CAPITAL MARKETS AUSTRALIA & NEW ZEALAND INVESTMENT REVIEW INDUSTRIAL YEAR IN REVIEW AND OUTLOOK 2020 Industrial

Accelerating success. INDUSTRIAL INVESTMENT REVIEW | ANZ Introduction Key Findings Major Transaction Overview NZ Investment Market The Australian Industrial Property Difference Detailed Transaction List Team & Authors A CAPITAL MARKETS PUBLICATION | 2

Introduction AUSTRALIAN INDUSTRIAL INVESTMENT REVIEW

$5.7bn 13.8% INDUSTRIAL PROPERTY TRANSACTIONS IN 2019

Demand for Australian logistics assets remains strong, with an unprecedented amount of capital seeking to expand or enter the market.

Conditions within the logistics market are a continuation Singapore, Europe and the US and was the result of a of the trends recorded in recent years with record select number of groups aggressively expanding their levels of infrastructure investment, continued growth presence in Australia. of e-commerce and the low cost of debt fuelling Given the tight investment market, investors are demand for assets. This is particularly the case along increasingly becoming more willing to move up the the east coast states where 78% of the Australian risk curve and purchase secondary assets with more population resides. leasing and vacancy risk to obtain increased returns. During calendar year 2019, transaction volumes for Opportunistic purchasers seeking value add/change industrial property totalled $5.7 billion (over $5 million), of use opportunities have also been active in recent up 13.8% from the $5.0 billion recorded in the 2018 months, particularly within inner ring industrial markets calendar year. The strong outcome for 2019 was the where population densities are highest. result of higher capital values with fewer assets brought The increasing level of demand is not being matched by to market when compared to 2018 levels as investors supply and coupled with the reduced cost of debt, yields increasingly looked to hold onto their logistics assets/ continue to firm with all markets recording compression portfolios. In fact, sales volumes by number in 2019 was over the past 12 months. Nationally, prime industrial the lowest it’s been since 2013. With fewer assets for yields fell an average of 40 basis points over the past sale, prime core facilities which were brought to market year, led by Sydney and Adelaide markets. in 2019 attracted significant interest and achieved strong yield metrics. Unlike previous years, larger single assets The rate of firming in the secondary market has came to market in 2019 which is a trend we expect to also been strong, tightening 38 basis points over the continue in 2020. same period. Given this, groups are continually needing to reassess their investment hurdles to allow them to Investment activity over the past 12 months has been participate in the market. focussed on eastern seaboard markets but the weight of capital has been felt nationally. Local REITs and unlisted This year’s ANZ Capital Markets Industrial Investment funds were the dominant buyers in 2019, while record Review highlights the key transactions and trends low interest rates have encouraged private investors impacting the Australian industrial investment market, to re-enter the market after a brief hiatus. Offshore and our outlook for the year ahead. We look forward to EUROPE USA groups remain active with investment volumes from assisting you with your Industrial requirement in 2020. HONG KONG these groups at their highest level since 2016. Offshore ACROSS THE COUNTRY INVESTORS ARE WILLING TO demand has been largely sourced from Hong Kong, move SINGAPORE $130bn UP RISK CURVE OFFSHORE WORTH OF TRANSPORT AND PURCHASE SECONDARY ASSETS WITH DEMAND INFRASTRUCTURE PROJECTS UNDER MORE LEASING AND VACANCY RISK TO OBTAIN CONSTRUCTION OR COMMITTED INCREASED RETURNS INDUSTRIAL INVESTMENT REVIEW | ANZ Introduction Key Findings Major Transaction Overview NZ Investment Market The Australian Industrial Property Difference Detailed Transaction List Team & Authors A CAPITAL MARKETS PUBLICATION | 3

Key Findings A PERIOD OF TRANSITION

The past few years has represented a period of transition for the Australian logistics sector as technological advancements and changing consumer preferences have changed the way industrial businesses operate.

KEY FINDINGS

RECALIBRATING TO A LOW INTEREST NEW NORMAL RATES when it comes to pricing of and bond yields have been industrial assets hugely positive

This environment coupled with the continued growth of online retail sales has required landlords to keep up to date with consumer demands and invest and grow their portfolio to attract and retain tenants.

Low interest rates and bond yields have been hugely positive for the industrial sector as the spread between cap rates and funding costs widen. While headline industrial investment metrics such as cap rates, IRRs and value per square metre rates are at record levels, on a relative basis, they remain attractive to investors given the cost of financing is significantly lower than previous market cycles.

The market is going through a period of recalibrating to a new normal when it comes to pricing of industrial assets. Investors who have remained on the sideline in recent years have missed significant capital gains while active investors who have adjusted to changing market conditions have been rewarded. INDUSTRIAL INVESTMENT REVIEW | ANZ Introduction Key Findings Major Transaction Overview NZ Investment Market The Australian Industrial Property Difference Detailed Transaction List Team & Authors A CAPITAL MARKETS PUBLICATION | 4

Key Findings ECONOMIC STATE OF PLAY

The Australian economy continues to grow, albeit at a slower pace as falling property ECONOMIC FORECASTS prices led to substantial declines in dwelling investment, weak wage growth restricted household consumption and the US–China trade dispute weighed on business investment decisions. Current 2020 Forcast Direction GDP 1.7% 2.5% Nevertheless, the economy recorded its 28th markets, recent interest rate cuts and resilient GDP GROWTH FORCAST AVERAGE year of uninterrupted economic growth, commodity prices which remain elevated by increasing 1.7% in the year to September 2019. historical standards. Coupled with continued population growth and a significant pipeline 2.7% There are signs that economic growth will PER ANNUM OVER THE of infrastructure projects, economic growth is improve over the next 12 months with recent NEXT FIVE YEARS CPI forecast to average 2.7% per annum over the data pointing to a modest uptick. Positive 1.8% next five years. 1.8% influences going forward are the recent turnaround in house prices with notable gains being recorded in the Sydney and Melbourne POPULATION GROWTH 1.5% 1.5% AUSTRALIA GDP GROWTH

INTEREST RATES 1.6% 5.0% 0.75% 0.5%

1.2 4.0

0.8 3.0 WAGES GROWTH 2.2% 0.4 2.0 2.4%

0.0 1.0

UNEMPLOYMENT RATE -0.4 0.0 5.1% 5.1%

Mar-11 Sep-09Dec-09Mar-10Jun-10Sep-10Dec-10 Jun-11Sep-11Dec-11Mar-12Jun-12Sep-12Dec-12Mar-13Jun-13Sep-13Dec-13Mar-14Jun-14Sep-14Dec-14Mar-15Jun-15Sep-15Dec-15Mar-16Jun-16Sep-16Dec-16Mar-17Jun-17Sep-17Dec-17Mar-18Jun-18Sep-18Dec-18Mar-19Jun-19Sep-19

QoQ Growth YoY Growth (RHS)

Source: Colliers International, ABS Source: Deloitte Access Economics, Westpac, Colliers International INDUSTRIAL INVESTMENT REVIEW | ANZ Introduction Key Findings Major Transaction Overview NZ Investment Market The Australian Industrial Property Difference Detailed Transaction List Team & Authors A CAPITAL MARKETS PUBLICATION | 5

Key Findings INFRASTRUCTURE INVESTMENT

Australia is currently witnessing an era of transformation and renewal, with an unprecedented amount of funds being directed to transport infrastructure projects including new roads, rail, intermodal terminals and an airport.

For the industrial sector, ultimately these projects will The current spate of transport infrastructure investment shape the location of industrial demand while areas that is set to transform the outlook of the industrial market were once considered secondary may perhaps become not only for tenants, but also for developers and prime demand areas. It is estimated that there is $133 investors currently revisiting their investment strategy to billion worth of transport infrastructure projects under recognise the changing market dynamics created by the construction and committed, 65% of which is scheduled infrastructure investment. for completion in the next three to five years. $133bn 65% ESTIMATED FOR TRANSPORT SCHEDULED FOR INFRASTRUCTURE COMPLETION WITHIN THE PROJECTS NEXT THREE TO FIVE YEARS

AUSTRALIA TRANSPORT INFRASTRUCTURE AUSTRALIA ENGINEERING CONSTRUCTION

25,000 $million Forecast $50 billion

ACT Light Rail (Stage 2)

Tonkin Highway 20,000 40 Bruce Highway Cooroy to Curra

SEQIPP 30 Vic Metro Rail Upgrades 15,000 NorthLink WA 20

10,000

Brisbane M12 10 Airport Rail Gateway Link WA 5,000 Pacific Highway - Woolgoola to Ballina 0 Gold Coast Legacy Way Jun-11 Dec-11 Jun-17 Jun-13 Dec-17 Jun-19 Jun-15 Dec-13 Jun-12 Jun-14 Jun-16 Jun-18 Dec-15 Dec-12 Dec-14 Dec-16 Dec-18 Jun-10 Dec-10 Jun-01

Regional Rail Link Dec-01 Jun-99 Jun-07 Dec-99 Jun-03 Dec-07 Jun-02 Jun-09 Jun-05 Dec-03 Jun-08 Jun-06 Jun-04 Dec-02 Dec-09 Dec-05 Dec-08 Dec-06 Dec-04 Jun-00 Dec-00 WestConnex SW Rail Link 0 Reliance Rail Value of Work Done Value of Work Commenced Value of Work Yet to be Done 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

New South Wales Victoria Queensland Western Australia Australian Capital Territory Multiple states

