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Centennial’s $45m private capital raising closes oversubscribed in new $700m last mile logistics fund with Brookfield
- Centennial-managed $700m Enhanced Value Partnership (EVP) fund is third global partnership structure Centennial has offered to private investors comprising ~$120m of equity
- Capital raised at a point in the cycle to take advantage of short to medium term market volatility
- Transaction takes the capacity of Centennial’s I&L platform to over $2.3 billion
SYDNEY, NSW: A new $700m last mile industrial and logistics venture launched by national property fund manager Centennial, has closed oversubscribed after drawing a wave of high-net-worth and wholesale investors vying for equity in the last $45m offered to invest in the Fund, alongside Centennial and Brookfield Real Estate Secondaries.
The ‘Enhanced Value Partnership’ (EVP) which is Centennial’s third global partnership and first with Brookfield’s Real Estate Solutions business, will recapitalise a selection of existing assets owned by Centennial and provide additional capital to continue to acquire, reposition and develop niche, mid-space I&L assets within established, inner ring and land constrained urban areas.
The speed at which the fund’s remaining $45m was taken up was welcomed by Centennial’s Executive Director of Private Wealth and COO, Lyle Hammerschlag who attributed the fast take-up to Centennial’s strong track record in the mid-space I&L sector, niche strategy, plus offering the opportunity to partner alongside a global institutional investor of Brookfield’s calibre.
“We have attracted a number of new investors to this raising alongside our long-term private clients who viewed the EVP as an opportunity to invest in Australia’s strongly performing industrial sector, knowing Centennial’s ability to identify and enhance the value of mid-size properties and turn them into institutional-grade assets,” he said.
Targeting core plus to value add estates and buildings, Mr Hammerschlag said the Fund’s primary focus will remain on assets offering 1,000 to 10,000sq m tenancies or estates between $10m to $75m.
Four fully leased seed assets located in some of Brisbane’s and Melbourne’s prime inner ring industrial areas and valued at $100m, that account for 13 per cent of the target portfolio, were added to the fund with a visible pipeline of another $90m of sites under review across the eastern seaboard.
Centennial’s Executive Director and CEO, I&L Paul Ford said, “We are extremely comfortable operating in the mid-space, last mile and infill sectors and have grown our now sizeable logistics portfolio to 63 properties in just five years by maintaining a disciplined approach to the assets we acquire, their size and location.
“By ‘sticking to our knitting’ we have managed to increase and add considerable value to our existing I&L portfolio, now worth in excess of $1.4 billion,” Mr Ford added.
“According to SA1, Centennial are now the third and fourth largest mid-space industrial landholders in Melbourne and Brisbane respectively.
“This market is strongly supported by multiple demand and sector drivers but is often overlooked by institutional investors due to initial scale requirements and management intensity,” Mr Ford said.
“While the industrial sector is still performing strongly, we do anticipate some further cap rate softening and believe we are very well placed to seize opportunities and act quickly with the equity available to us, but only if potential assets meet our strict mandates.
“Those criteria are largely by targeting land constrained urban, infill locations and undercapitalised mid space industrial and logistics properties that have the potential for strong rental growth along with multiple options to add value,” Mr Ford added.
The creation of the $700m EVP fund takes the capacity of Centennial’s industrial and logistics platform to over $2.3 billion.
As seen in The Australian, Tuesday, 19 September 2023:
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