Sentinel drops anchor with $48.5m dockside industrial deal along the Brisbane River

October 6, 2017

The Sentinel Property Group managing director has never been one to follow the herd and judging from his latest acquisition nothing has changed.

In a $48.5 million deal in the TradeCoast precinct, his property fund management group has swooped on what – in his maverick way – he says others may deem a “high-risk ugly duckling”.

It has purchased a bulk storage industrial facility on a 14ha site fronting the Brisbane River at 69 Tingira St, Pinkenba, in a leaseback arrangement with global diversified industrial chemical company Incitec Pivot Pty Ltd.

Incitec will continue to run its fertiliser distribution centre from the site and will lease about 11.5ha of the property with 2.5ha on Soutter St available to Sentinel for further development. The property also benefits from an adjoining wet lease of 15,370sq m with associated wharf infrastructure.

“It’s 14ha on the river with its own 45,000-tonne wharf,” Mr Ebert said.

“They don’t make those anymore, you can’t go and develop one. It’s a fantastic asset but with some challenges.

“We don’t run away from trouble, we run towards trouble because that’s where you make money.

“This property has got some relatively minor contamination but it’s manageable.

“Most institutional investors wouldn’t touch an asset like this but we look for value in properties that have got some problems. Where there’s a problem, there’s an opportunity.

“We’re a yield-driven fund, not a trophy-driven fund. There’s a lot of buyers out there for good-quality, low-risk, income-producing properties.

“But when you buy a brand new property with a long lease you can’t add value to that.

“So we’d rather keep buying the properties that are seen as high-risk ugly ducklings. It’s the old real estate adage: buy the worst house in the best street.”

Simon Beirne and Anthony White, from Colliers International, negotiated the Pinkenba deal, which adds to Sentinel’s national portfolio of more than 40 retail, industrial, office, land, tourism infrastructure and agribusiness assets with a total value in excess of $1 billion.

“Freehold sites on the Brisbane River with a seabed lease is a very rare offering,” Mr Beirne said. “Land is becoming harder and harder to find, particularly with good access to major infrastructure.”

Mr White said the TradeCoast precinct had been a focus for investor interest, underpinned by rapidly increasing leasing volumes.

“We are seeing more sale and leaseback activity, particularly from corporates, which we expect will continue,” he said.

Mr Ebert said Sentinel expected to do a further $400 million in transactions – evenly split between acquisitions and sales – before the end of the year.

He said in Queensland it currently had more than $50 million worth of other acquisitions in due diligence.

Mr Ebert said recent sales of industrial facilities had reflected yields in the range of 5.5 per cent to 7.5 per cent but the Pinkenba property was purchased at a passing net yield of 8.2 per cent.

“This is also one of very few sites with wharf access in Brisbane that can accommodate Handymax class vessels of up to 188m long and 34m wide and capable of both liquid and bulk cartage,” he said.

Mr Ebert said it was an ideal time for Sentinel to purchase in the TradeCoast precinct as it was a tightly held market due to the lack of available land.

“The proximity to Brisbane Airport, Port of Brisbane and major transport infrastructure continues to drive demand in this precinct,” he said. “There are also some major infrastructure projects in play with Brisbane Airport Corporation funding over $2.5 billion worth of infrastructure over the next 10 years to keep up with the city’s growing demands.”