Source: Colliers International, ABS Source: Deloitte Access Economics * selected sectors include roads, railways, bridges, and harbours INDUSTRIAL INVESTMENT REVIEW | ANZ Introduction Key Findings Major Transaction Overview NZ Investment Market The Australian Industrial Property Difference Detailed Transaction List Team & Authors A CAPITAL MARKETS PUBLICATION | 6

Key Findings INFRASTRUCTURE INVESTMENT

AUSTRALIA'S LOGISTIC PERFORMANCE INDEX PORT CONTAINER MOVEMENTS (TEUS) SCORECARD (OUT OF 5) AUSTRALIA INFRASTRUCTURE PROJECTS

3 million -3.2% INFRASTRUCTURE Metronet CUSTOMS $5.2 billion 2 2024 Cross River Rail Brisbane Airport – New 3.87 3.97 Rail QUALITY OF TRADE AND $6.9 billion Parallel Runway EFFICIENCY OF THE 1 TRANSPORT RELATED 2.66 2.57 2024 $1.3 billion CLEARANCE PROCESS NorthLink WA INFRASTRUCTURE Rail 2020 (i.e., speed, simplicity and $1.1 billion (e.g., ports, railroads, roads, Airport predictability of formalities) 0 2019 Bruce Highway Upgrade by border control agencies, information technology) Road $1.7 billion Gateway North Upgrade including customs Sydney 2023+ $1.0 billion Perth Airport Upgrade Road 2024+ $1.0 billion Road 2020 Airport QLD -1.5% LOGISTICS 3 million WA INTERNATIONAL SHIPMENTS COMPETENCE 3.25 3.71 2 COMPETENCE AND 3.01 2.97 Northern Connector GlobeLink SA EASE OF ARRANGING 1 QUALITY OF LOGISTICS $0.8 billion — COMPETITIVELY PRICED SERVICES 2020 2026+ NSW SHIPMENTS Inland Rail Moorebank Intermodal (e.g., transport operators, 0 Road Road $10 billion Terminal customs brokers) 2030 $1.9 billion Melbourne Rail 2025 Rail Melbourne Metro Rail Project North East Link VIC WestConnex $16.8 billion Sydney Metro West $11.0 billion $15.8 billion 2025 2027 2023 $10.4 billion TIMELINESS TRACKING & TRACING Rail Road Road 2028 3 million -4.9% Rail West Gate Tunnel Project Melbourne Tullamarine Airport Rail link Sydney Metro City & 3.98 3.82 Southwest Pacific Highway Upgrade TIMELINESS OF $6.7 billion $10.0 billion ABILITY TO TRACK AND 2 2022 2027+ $12 billion $4.9 billion SHIPMENTS TRACE CONSIGNMENTS Road Rail 2024 2020 in reaching destination Rail Road within the scheduled or 1 Level Crossing Removal expected delivery time Western Sydney Airport M12 Motorway 1.38 1.31 $6.6 billion 0 2025 $5.3 billion $1.8 billion Rail 2026 2026 Airport Road Brisbane

NorthConnex $3 billion LPI SCORE 2019 2020 2020 Road 3.75 LPI SCORE Source: World Bank COST EXPECTED COMPLETION TYPE Source: NSW Ports, Port of Melbourne and Port of Brisbane INDUSTRIAL INVESTMENT REVIEW | ANZ Introduction Key Findings Major Transaction Overview NZ Investment Market The Australian Industrial Property Difference Detailed Transaction List Team & Authors A CAPITAL MARKETS PUBLICATION | 7

Key Findings INVESTMENT VOLUMES

Against a backdrop of strong fundamentals, demand for industrial 2019 INVESTMENT VOLUME % BY STATE and logistics assets remains significant.

The strong flow of capital into the Australian industrial Although sales volumes have increased from the level sector now stems from a diverse range of investor types recorded in 2018, fewer assets have been brought to including local institutions, private investors and offshore market. In 2019, 220 assets traded, well below the 252 institutional investors. This strong demand, however, is recorded in 2018 and the 353 recorded in the last volume QLD being restrained by fewer assets being brought to the peak in 2016. As institutional investors continue to grow WA market and has been further exacerbated by a lack of their ownership of industrial assets within the logistics 3.1% 26.6% large portfolio opportunities consisting of four or more sector, the availability of assets (particularly high-quality assets being offered. assets) for sale has diminished. To grow their portfolios, SA NSW industrial groups are likely to seek alternative strategies In the 2019 calendar year, investment volumes within the in 2020 such as a build-to-core strategy, which has seen 6.6% 37.7% industrial sector totalled $5.7 billion, well above the $5.0 land values increase at a significant rate. billion recorded in the 2018 calendar year. The East Coast VIC capital cities of Sydney, Melbourne and Brisbane captured Prime core assets with long WALEs where security of over 85% of this activity as institutions look to capitalise on tenure and quality of covenant are sound remain the asset 24.0% strong leasing fundamentals and a favourable outlook for of choice for investors as they offer certainty of cash flow. further yield compression in these cities. Alternatively, investors are becoming less risk adverse and are willing to acquire assets with more elevated leasing and vacancy risk. Source: Colliers International

INDUSTRIAL INVESTMENT VOLUMES ($5 MIL+) INDUSTRIAL INVESTMENT BY NUMBER ($5 MIL+)

400 $9.0 billions

8.0

7.0 300

6.0

5.0 200 4.0

3.0

2.0 100

1.0

0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 0

NSW QLD VIC SA WA Various/Other 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Source: Colliers International Source: Colliers International INDUSTRIAL INVESTMENT REVIEW | ANZ Introduction Key Findings Major Transaction Overview NZ Investment Market The Australian Industrial Property Difference Detailed Transaction List Team & Authors A CAPITAL MARKETS PUBLICATION | 8

Key Findings PORTFOLIO SALES

TOTAL 2019 INDUSTRIAL PORTFOLIO Given the difficulty in obtaining core and core plus assets on their own, TRANSACTIONS Up from portfolio transactions have been highly sought after. $1.8bn 1.2bn Portfolios provide asset hungry investors with instant scale and as a result, investors have demonstrated a willingness to pay a premium EASTERN CREEK NSW for portfolios. Industrial portfolio transactions in 2019 amounted to approximately $1.8 billion, up from the $1.2 billion recorded in 2018. Sale Price: $90.5m Total Size: 36,404sqm Vendor: Confidential MAJOR PORTFOLIOS SOLD IN 2019 INCLUDE: Purchaser: AMP Capital on behalf of Swiss Re Sold by: Colliers International AMP Capital Portfolio Three Sydney assets (Kingsgrove, Villawood and Blacktown) were purchased by GPT for $105 million on a combined yield of 5.6%. Charter Hall Portfolio Investec acquired three assets for a collective total of $81 million in September 2019. The assets, located in Perth, Adelaide and Darwin, were purchased on a combined initial yield of 7.3%. Arnotts Portfolio Three assets brought to the market by KKR following their acquisition of the Campbell Soup business. The Brisbane and Adelaide assets were acquired by the Centuria Industrial REIT for $236.2 million while Charter Hall purchased the Sydney facility for $397.8 million. Greenlit Brands Portfolio Two Sydney assets offered by Greenlit Brands. Both Sale and Leaseback Activity assets were then sold individually to AMP and Logos Dominated by several large transactions towards the leaseback provides corporates with an opportunity what was the largest industrial transaction for 2019. for a collective total of $171.8 million. end of 2019, sale and leaseback activity was strong to release capital that is tied up on the balance sheet The properties were acquired on a sale and leaseback over the past year with several corporates capitalising and reinvest the funds back into their business agreement with an average lease expiry of 32 years. Blackstone Cold Storage Portfolio on favourable pricing metrics. In 2019, investment or reduce debt. Five temperature-controlled warehouses (across Other sale and leaseback transactions include 1 volumes stemming from sale and leasebacks totalled Brisbane, Perth and Adelaide) sold to Emergent Sale and leaseback acquisitions in 2019 were Eucalyptus Place, Eastern Creek which sold to AMP just over $1.1 billion, representing 20% of investment Cold for $345 million. headlined by the Arnott’s Portfolio (assets located Capital (on behalf of Swiss Re) for $90.5 million and volumes over the period. in Sydney, Brisbane and Adelaide) which sold for 2-4 Harvey Road, Kings Park sold to LOGOS for $81.3 Increased corporate M&A activity is fuelling this a collective total of $635.1 million. The Centuria million. Earlier in 2019, 95 Greens Road, Dandenong growth as a number of groups acquire businesses Industrial REIT acquired the Brisbane and Adelaide South was sold to Charter Hall for $100 million on and then split out the real estate components assets for $236.2 million while Charter Hall a sale and leaseback to Viridian Glass. The sale through a sale and leaseback arrangement. While it purchased the Sydney facility for $397.8 million in followed Crescent Capital Partners acquisition of the represents a way of unlocking acquisitions, a sale and Viridian Glass business from CSR in 2018. INDUSTRIAL INVESTMENT REVIEW | ANZ Introduction Key Findings Major Transaction Overview NZ Investment Market The Australian Industrial Property Difference Detailed Transaction List Team & Authors A CAPITAL MARKETS PUBLICATION | 9

Key Findings BUYER PROFILE

Domestic institutions were the largest buyer group in 2019, accounting for 48.0% of investment volumes in 2019.

