Establishment of the Growthpoint Aust Logistics Partnership

Growthpoint Properties Australia is forming a logistics partnership with TPG Angelo Gordon, selling an 80% stake in six industrial assets for $181 million, resulting in a special distribution to security holders and reduced gearing.

Summary

• Growthpoint Properties Australia (Growthpoint) is partnering with TPG Angelo Gordon to create the Growthpoint Australia Logistics Partnership (GALP).
• GALP will acquire approximately 80% of six existing Growthpoint industrial assets at book value.
• The sale will generate net proceeds of $181 million for Growthpoint.
• This transaction will reduce Growthpoint's gearing by 2.0% to 38.7% (pro forma as of June 30, 2024).
• Growthpoint forecasts a special distribution of 2.1 cents per security (cps) to shareholders.
• Growthpoint will retain a 20% interest in GALP and will manage the assets.
• The partnership aims to expand in the Australian logistics sector.
• Transaction completion is expected around December 2024, subject to FIRB approval.

Sentiment

Score: 7

Explanation: The announcement presents a positive strategic move for Growthpoint, improving its financial position and expanding into a growth sector. However, the reliance on FIRB approval introduces some uncertainty.

Positives

• Strategic partnership with a global institutional investor enhances Growthpoint's funds management business.
• Significant capital inflow of $181 million from the asset sale.
• Improved financial position with a 2% reduction in gearing.
• Special distribution of 2.1 cps provides a return to shareholders.
• Expansion into the growing Australian logistics sector.

Negatives

• Sale of a significant portion (80%) of the industrial asset portfolio.
• Transaction completion is subject to FIRB approval, which could delay the process.

Risks

• Potential delays due to FIRB approval process.
• Uncertainties related to the final amount of the special distribution.

Future Outlook

There is no change to FY25 funds from operations (FFO) guidance.

Management Comments

• 'We are pleased to form this capital partnership alongside an aligned global institutional partner with extensive investment experience.'
• 'This partnership supports Growthpoint’s strategy to grow its funds management business and capital partnerships, and is a testament to the strength of our industrial portfolio.'

Industry Context

This partnership reflects the increasing interest in the Australian logistics sector and the trend of REITs forming capital partnerships to unlock value and expand their investment strategies. The transaction also highlights the ongoing demand for high-quality industrial assets.

Next Steps

• Completion of the transaction (around December 2024, subject to FIRB approval)
• Payment of debt using sale proceeds
• Distribution of 2.1 cps to security holders
• Growth of the GALP partnership in the Australian logistics sector

Key Dates

Keywords

Logistics, Real Estate, Partnership, Industrial, Growthpoint, TPG Angelo Gordon, Australia, Investment, Capital, Sale