Recently, we outlined the ways in which we identify a high-quality industrial property. Excitingly, those processes have resulted in the acquisition of 75-95 and 105 Corio Quay Road in North Geelong, Victoria.
The yield, local infrastructure and connectivity, lease terms, tenant and buildings present a compelling opportunity, as do the prospects for the broader region. Here, we breakdown the compelling elements which ultimately led to us adding this asset to the Trilogy Industrial Property Trust.
Yield
The first filter during our search was on yield. Agents in our network first submitted this asset for our consideration on the basis it met our stringent yield requirements.
A further attraction regarding the yield on this asset was the 50% stamp duty discount on offer for purchases in regional Victoria, including Geelong. This saving improves the yield of the asset by approximately 0.2% when compared to an asset for which full-freight stamp duty is paid.
Strategic location
We like the location for a number of reasons. One key advantage is that it is only our second acquisition in Victoria, which aids the further diversification of our portfolio. While our yield requirements make many Melbourne assets unattractive for us, this location offers a higher yield, plus many of the same benefits Melbourne offers.
The asset is also located in a tightly held industrial precinct, which means opportunities to invest in the area are uncommon, increasing competition for assets in this location.
Connectivity
The site has excellent access to the Princes Highway and the Geelong Ring Road. It is 6.3 kilometres from the Geelong CBD and 62 kilometres from the Melbourne CBD – less than an hour’s drive. It is also 17 kilometres from Avalon Airport and is adjacent to the Port of Geelong, as well as the Spirit of Tasmania terminal.
Port of Geelong
The Port of Geelong is Victoria’s second largest port. It handles a diverse range of cargo, including petroleum products, bulk commodities and containerised goods. The largest regional port in Victoria, it plays a key role in facilitating import and export activities, supporting industries across the region. The port facilitates over $7 billion worth of trade each year.
Infrastructure
Geelong has been the beneficiary of significant infrastructure investments. These include upgrades to road and rail and health.
It is home to several reputable educational institutions including Deakin University and Gordon Institute of TAFE, which provide for a stream of skilled workers to the region. These infrastructure investments increase the utility of industrial assets in the area and attract businesses and residents.
Diversified economy
Geelong has a diversified economy which includes healthcare, education, advanced manufacturing and a considerable tourism industry. In fact, the Spirit of Tasmania, the ship responsible for ferrying passengers across the Bass Strait between Victoria and Tasmania, brought $21 million in tourism to the region in its first year of operation at Port of Geelong. During the 2022-23 financial year, it also recorded 450,000 passengers and over 160,000 20 foot-equivalent units of cargo.
Prospects for the region
Geelong offers superior housing affordability to Melbourne, making it an attractive destination for home-buyers. It offers a high quality of life with parks and recreation facilities attracting residents and tourists, and is accessible to Bellarine Peninsula and Bells Beach.
Geelong is Victoria’s largest regional city with a population of 282,000, which, given the strong economic and lifestyle features on offer is forecast to grow to 325,779 by 2036 – the fastest growth precinct in Victoria.
Lease terms
The asset has very favourable lease terms – with fixed rental increases of 3% annually, and 7 years remaining on the term and two further 7-year renewal options. It is softly rented at $106 per square metre, which makes it a competitive proposition for the existing tenant.
Tenant covenant
The tenant is UG Manufacturing, which trades as its more commonly known brand name, Quiksilver. Quiksilver is an iconic brand and has a long history of customer loyalty in the fashion industry.
The buildings
The site includes two warehouses. Both warehouses are tilt-panel for the full wall, which is rarer and better quality than the more common metal-clad construction.
Tilt panel construction refers to concrete panels tilted into place, whereas metal cladding consists of metal panels attached to a building’s frame.
Discover why we think an industrial property boom is coming
In our report, ‘The time for industrial property is NOW’, we explain the fundamentals driving the growth of the industrial property sector. Discover why Trilogy Funds sees great investment potential in the sector, and what we look for when selecting a strong industrial asset.
This article is issued by Trilogy Funds Management Limited ABN 59 080 383 679 AFSL 261425 (Trilogy Funds) as responsible entity for the Trilogy Industrial Property Trust ARSN 623 096 944. Application for investment can only be made on the application form accompanying the Product Disclosure Statement (PDS) dated 11 September 2023 and by considering the Target Market Determination (TMD) dated 11 September 2023 for the Trilogy Industrial Property Trust ARSN 623 096 944 available at www.trilogyfunds.com.au. The PDS and the TMD contain full details of the terms and conditions of investment and should be read in full, particularly the risk section, prior to lodging any application or making a further investment. All investments, including those with Trilogy Funds, involve risk which can lead to no or lower than expected returns, or a loss of part or all of your capital. Trilogy Funds is licensed to provide only general financial product advice about its products and therefore recommends you seek personal advice on the suitability of this investment to your objectives, financial situation and needs from a licensed financial adviser. Investments with Trilogy Funds are not bank deposits and are not government guaranteed. Past performance is not a reliable indicator of future performance.