Notable domestic institutions who were active in 2019 Offshore investors remain active in the market with offshore acquisition in 2019 was ESR’s equity buyout of OFFSHORE INVESTMENT VOLUMES include Charter Hall, Centuria, LOGOS, GPT and Fife investment volumes for the year totalling almost $1.6 the Propertylink industrial portfolio in early 2019 for $723 TOTALLED Capital. Institutional owners with development capability billion, underpinned by groups from Singapore, Europe, million. Other major acquisitions from offshore groups are increasingly turning their focus to new developments to the US and Hong Kong. However, the offshore value of include DWS (ex Deutsche Asset Management) purchasing grow their funds under management and as a result supply sales is likely be understated given the sizable levels of a 50% interest in 99 Sandstone Place, Parkinson for $1.6bn levels are expected to increase further in 2020. offshore capital being deployed via domestic managers $134.2 million. through capital raisings and joint ventures. The largest

SHARE OF PURCHASER TYPE BY SALES VOLUME SHARE OF INDUSTRIAL SALES BY PURCHASER TYPE

China $17.3m 8.5% 0.3% 28.6% 48.0%

Hong Kong $791.2m 16.0% 14.9%

Institution Private Osore Other

Source: Colliers International

VOLUME PROPORTIONS BY SOURCE OF CAPITAL USA $171.0m 3.4% O shore

Germany Singapore $134.2m Australia 2.7% $284.2m 5.7% $4.0bn Domestic 71.8%

0% 20% 40% 60% 80% 100%

NSW QLD VIC WA SA Various/Other

Source: Colliers International Source: Colliers International INDUSTRIAL INVESTMENT REVIEW | ANZ Introduction Key Findings Major Transaction Overview NZ Investment Market The Australian Industrial Property Difference Detailed Transaction List Team & Authors A CAPITAL MARKETS PUBLICATION | 10

Key Findings YIELDS

Industrial yields have shown further compression over the past 12 months AVERAGE PRIME & SECONDARY YIELD BY CAPITAL (DEC 19) as demand for industrial exposure has outweighed stock for sale. Average prime industrial yields currently average 5.7% Despite yield metrics continuing to firm, they remain nationally, representing 40 basis points of firming over attractive in a global context and the spread between the the past year. The rate of compression in the prime 10-year government bond rate has widened to its highest market has been most pronounced within the Sydney and level in six years. Adelaide markets, the latter reflecting increased buyer Recent yield compression combined with solid rental appetite given the yield premium when compared to other growth across most capital cities has resulted in east coast capital cities. significant growth in capital values. Nationally, prime Secondary yields currently average 6.8%, firming 38 capital values have increased 13.8%, over double the 10- BRISBANE basis points in 2019. The rate of firming has been broadly year average of 6.2%. Sydney and Adelaide led the way consistent across the capital cities, albeit with Sydney with prime capital values jumping 17.6% and 19.1% over being the standout performer with firming of 47 basis the 12 months to December 2019. PERTH points over the 12-month period. ADELAIDE SYDNEY AVERAGE NATIONAL CAP RATE AND PRIME SPREAD TO 10 YEAR GOVT. BOND RATE

10.0% 600 MELBOURNE

9.0 500

8.0 400

7.0 300 BRISBANE SYDNEY MELBOURNE 6.0 200 Average Prime 12-month Average Prime 12-month Average Prime 12-month 5.0 100 Yield Compression Yield Compression Yield Compression 4.0 0 5.94% 36bps 4.70% 48bps 5.73% 38bps Jun-11 Jun-05Dec-05Jun-06Dec-06Jun-07Dec-07Jun-08Dec-08Jun-09Dec-09Jun-10Dec-10 Dec-11Jun-12Dec-12Jun-13Dec-13Jun-14Dec-14Jun-15Dec-15Jun-16Dec-16Jun-17Dec-17Jun-18Dec-18Jun-19Dec-19 Prime - 10 Year Govt. Bond Yield Spread (RHS) Prime Secondary Average Secondary 12-month Average Secondary 12-month Average Secondary 12-month

Source: Colliers International Yield Compression Yield Compression Yield Compression 7.53% 31bps 5.38% 47bps 6.70% 38bps PRIME CAPITAL VALUES BY CAPITAL CITY

$3,500 ADELAIDE PERTH $3,000 $2,500 Average 12-month Average Prime 12-month $2,000 Prime Yield Compression Yield Compression $1,500 $1,000 7.44% 59bps 6.90% 20bps $500 Average 12-month Average Secondary 12-month $0 Secondary Yield Compression Yield Compression

06 06 07 08 08 09 09 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 19 19 c-05 c- c-07 c- c- c- c- c- c- c- c- c- c- c- c- De Jun- De Jun- De Jun- De Jun- De Jun- De Jun- De Jun- De Jun- De Jun- De Jun- De Jun- De Jun- De Jun- De Jun- De 9.16% 28bps 7.97% 31bps

Sydney Melbourne Brisbane Perth Adelaide Source: Colliers International Source: Colliers International INDUSTRIAL INVESTMENT REVIEW | ANZ Introduction Key Findings Major Transaction Overview NZ Investment Market The Australian Industrial Property Difference Detailed Transaction List Team & Authors A CAPITAL MARKETS PUBLICATION | 11

Major Transaction Overview SYDNEY With key national industrial drivers remaining strong, the Sydney industrial and logistics market continued to move from strength to strength off the back of the significant weight of capital seeking logistics facilities within Sydney. Key MAJOR TRANSACTIONS

61 Huntingwood Drive, Huntingwood Purchased for: $397.8m Purchased by: Purchased From: Charter Hall KKR

Superior Sydney Portfolio Purchased for: $105m Purchased by: Purchased From: GPT AMP TOTAL INVESTMENT VOLUMES IN 2019 2019 AVERAGE YIELDS 2019 ANNUAL RENT GROWTH AVERAGE CAPITAL VALUES

4.70% 5.38% 6.5% $3,350/sqm 57-89 Lockwood Road, Erskine Park PRIME SECONDARY $2.0bn AVERAGE PRIME AND SECONDARY FOR PRIME GRADE ASSETS Purchased for: Investment volumes in 2019 measured just over $2.0 The weight of capital flowing into Sydney industrial and The average yield for Sydney has been continuously billion, largely on par with the levels recorded in 2018. logistics property continues to be sourced from a diverse tightening across the market. Prime yields are currently $107m Despite the average asset value being 40% higher in 2019 range of investors, including offshore capital from the USA, averaging 4.70% and secondary yields tightened by 47 Purchased by: Purchased From: when compared to 2018, volumes were limited by fewer Canada, Asia and Europe. basis points in 2019 to an average of 5.38%. With rents GPT Private assets being brought to market. growing at 6.5% on average for 2019, capital values However, domestic REIT’s have continued to outbid these for prime grade assets increased 17.6% to $3,350/ With many institutional and private investors choosing to offshore groups as they look to reweight their portfolios sqm and secondary grade building values grew by retain their assets as it is too hard to replace this capital and gain further exposure into the logistics sector, with 16.9% to $2,525/sqm. within the tightly held Sydney market, approximately 62% offshore investors making up 27% of total sale volumes. of the assets to trade in 2019 have been by corporate We expect the New South Wales industrial & logistics With key institutional industrial investors all trying to vendors. This is a trend we expect to continue as these market to continue to remain robust throughout 2020 as reweight their portfolios to New South Wales, we have corporate vendors sell their assets on sale and leaseback further major infrastructure projects reach construction seen all opportunities of scale hotly contested and setting transactions, divesting of their non-core assets and recycle phase and investors compete aggressively to acquire any new benchmarks. This was reflected in the sale of the this capital back within their businesses. opportunity that is presented to them. AMP Portfolio, a portfolio of three Sydney assets providing a GLA of more than 50,000 sqm purchased by GPT for $105 million. INDUSTRIAL INVESTMENT REVIEW | ANZ Introduction Key Findings Major Transaction Overview NZ Investment Market The Australian Industrial Property Difference Detailed Transaction List Team & Authors A CAPITAL MARKETS PUBLICATION | 12

Major Transaction Overview MELBOURNE Investment demand continues to be very strong across the Melbourne industrial market, however, stock remains tightly held and as a result the majority of transaction activity in 2019 has stemmed from secondary assets or turn-key developments. Key MAJOR TRANSACTIONS

ConnectWest Industrial Estate, Truganina Purchased for: $71m Purchased by: Purchased From: LOGOS Goodman

95 Greens Road, Dandenong South Purchased for: $100m Purchased by: Purchased From: Charter Hall Crescent Capital Partners TOTAL INVESTMENT VOLUMES IN 2019 2019 AVERAGE YIELDS 2019 ANNUAL RENT GROWTH AVERAGE CAPITAL VALUES

5.73% 6.70% 5.1% $1,993/sqm 3 Maker Place, Truganina PRIME SECONDARY $1.3bn AVERAGE PRIME AND SECONDARY FOR PRIME GRADE ASSETS Purchased for: Investment demand continues to be very strong across Similar to broader trends, the number of industrial assets The confluence of few assets for sale and significant the Melbourne industrial market, however, stock remains sold in 2019 declined 7.2% from 2018 and reflects the levels of demand has led to further compression in yields, $40m tightly held and as a result the majority of transaction continued tightening of the industrial market in Melbourne which combined with a pick-up in rental growth has driven Purchased by Purchased From: activity in 2019 has stemmed from secondary assets as owners opt to hold onto their assets. Offshore capital values higher. As at December 2019, prime yields Growthpoint Frasers Property or turn-key developments. Total investment volumes in demand was strong in Melbourne, representing 44.0% of in Melbourne averaged 5.73% while secondary yields are Melbourne for 2019 totalled approximately $1.3 billion, investment volumes over the period, underpinned by the higher at 6.70%, both of which firmed 38 basis points in moderately above the level recorded in 2018. ESR’s equity buyout of the Propertylink portfolio. 2019. With rents growing at 3.6% in prime and 6.5% in the secondary market on average, capital values for prime Investment sales have been broadly spread, however, The lack of built industrial investment product for sale grade assets increased 12.1% to $1,993/sqm and secondary skewed towards Melbourne’s South East and West, in Melbourne is leading to solid demand for land as local grade building values grew by 13.5% to $1,197/sqm. collectively accounting for 55% of investment volumes in REITs and developers look to replenish their land banks in 2019. Notably, this result was led by Charter Hall’s (Charter core locations. More recently, this was evidenced by ISPT’s The outlook for the Melbourne industrial market in 2020 Hall Prime Industrial Fund) acquisition of 95 Greens Road, $23.1 million purchase of 40 hectares of land in Truganina is favourable as Melbourne offers an attractive alternative Dandenong South on a sale and leaseback arrangement and followed their earlier acquisition of 30 hectares in to other Eastern Seaboard markets given the availability of to Veridian Glass for $100 million. Other notable sales to Altona North for $60 million. land and relative pricing. occur include 182-198 Maidstone Street, Altona which sold to Cache Logistics Trust for $41.2 million and highlights the resilient demand from offshore groups. INDUSTRIAL INVESTMENT REVIEW | ANZ Introduction Key Findings Major Transaction Overview NZ Investment Market The Australian Industrial Property Difference Detailed Transaction List Team & Authors A CAPITAL MARKETS PUBLICATION | 13

Major Transaction Overview BRISBANE Almost $30 billion in committed or under construction infrastructure projects have been a catalyst for the growth of the industrial sector in Queensland in 2019. Key MAJOR TRANSACTIONS

61 Pritchard Road, Virginia Purchased for: $211.8m Purchased by: Purchased From: Centuria KKR

99 Sandstone Place, Parkinson Purchased 50% share for: $134.2m Purchased by: Purchased From: DWS Frasers Property TOTAL INVESTMENT VOLUMES IN 2019 2019 AVERAGE YIELDS 2019 ANNUAL RENT GROWTH AVERAGE CAPITAL VALUES

5.94% 7.53% 1.3% $1,874/sqm 40 Schneider Road, Eagle Farm PRIME SECONDARY $1.4bn AVERAGE PRIME AND SECONDARY FOR PRIME GRADE ASSETS Purchased for: Coupled with sustained population growth and the shift in Industrial land values also increased in the Brisbane’s Major sales include four $100 million-plus sites this year, industrial activity from traditional manufacturing activity to industrial market as institutional investors have moved which show the strength of the Queensland industrial $102.5m construction, transport, logistics and distribution have also to purchase the next wave of englobo sites and land market, led by Centuria's acquisition of the Arnotts facility Purchased by: Purchased From: contributed to an uplift in investment levels in the region. absorption continues. In this regard, a 23-hectare englobo in Virginia for $211.8 million. Charter Hall Queensland Treasury Corporation parcel was acquired by ISPT for $59.8 million in the largest Transaction volumes rose considerably throughout last In 2020, the industrial sector is expected to continue transaction of englobo land in Queensland in 2019. year. In this regard, over $1.4 billion changed hands in improving as the employment market is forecast to the industrial investment market for properties over Net face rents for prime grade assets are expected to strengthen due to the business investment recovery on the $5 million including completed and pending sales. This slightly increase in 2020 whilst rents for secondary back of solid population growth and monetary and fiscal figure contrasts with the more modest total of over $1.0 grade will remain flat. Prime and secondary yields are stimulus package. billion in 2018. also expected to tighten in every precinct in Brisbane. Another indication of the improvement of the investment Institutional investors played an active role in the market relate to the rise in prime capital values observed investment market as evidenced by their 89% market last year, up 7.9% to $1,874/sqm. However, incentives for share (by volume) in the over $10 million sales category prime and secondary grade assets are forecast to remain whereas private investors accounted for the remaining unchanged in 2020. total amount of sales. INDUSTRIAL INVESTMENT REVIEW | ANZ Introduction Key Findings Major Transaction Overview NZ Investment Market The Australian Industrial Property Difference Detailed Transaction List Team & Authors A CAPITAL MARKETS PUBLICATION | 14

Major Transaction Overview ADELAIDE The abolishment of stamp duty for commercial transactions continues to positively impact the Adelaide industrial market with several large investment sales recorded in the final quarter of 2019. Key MAJOR TRANSACTIONS

Port Adelaide Distribution Centre, Gillman Purchased for: $80m Purchased by: Purchased from: Quintessential Stockland

46-70 Grand Trunkway, Gillman Purchased for: $25.5m Purchased by: Purchased from: Investec Charter Hall TOTAL INVESTMENT VOLUMES IN 2019 2019 AVERAGE YIELDS 2019 ANNUAL RENT GROWTH AVERAGE CAPITAL VALUES

7.44% 9.13% 8.6% $1,410/sqm 21-41 Galway Avenue, Marleston PRIME SECONDARY $360m AVERAGE PRIME AND SECONDARY FOR PRIME GRADE ASSETS Purchased for: In 2019, industrial investment volumes measured $360 With the Adelaide market offering higher yields when 28 basis points in 2019 to average 9.13% and reflects a million and represents its highest annual total on record. compared to east coast industrial markets and an clear preference for prime stock, particularly fully leased $24.4m improved economic outlook due to investments in defence, assets with strong lease covenants. Purchased by: Purchased from: The strong result for 2019 largely stemmed from the sale mining, energy and infrastructure, institutional owners Centuria KKR of the Port Adelaide Distribution Centre at Gillman which Investment demand is expected to remain strong over the have increased their presence in the Adelaide market. was acquired by Quintessential Equity for $80 million. coming year, with rate cuts and increased capital chasing Institutional owners have accounted for 70% of sales Providing a total NLA of approximately 167,500 sqm yield improving the investment outlook. However, demand volumes in 2019, compared to 60% in 2018. across 12 freestanding buildings, the asset was sold on a is expected to remain two tired with prime assets to yield of 10.85% from Stockland. Elsewhere, Charter Hall This renewed interest has resulted in high levels of yield remain highly sought after. purchased the GMH site at Gepps Cross for $35.1 million compression with prime yields in 2019 tightening by 59 while the Centuria Industrial REIT acquired the Arnotts basis points to average 7.44% and represents the highest facility at Marleston for $24.4 million as part of a portfolio level of firming of all capital cities. Whilst still strong, yield of two assets with the other located in Brisbane. compression in the secondary market totalled INDUSTRIAL INVESTMENT REVIEW | ANZ Introduction Key Findings Major Transaction Overview NZ Investment Market The Australian Industrial Property Difference Detailed Transaction List Team & Authors A CAPITAL MARKETS PUBLICATION | 15

Major Transaction Overview PERTH After a positive start to the 2019 calendar year, investment activity within the Perth industrial market was more subdued in the second half of 2019. Over the year, industrial investment volumes measured $167 million across 13 sales. Key MAJOR TRANSACTIONS

103 Welshpool Road, Welshpool Purchased for: $26.5m Purchased by: Purchased from: Investec Charter Hall

58 Boom Street, Gnangara Purchased for: $19.9m Purchased by: Purchased from: Lendlease Linc Properties TOTAL INVESTMENT VOLUMES IN 2019 2019 AVERAGE YIELDS 2019 ANNUAL RENT GROWTH AVERAGE CAPITAL VALUES

6.90% 7.97% 1.1% $1,147/sqm 16-18 Baile Road, Canning Vale PRIME SECONDARY $167m AVERAGE PRIME AND SECONDARY FOR PRIME GRADE ASSETS Purchased for: Modern industrial facilities that are well leased and well Perth’s comparatively smaller industrial market remains 2019. Alternatively, yields in the secondary market range located with strong cash flows are assets that continue dominated by local high net worth individuals; however, between 7.25% and 8.50% with 31 basis points of firming $18.1m to be sought by investors, despite challenges in the institutional interest is increasing given the upside being registered in 2019. The stronger rate of firming in Purchased by: Purchased from: leasing market. opportunities. Offshore investment has been limited when the secondary market can be attributed to opportunistic Centuria Benchmark Properties compared to the east coast capital cities with major foreign investors seeking value add opportunities. The low investment volumes for 2019 can be attributed to purchases in recent years stemming from national portfolio the institutional-grade segment which was relatively low, These yields, in comparison to bonds and yields in other acquisitions with combined assets from several cities, with only seven assets greater than $10 million changing Australian cities, remain attractive to investors and as rather than individual asset acquisitions. hands in 2019. The largest sale in 2019 was 103 Welshpool a result, Colliers maintains a projection of further yield Road, Welshpool which sold as part of a portfolio to While rents and value deterioration has largely impacted compression in 2020. Investec Australia Property Fund from the Charter Hall the smaller end of the market, capital values of larger Prime Industrial Fund. The price attributable to this asset investment stock, particularly institutional-grade assets, $26.5 million and represents a capital value of $5,246/sqm. continued to be assisted by yield compression during 2019. Generally, prime yields in Perth range between 6.25% and 7.50% with compression of 20 basis points recorded in INDUSTRIAL INVESTMENT REVIEW | ANZ Introduction Key Findings Major Transaction Overview NZ Investment Market The Australian Industrial Property Difference Detailed Transaction List Team & Authors A CAPITAL MARKETS PUBLICATION | 16

New Zealand Sector Overview GLOBALLY, MANY FAVOUR THE DEFENSIVE CHARACTERISTICS AND POSITIVE ASPECTS OF THE INDUSTRIAL SECTOR, AND NEW ZEALAND IS NO DIFFERENT.

INDUSTRIAL SECTOR ACCOUNTS FOR 1/5 OF Why investing in NZ NEW ZEALANDS

MAKES SENSE NZD from an offshore perspective: $300bn Economy At the heart of the industrial sector, goods-producing industries such as manufacturing and construction now account for around one-fifth of New Zealand’s NZD $300 billion economy, according to Statistics New Zealand. However, this is boosted by other services such as transport, warehousing and postal services, an industry showing another year of growth. Additional depth comes from rising public sector spend with the Government’s recent NZD$12 billion infrastructure package expected to provide a significant boost to industrial fundamentals over coming years. From a sales perspective, the industrial sector accounts for In another joint effort, but still under Overseas Investment Office A BENIGN TAX POSITIVE NET approximately 50% of all commercial and industrial sales activity consideration, Stride Property Group, one of New Zealand’s annually in New Zealand and just under 40% of the total value. The largest property companies launched a joint venture with a group STRUCTURE MIGRATION variance in percentages reflects the typically lower value size of the of international institutional investors, through a special purpose and limited property and demographic profiles industrial market and the higher turnover represents both investors vehicle, and advised by J.P. Morgan Asset Management (JPMAM). associated taxes: and owner-occupiers. Stride will contribute 12 properties with JPMAM initially contributing $70 million with a commitment to contribute another $155 million of While activity has been strong in the sub-NZD$5 million market, equity in the first two years for future acquisitions and developments. 2019 has also been a stellar year for high-value industrial property LIMITED CAPITAL GAINS TAX This indicates funding for an additional $190 million will be provided transactions in New Zealand. over the short term, potentially taking the portfolio to approximately NO STAMP DUTY OR CONVEYANCE DUTY One standout transaction was Visy’s manufacturing and distribution NZD$550 million in value. facility in Hamilton which sold to a private local investor for more While these two standout deals highlight the growing depth of the Supportive investment for foreign and local ownership than NZD$70 million. There was significant interest, a high number sector and commitment for additional purchasing from listed and of bidders and a strong yield that has arguably resulted in a offshore funds, industrial properties have also proven popular with recalibration of the industrial market, especially in main centres and Favourable current debt to yield spreads syndication companies as well. A review of the types of purchasers the NZD$15-35 million price bracket. seeking industrial properties NZD$20 million and above shows Transparent real estate sector: indefensibility of title Further, rising rents, limited incentives and pent-up investor sizeable growth in this space with Augusta and PMG Property in demand are driving average prime yields down, now typically particular. Goodman Property trust has also been active. ranging between 5.0% and 6.5% in Auckland, but some are below Favourable long-term economic indicators According to responses to the latest Colliers International 5%. Purchaser interest is growing for well-positioned, add-value Commercial Property Investor Confidence survey, there should be secondary premises as well. Solid, long-term total returns with relatively low volatility another solid year of activity in the industrial sector ahead. A net Another industrial sale for more than $70 million that concluded positive 46% (optimists minus pessimists) of respondents expect A stable political regulatory environment in 2019 was the purchase by LOGOS and AustralianSuper of the investment conditions to improve over the next 12 months. This is 14 hectares of industrial land at 11 Puaki Drive in Wiri, Manukau one of the highest results in the past 10 years. Auckland. LOGOS bought 10 ha of neighbouring land in mid-2018. Company announcements suggest a $500 million prime logistics estate will be created, offering 120,000 sqm of industrial space. INDUSTRIAL INVESTMENT REVIEW | ANZ Introduction Key Findings Major Transaction Overview NZ Investment Market The Australian Industrial Property Difference Detailed Transaction List Team & Authors A CAPITAL MARKETS PUBLICATION | 17

Feature Thought Leadership INDUSTRIAL – COMING TO A RETAIL CENTRE NEAR YOU?

Driven by changing consumer preferences and a challenging brick-and-mortar retail environment, industrial occupiers are increasingly seeking infill locations to solve their last-mile logistics function.

As a result, the conversion of retail centres for industrial use is likely to gather momentum in Australia, mirroring the experience of the US. While this trend is yet to occur in Australia, it follows Dexus’ recent purchase of the Homemaker Prospect Large Format Centre in Sydney with their intention to convert it to industrial over the short to medium term. Once complete, this would be the first of its kind in Australia and may represent a catalyst for further conversions going forward as industrial groups look to grow their funds under management in a period of diminished asset availability for sale.

Demand for the conversion of retail space to industrial is being aided by fundamentals within each industry. On one hand, demand for industrial space across Australia remains robust, underpinned by e-commerce and logistics providers off the back of significant growth in online retail which has increased demand for the delivery of goods. Alternatively, the retail sector is experiencing some structural changes while traditional retailers continue to embrace the omnichannel phenomenon which has had positive flow on effects to the industrial sector.

The repurposing of retail centres has been an apparent trend in the US for almost five years with Amazon being the pioneer in this space. Since 2016, it is estimated that nearly 800,000 sqm of retail space has been converted for industrial use, providing over one million sqm of industrial floorspace in tightly held infill locations. Randall Park Mall, located in Ohio was once the world’s largest shopping centre, however, it was repurposed in 2019 into an 80,000 sqm Amazon fulfilment centre. Whilst the Randall Park Mall was demolished, elsewhere in the US, existing retail centres are being retrofitted for industrial use including a former Toys ‘R’ Us store in Milwaukee now being used for a remanufacturer of car parts while several Sam’s Club stores are being used as distribution centres.

SINCE 2016 IT'S ESTIMATED THAT 800,000sqm OF RETAIL SPACE HAS BEEN CONVERTED FOR INDUSTRIAL USE IN THE UNITED STATES INDUSTRIAL INVESTMENT REVIEW | ANZ Introduction Key Findings Major Transaction Overview NZ Investment Market The Australian Industrial Property Difference Detailed Transaction List Team & Authors A CAPITAL MARKETS PUBLICATION | 18

Feature Thought Leadership THE CASE FOR AUSTRALIA

AUSTRALIAN CONSUMER DEMAND FOR NEXT DAY DELIVERY MAIN CAUSES FOR THIS DISRUPTION: The Australian retail sector continues to navigate through a disruptive period. Traditional models of retailing no longer meet consumer expectations and retailers are being urged to make changes to GROWING BY their strategies. While brick-and-mortar stores remain an essential part of the retail landscape, online retail continues to gain market share and as a result the conversion of retail space is expected to 31.7% gather momentum as institutions increasingly seek opportunities outside of the box to grow their funds Traditional models of retailing are under management. no longer meeting Highlighted by several recent capital raisings including ability to provide scale in suitable locations. In addition, the centres as opposed to on the periphery of the city would CONSUMER the Charter Hall Prime Industrial Fund’s $725 million costs of conversion are significantly lower for large format support the flexibility required for last mile delivery in raising, institutions are increasing their asset allocation centres as they are typically more adaptable for industrial the local market. EXPECTATIONS towards industrial property and as a result, will look at use as they are of a compatible height, provide doors and Perhaps the biggest hurdle to this trend taking off in alternative strategies to retain and attract tenants within docks and have adequate car parking provisions. Similarly, Australia is the approval process. While in the bulk of cases and to their portfolio. Alternative strategies to grow funds the costs for demolition are lower, making them more warehouse and distribution centres are permissible under under management have been further exacerbated by feasible for industrial development. the zoning applicable to large format centres, a separate fewer assets being brought to market with just 220 In the case of the Homemaker Prospect Large Format development application is likely required which would industrial assets trading in 2019, well below the 252 Centre, the site provides a total area of 65,500 sqm within result in a community consultation process. Given the recorded in 2018. LACK OF LAND a centrally located precinct with easy access to the major likelihood of increased truck volumes and earlier and later in middle and inner ring Given the lack of available land in middle and inner ring road networks of the Great Western Highway and M4 opening times, this is likely to generate some angst among locations locations, industrial groups in Australia are likely to Motorway. Once converted to industrial, the site could residents and businesses. follow the US and look to secure retail centres which provide approximately 35,000 sqm of warehouse space Going forward, each site would need to be assessed on can be reused for industrial space. Looking at Sydney, and is likely to generate solid demand from logistics users its own merits to determine if a conversion is feasible and for example, the industrial vacancy rate in inner ring as the surrounding industrial vacancy rate is circa 3.5%. possible, taking into consideration a number of factors locations is currently sub 4%. However, these areas have The catalyst for this trend becoming more apparent in including planning parameters, proximity to key arterial been subject to heightened tenant demand, given their Australia will be the continued growth in online retail and roads, site and centre configuration, adaptive reuse immediacy to the surrounding population. CONTINUED retailers desire to satisfy consumer requirements with opportunities (or whether the centre needs to be From a logistics perspective, the benefits of positioning regards to delivery times. Given large format centres demolished) and construction costs. Location will be the GROWTH products close to demand can translate into significant are typically located in prime infill locations with good most significant factor in groups assessing whether the in online retail and retailers savings in last-mile transportation costs usually accounting proximity to major road networks and surrounding a large opportunity is feasible as this will underpin tenant demand desire to satisfy consumer for the largest portion of overall supply chain cost. For population, they are well suited for use as a distribution for industrial use. requirements companies, being close to customers represents greater centre. Online shoppers increasingly expect faster delivery Despite growing in excess of 30% per annum in recent responsiveness and increased service level, which is the times with next day deliveries growing by 31.7% over years, online retail’s share of the total retail expenditure aim of a customer centric offering. The benefit of retail the past year and as a result, retailers are responding pool in Australia remains minute, only representing conversion for industrial owners and developers is that through advancements to their supply chains to gain a 6.6% of total sales. With the UK and parts of Asia having they receive a holding income while development and competitive edge. penetration rates above 20%, the scope for further growth conversion plans are made for the site, which is a major Demand for distribution centres in infill locations is being in Australia is significant and will only increase the demand benefit over buying raw land for development. driven by the need to reduce transport costs which for well-located industrial space to assist online retailers in Unlike the US, demand for retail centres for conversion is can account for up to 50% of the overall supply chain satisfying consumer needs of quicker delivery times. The likely to stem from large format centres rather than higher costs. For the bulk of online and omnichannel retailers, conversion of retail space, therefore, represents a viable density shopping centres given their low site coverage and having smaller distribution centres located closer to city and suitable way to achieve this. INDUSTRIAL INVESTMENT REVIEW | ANZ Introduction Key Findings Major Transaction Overview NZ Investment Market The Australian Industrial Property Difference Detailed Transaction List Team & Authors A CAPITAL MARKETS PUBLICATION | 19

Investment Outlook FUNDAMENTALS REMAIN FAVOURABLE

Economic conditions are expected to improve GDP Forecast Growth Rate 2.0% by Country 2019‑2024 OECD

Australia’s political and economic STABILITY AND DEFENSIVE 2.7% 1.8% 0.6% 1.4% nature of industrial property will remain key lures for offshore groups AUSTRALIA UNITED STATES JAPAN EUROZONE

Fundamentals remain favourable heading into 2020 for the Australian industrial property market, buoyed by a significant pipeline of transport infrastructure, high levels of population growth and continued demand from the e-commerce sector. More broadly, economic conditions are expected to improve and as 1.2% 5.6% 6.8% 2.4% a result there will be positive flow on effects to the industrial market. UNITED KINGDOM CHINA INDIA NEW ZEALAND Buyer demand for industrial property in Australia is cashing out to institutions. Offshore groups are expected to expected to accelerate in 2020, driven by recent capital remain active, particularly from Asia and Europe, however, Source: Deloitte Access Economics raisings and institutions increasingly reweighting their focussed on strategic partnerships and joint ventures as asset allocation towards industrial property. However, they look to capitalise on local market expertise. Despite buying opportunities are expected to remain scarce as global headwinds, Australia’s political and economic institutions increasingly choose to hold onto their assets stability and the defensive nature of industrial property will and capitalise on a period of solid capital appreciation remain key lures for offshore groups. Population Growth Forecast by and rental growth. Against a backdrop of limited buying The biggest challenge for groups in 2020 will be achieving Country/Region 2019‑2024 opportunities, we expect institutions will increasingly seek scale and as a result, portfolios will become increasingly opportunities outside of the box to grow their funds under favoured in 2020 and will attract a premium as they offer 2.0 management and will include alternative strategies such both scale and diversity by geography and tenant mix. 1.6% as sale and leaseback, asset swaps, alternative use site Australia acquisitions, land development, strategic partnerships and The long-standing reduced cost of debt and the current 1.5 1.3% India joint ventures. low levels of the Australian bond yield are forecast to 1.0% continue to drive further yield compression into 2020, Given the significant weight of capital seeking to enter the World albeit under the rate recorded over the past 12 months. 1.0 sector, we expect that industrial assets brought to market 0.7% While industrial yields are currently at record low levels, Hong Kong in 2020 will continue to be met with strong interest from 0.5% the average spread between industrial property yields a variety of buyer types, headlined by local institutions off United States 0.4% and 10-year government bond yields have increased to 0.5 OECD 0.3% the back of recent capital raisings by REITs and unlisted 0.2% Advanced their highest level since early 2013 with a current spread China 0.1% Economies funds, many of which were oversubscribed. Lower interest Eurozone -0.4% of 445 basis points. Outside of financial market shocks, Japan rates and sustained capital appreciation will encourage Australian industrial assets will maintain favour with 0.0 private investors to become more active in 2020, many investors in 2020. of which have sat on the sidelines in recent years after -0.5

Source: IMF INDUSTRIAL INVESTMENT REVIEW | ANZ Introduction Key Findings Major Transaction Overview NZ Investment Market The Australian Industrial Property Difference Detailed Transaction List Team & Authors A CAPITAL MARKETS PUBLICATION | 20

Valuation Outlook INDUSTRIAL AND LOGISTICS CONTINUES TO BE THE HOT TICKET ITEM

We have continued to see downward pressure on investment hurdles throughout 2019… 326 AND 340 THYNNE ROAD

MORNINGSIDE, QLD

Sale Price: $41m Total Size: 16,979sqm Vendor: Private Client Purchaser: Private Client 25 to 50 Basis points Sold by: Colliers International TIGHTENING ACROSS PRIME INDUSTRIAL YIELDS IS ANTICIPATED OVER THE NEXT 12 MONTHS

The industrial and logistics sector continues to be the hot ticket item, with strong sentiment very much the result of three key attributes; integration, innovation and adaptability. This has become more apparent in recent years with e-commerce demand and the development of a complex supply chain that can fulfil this demand. As this sector continues to grow so too will the positive spill over effects on the industrial market. That being said, e-commerce sales growth does not translate into a one-for-one increase in industrial space, however it will certainly be a contributing factor in pushing demand for industrial space in Australia. Throughout 2019 we witnessed continued yield We are now seeing a “portfolio premium” being achieved compression and rental growth across core markets along as institutional owners seek out scale of both land and the eastern seaboard of Australia, and this sentiment completed product. is expected to continue well into 2020 with continued From a valuation and investment perspective we have supply constraints creating demand for new stock. This continued to see downward pressure on investment is particularly evident in Sydney’s outer west and south- hurdles throughout 2019. This has resulted in a stronger west precincts, as well as in Melbourne’s south-east and focus on valuation methodologies, and the integrity of western precincts, whereby both offshore and domestics inputs and assumptions within the Discounted Cash Flow REIT’s have been very active. analysis (DCF), with a more pertinent focus from investors Many of the major institutional owners have reported some over sustainable returns throughout the chosen investment of the highest occupancy rates in years, with strong take- horizon, terminal values and terminal capitalisation rates. up levels and reduced vacancy. This is also evident for the Looking ahead, we envisage similar market sentiment major owner’s speculative development pipeline where over the next 12 months and anticipate a further 25 to they are seeing similar trends. The boost in speculative 50 basis point tightening across prime industrial yields. development appears to be pushed along by the transport The low interest rate environment, yield spread to bonds, and logistics sector which accounted for approximately solid capital inflows nationally, healthy depth of market 60% of new take-up over the past three years and has participants both locally and internationally, record been further driven by demand from logistics occupiers infrastructure spending and a rising e-commerce sector, trying to fulfil their mandates for 3PL contract space. THE TRANSPORT AND LOGISTICS SECTOR ACCOUNTS FOR will be integral in maintaining positive market sentiment. Furthermore, the current sentiment for large industrial Finally, it is the ability to adapt to the ever-changing needs OF NEW TAKE-UP OVER THE PAST land holdings is still at an historic high, with a strong of its operators, occupiers and the consumers that will 60% THREE YEARS appetite for scale. Once upon a time there was a discount continue to drive the industrial sector forward. warranted for such scale, today it is the opposite. INDUSTRIAL INVESTMENT REVIEW | ANZ Introduction Key Findings Major Transaction Overview NZ Investment Market The Australian Industrial Property Difference Detailed Transaction List Team & Authors A CAPITAL MARKETS PUBLICATION | 21

Real Estate Management Outlook TAILORING THE MANAGEMENT APPROACH TO AN INVESTOR’S NEEDS

Our risk and compliance Industrial as an asset class has many types of ownership structures from private clients through to syndicators, REIT’s and asset management groups CYBER SECURITY approach will be significantly funded by overseas investors. Each of these groups have differing key With the advent of hi-tech robotics being installed and operating in the latest more tailored in 2020 priorities that drive the day to day ownership and how they report on their generation of logistic developments, protection of associated control systems properties. For example, private clients require their property manager to is essential. We are working with our global cyber security partners Blackpoint, to advise our owners and tenants of the actions required to protect these meet their risk and compliance requirements, while also carefully handling critical installations from cyber attacks, avoiding downstream disruption to expenditure and keeping their tenant happy. Whereas many of our overseas distribution networks. funds have a greater focus on WHS reporting and internal process audits. Tailoring and packaging up these key property management elements in a structured way SOME OTHER TRENDS WE SEE AHEAD FOR 2020 ARE: that is customised for each client’s ownership structure is a requirement we only see We're positioning as growing. Our Real Estate Management (REM) industrial leadership team sees this as Technology enhancing property and facilities management capabilities ourselves at the an important aspect to get right for 2020, providing a bespoke service based entirely on FOREFRONT particular client’s portfolio needs. Drone inspections of roofs in properties (outside of CBD areas or near airports) In 2019 we saw annual Property Risk Assessments (PRAs) become a common component of Health, Safety and Digitalisation of work orders and integration/connectivity of facilities systems Environment of the ongoing Industrial REM program approach for clients, regardless of whether they were large institutional investors with inhouse management expertise or smaller individual investors. PRAs are an invaluable tool for recognising and actioning identified risk. They Greater focus on energy efficiency initiatives are prepared by specifically contracted consultants to give an independent, formal platform for property and facilities managers, as well as the tenant and owner to discuss all the Expansion of solar panel installations risk and compliance issues on site annually and develop a program to address them over the coming year. Water efficiency measures

We tailor our property Our risk and compliance approach will be significantly more tailored in 2020. Positioning management in a way that is us at the forefront in the Health, Safety and Environment (HSE) arena is our recent appointment of Leanne Fredrickson into the role of HSE | Associate Director. Leanne is BESPOKE a leader in this field with over 20 years in the HSE discipline and will be instrumental in for each client minimising the risk profile of REM and our clients. She will focus on successful cultural change management that creates inspiring places of work in the area of health, safety and sustainable environmental practices. INDUSTRIAL INVESTMENT REVIEW | ANZ Introduction Key Findings Major Transaction Overview NZ Investment Market The Australian Industrial Property Difference Detailed Transaction List Team & Authors A CAPITAL MARKETS PUBLICATION | 22

Detailed Transaction List

Property Name Address Suburb State NLA Price Stake Sale Type Sale Date Purchaser Vendor Propertylink Portfolio Propertylink Portfolio Various Multiple - $723,000,000 100% Portfolio Sale Jan-19 ESR Propertylink Arnotts Warehouse 61 Huntingwood Drive Huntingwood NSW 63,000 $397,800,000 100% Investment Sale Dec-19 Charter Hall KKR Blackstone Cold Store Porfolio Various Various Various 91,035 $345,000,000 100% Portfolio Sale Dec-19 Emergent Cold Blackstone Arnotts Warehouse 46 Robinson Road East Virginia QLD 44,785 $211,800,000 100% Portfolio Sale Dec-19 Centuria Industrial REIT KKR Crestmead Distribution Centre 105-137 Magnesium Drive Crestmead QLD 89,254 $183,600,000 100% Investment Sale Jun-19 Charter Hall Blackstone Coles Cold Storage Distribution Centre 99 Sandstone Place Parkinson QLD 54,245 $134,200,000 50% Investment Sale Jun-19 DWS Frasers Logistics & Industrial Trust 57-89 Lockwood Road 57-89 Lockwood Road Erskine Park NSW 37,700 $107,000,000 100% Investment Sale May-19 GPT Group Private Brisbane City Council Bus Network 40 Schneider Road Eagle Farm QLD 4,430 $102,500,000 100% Investment Sale May-19 Charter Hall (CQE - 50% & CLW - 50%) Queensland Treasury Corporation 95 Greens Road 95 Greens Road Dandenong South VIC 73,435 $100,000,000 100% Sale Leaseback Nov-19 Charter Hall Crescent Capital Partners 1 Eucalyptus Place 1 Eucalyptus Place Eastern Creek NSW 36,404 $90,500,000 100% Portfolio Sale Mar-19 AMP (Swiss Re) Confidential 3-7 McPherson Street 3-7 McPherson Street Banksmeadow NSW 19,487 $86,500,000 100% Investment Sale Jul-19 Goodman Group Gazal Apparel Pty Limited 2-4 Harvey Road 2-4 Harvey Road Kings Park NSW 40,336 $81,285,000 100% Portfolio Sale Jul-19 LOGOS Confidential Port Adelaide Distribution Centre 25-91 Bedford Street Port Adelaide SA 167,500 $80,000,000 100% Investment Sale Nov-19 Quintessential Equity Stockland Macquarie Technology Park 40 Talavera Road Macquarie Park NSW 13,051 $70,000,000 100% Investment Sale May-19 LaSalle Investment Management Aqualand 8 Williamson Road 8 Williamson Road Ingleburn NSW 34,061 $66,300,000 100% Sale Leaseback Mar-19 Fife Capital Group CSR Limited FDM Warehousing Facility 2 Hanson Place Eastern Creek NSW 32,894 $65,500,000 100% Investment Sale Jun-19 Frasers Logistics & Industrial Trust (FLT) Undisclosed 127 Todd Road 127 Todd Road Port Melbourne VIC 25,744 $55,000,000 100% Investment Sale Apr-19 Blackstone The Herlad and Weekly Times Pty Ltd Tallo Ho Business Park 4 Wesley Court Burwood East VIC 10,000 $50,000,000 100% Investment Sale Aug-19 Wing Tai Holdings Wilfred Kong 247 King Street 247 King Street Mascot NSW 10,546 $48,000,000 100% Investment Sale Oct Leda Deloitte 30-68 Taras Avenue 30-68 Taras Avenue Altona North VIC 41,466 $48,000,000 100% Investment Sale Sep-19 Fife Capital Group Quatius Group 30-32 Bessemer Street 30-32 Bessemer Street Blacktown NSW 20,149 $41,500,000 100% Portfolio Sale May-19 GPT Group AMP Capital 182-198 Maidstone Street 182-198 Maidstone Street Altona VIC 37,906 $41,200,000 100% Investment Sale Apr-19 Cache Logistics Trust Abacus JV GAW Capital 326-340 Thynne Road 326-340 Thynne Road Morningside QLD 16,979 $41,000,000 100% Investment Sale Sep-19 Garda GJJ Nominees Pty Ltd 3 Maker Place 3 Maker Place Truganina VIC 31,092 $40,000,000 100% Investment Sale Sep-19 Growthpoint Properties Australia Frasers Property Australia 64 Biloela Street 64 Biloela Street Villawood NSW 23,304 $39,500,000 100% Portfolio Sale May-19 GPT Group AMP Capital Boardriders APAC HQ 209-217 Burleigh Connection Road Burleigh Heads QLD 14,937 $38,460,000 100% Sale Leaseback May-19 AIMS APAC REIT GSM Rocket Australia Pty Ltd 40-76 William Street 40-76 William Street Leichhardt NSW 10,060 $38,000,000 100% Investment Sale Oct-19 Kate Lewy Undisclosed 133 Vanessa Street 133 Vanessa Street Kingsgrove NSW 13,087 $37,000,000 100% Investment Sale Oct-19 Charter Hall Private 45 Waterway Drive 45 Waterway Drive Coomera QLD N/A $36,500,000 100% Vacant Possession Aug-19 BRP Australia Private Dickers Data's Distribution Centre 230-236 Captain Cook Drive Kurnell NSW 15,955 $36,000,000 100% Sale Leaseback Jul-19 EG Australian Core Enhanced Fund Dicker Data Lot 701 Port Wakefield Road Lot 701 Port Wakefield Road Gepps Cross SA 13,500 $35,147,500 100% Investment Sale Apr-19 Charter Hall Private 600 Main North Road 600 Main North Road Gepps Cross SA 19,176 $35,100,000 100% Investment Sale Apr-19 Charter Hall Aretzis Group Brooklyn Distribution Park 600-604 Geelong Road Brooklyn VIC 31,571 $35,000,000 100% Investment Sale Apr-19 Centennial Property Group GM Property Group Key Industrial Park 8-28 Hudson Court Keysborough VIC 25,762 $34,800,000 100% Investment Sale Jun-19 Frasers Logistics & Industrial Trust (FLT) Frasers Property Australia 3 Myer Place 3 Myer Place Rowville VIC 57,290 $34,500,000 100% Investment Sale Jun-19 Gibb Group Mcmillan Property No 1 Hume Industrial Estate 34-42 Sheppard Street Hume ACT 15,671 $34,000,000 100% Investment Sale Nov-19 Charter Hall (DIF4) Blackstone 29-33 Bourke Road 29-33 Bourke Road Alexandria NSW 1,541 $34,000,000 100% Investment Sale Jan-19 Loftex Skylife Bourke Pty Ltd Inghams 38 Cutrock Rd Lisarow NSW 15,649 $33,523,497 100% Portfolio Sale Dec-19 Charter Hall CorVal 102 Dunning Avenue 102 Dunning Avenue Rosebery NSW N/A $31,800,000 100% Investment Sale Jul-19 Lh & JC Investments Wilhemsen Investments 50 Eastern Creek Drive 50 Eastern Creek Drive Eastern Creek NSW 12,030 $31,000,000 100% Investment Sale Jun-19 Fife Capital Group Private 282-300 Hammond Road 282-300 Hammond Road Dandenong South VIC 20,154 $30,900,000 100% Sale Leaseback May-19 Charter Hall Greenacre Developments Spec 4 Endeavour Court Spec 4 Endeavour Court Dandenong South VIC 19,000 $30,020,000 100% Investment Sale May-19 Goodman Group GPT Group INDUSTRIAL INVESTMENT REVIEW | ANZ Introduction Key Findings Major Transaction Overview NZ Investment Market The Australian Industrial Property Difference Detailed Transaction List Team & Authors A CAPITAL MARKETS PUBLICATION | 23

Detailed Transaction List (continued)

Property Name Address Suburb State NLA Price Stake Sale Type Sale Date Purchaser Vendor 103 Melville Street 103 Melville Street Hobart TAS 6,374 $30,000,000 100% Investment Sale May-19 University of Tasmania Private Ray's Outdoor Altona 28-30 Marshall Court Altona VIC 20,200 $29,500,000 100% Investment Sale May-19 Charter Hall (DIF4) Wild Country Leisure Charter Hall Portfolio 16 Dawson Street East Arm NT 14,410 $29,000,000 100% Portfolio Sale Sep-19 Investec Australia Property Fund Charter Hall Prime Industrial Fund 57-101 Balham Road 57-101 Balham Road Archerfield QLD 24,461 $28,951,452 100% Investment Sale Nov-19 China Merchants Group ESR 7 Williamson Road 7 Williamson Road Ingleburn NSW 18,460 $28,175,000 100% Investment Sale Dec-19 Pipeclay Lawson Kimberly-Clark 58 Precinct Street 58 Precinct Street Parkinson QLD 13,096 $28,000,000 100% Sale Leaseback Dec-19 Charter Hall (DIF4) Beacon Property Company Pty Ltd Charter Hall Portfolio 103 Welshpool Road Welshpool WA 5,246 $26,500,000 100% Portfolio Sale Sep-19 Investec Australia Property Fund Charter Hall Prime Industrial Fund 1677 Beenleigh Road 1677 Beenleigh Road Underwood QLD 24,873 $26,000,000 100% Investment Sale May-19 Beenleigh Road Land Unit Trust Australia Postal Corporation 66 Christine Road 66 Christine Road Villawood NSW 19,265 $26,000,000 100% Portfolio Sale May-19 Blackstone (West Infill Sub Tc Pty Ltd) AonAri Property 649-655 Springvale Road 649-655 Springvale Road Mulgrave VIC 19,286 $26,000,000 100% Investment Sale Jun-19 Fife Capital Group Rinoldi Pasta 29-51 Wayne Goss Drive 29-51 Wayne Goss Drive Berrinba QLD 15,456 $25,500,000 100% Investment Sale Jun-19 Frasers Logistics & Industrial Trust (FLT) Frasers Property Charter Hall Portfolio 46-70 Grand Trunkway Gillman SA 31,589 $25,500,000 100% Portfolio Sale Sep-19 Investec Australia Property Fund Charter Hall Prime Industrial Fund 582-600 Somerville Road 582-600 Somerville Road Sunshine West VIC 18,352 $25,500,000 100% Investment Sale May-19 Undisclosed Goodman Group Arnotts Warehouse 23-41 Galway Avenue Marleston SA 23,593 $24,400,000 100% Portfolio Sale Dec-19 Centuria Industrial REIT KKR 159 Newton Road 159 Newton Road Wetherill Park NSW 12,655 $24,400,000 100% Investment Sale Jun-19 Aliro Lester Property Group 104 Vanessa Street 104 Vanessa Street Kingsgrove NSW 7,056 $24,000,000 100% Portfolio Sale May-19 GPT Group AMP Capital 4 Enterprise Street 4 Enterprise Street Wulkuraka QLD 5,167 $24,000,000 100% Investment Sale Apr-19 Undisclosed JRDM Pty Ltd Quiksilver Distribution and Logistics Facility 75-105 Corio Quay Road North Geelong VIC 21,772 $22,800,000 100% Investment Sale Jun-19 Centuria Industrial REIT Private 28-34 Orange Grove Road 28-34 Orange Grove Road Warwick Farm NSW 15,825 $22,000,000 100% Investment Sale Jun-19 Chan & Li International Chan & Li International 5-7 Leslie Road 5-7 Leslie Road Laverton North VIC 15,139 $21,000,000 100% Sale Leaseback Jul-19 Kordamentha Wingara AG Limited 5-17 Taminga Street 5-17 Taminga Street Regency Park SA 17,150 $20,500,000 100% Sale Leaseback Nov-19 Australiasian Property Investments (APIL Revolution Roofing Industrial Fund No. 1) 30 Loftus Road 30 Loftus Road Yennora NSW 8,052 $20,000,000 100% Portfolio Sale May-19 Blackstone AonAri Property 369 Gore Street 369 Gore Street Fitzroy VIC 13,317 $20,000,000 100% Investment Sale Jul-19 Pace Development Group Private 347 Lytton Road 347 Lytton Road Morningside QLD 13,317 $20,000,000 100% Investment Sale Jun-19 Private Watson & Sons 58 Boom Street 58 Boom Street Gnangara WA 12,190 $19,900,000 100% Investment Sale Jan-19 Lendlease Linc Properties 1-5 Lake Drive 1-5 Lake Drive Dingley Village VIC 17,431 $19,750,000 100% Investment Sale Oct-19 HB+B Property ESR Group 32-54 Kaurna Avenue 32-54 Kaurna Avenue Edinburgh SA 12,115 $19,500,000 100% Investment Sale Dec-19 Centuria Industrial REIT Private 680 Boundary Road 680 Boundary Road Richlands QLD 12,633 $19,500,000 100% Investment Sale Jun-19 Centuria Industrial REIT Private 40-54 Baxter Road 40-54 Baxter Rd Mascot NSW N/A $19,470,842 100% Investment Sale Oct-19 WellSmart Investors Manboom Pty Limited 101 Wilkins Road 101 Wilkins Road Wingfield SA 10,400 $19,421,190 100% Vacant Possession Oct-19 Boogie Blues Investments Danif Properties Pty Ltd 67-91 Nathan Road 67-91 Nathan Road Dandenong South VIC 13,057 $18,600,000 100% Sale Leaseback Jun-19 Charter Hall AL-KO International 15 Boterro Place 15 Boterro Place Truganina VIC 15,100 $18,400,000 100% Development Sep-19 Mapletree Logistics Trust Wooreddy Investments Cook Freeze Warehouse 60 Grindle Road Wacol QLD 8,971 $18,340,000 100% Investment Sale Aug-19 APN Industria REIT Undisclosed 16-18 Baile Road 16-18 Baile Road Canning Vale WA 11,068 $18,100,000 100% Investment Sale Feb-19 Centuria Property Funds No.2 Limited (CPF2L) Undisclosed 93 Francisco Street 93 Francisco Street Belmont WA 7,816 $18,000,000 100% Investment Sale Nov-19 Australian Development Corp Benmuni Pty Ltd 88 Mulgoa Road 88 Mulgoa Road Penrith NSW 2,530 $18,000,000 100% Investment Sale Mar-19 Black Cedar Investments Pty Ltd Dunlop 22 Narabang Way 22 Narabang Way Belrose NSW N/A $18,000,000 100% Investment Sale Nov-19 EG Funds Management Undisclosed 60 Belmont Street 60 Belmont Street Alexandria NSW 2,930 $18,000,000 100% Investment Sale Mar-19 MB Jet Pty Limited McCulla 39 Graystone Street 39 Graystone Street Tingalpa QLD 10,062 $17,600,000 100% Investment Sale Jun-19 Darveniza Group Gold Coast Ltd 88-96 Stubbs Street 88-96 Stubbs Street Kensington VIC 4,070 $17,500,000 100% Investment Sale Mar-19 Make Ventures Quattro Group 13B Church Avenue 13B Church Avenue Mascot NSW 1,174 $17,490,000 100% Investment Sale Jun-19 Iglu No. 211 Pty Ltd J & Lee Property Investment Group Pty Limited INDUSTRIAL INVESTMENT REVIEW | ANZ Introduction Key Findings Major Transaction Overview NZ Investment Market The Australian Industrial Property Difference Detailed Transaction List Team & Authors A CAPITAL MARKETS PUBLICATION | 24

Detailed Transaction List (continued)

Property Name Address Suburb State NLA Price Stake Sale Type Sale Date Purchaser Vendor 30-36 Grosvenor Street 30-36 Grosvenor Street Abbotsford VIC 3,600 $17,300,000 100% Investment Sale Feb-19 Southlink Grosvenor Samuel J Bram Pty Ltd 63-79 South Park Drive 63-79 South Park Drive Dandenong South VIC 13,963 $17,250,000 100% Investment Sale Mar-19 Enborne Frasers Logistics & Industrial Trust 46-68 Gosport Street 46-68 Gosport Street Hemmant QLD 12,552 $17,000,000 100% Investment Sale Jun-19 Centuria Industrial REIT Sentinel Property Group Don Kyatt Automobiles 172 Roden Street West Melbourne VIC 1,200 $17,000,000 100% Investment Sale Mar-19 Sentinel Property Group Oliver Hume 490-494 Nudgee Road 490-494 Nudgee Road Hendra QLD 17,253 $16,500,000 100% Investment Sale Nov-19 Private Heathly Funds Management 635 Macarthur Road 635 Macarthur Road Pinkenba QLD 8,200 $16,200,000 100% Investment Sale Aug-19 Northshore Corporation Stradbroke Rutile Pty Ltd 76-86 West Avenue 76-86 West Avenue Edinburgh SA 11,917 $14,900,000 100% Sale Leaseback Nov-19 Primewest Mastec Victoria Carpets 7-29 Gladstone Road Dandenong VIC 11,500 $14,750,000 100% Investment Sale Aug-19 Private Up Property 411 Freeman Road 411 Freeman Road Richlands QLD N/A $14,630,000 100% Investment Sale Mar-19 Metroll Industries Pty Ltd Metroll Queensland Pty Ltd Inghams 13-23 Rockford Rd Tahmoor NSW 8,287 $14,220,334 100% Portfolio Sale Dec-19 Charter Hall CorVal 250 Regency Road 250 Regency Road Regency Park SA 6,900 $14,025,000 100% Investment Sale Apr-19 2550 Regency Road Pty Ltd Footers Structural Timber 111 Stirling Highway 111 Stirling Highway Fremantle WA 9,058 $14,000,000 100% Investment Sale May-19 Undisclosed Undisclosed 35-37 Maxwell Road 35-37 Maxwell Road Pooraka SA 9,936 $13,600,000 100% Investment Sale Feb-19 Real Side Private 87-107 Fred Chaplin Circuit 87-107 Fred Chaplin Circuit Bells Creek QLD 7,933 $13,100,000 100% Investment Sale May-19 Undisclosed Minister for Economic Development Queensland Inghams 82 Tasman Hwy Ordford TAS 6,231 $12,756,135 100% Portfolio Sale Dec-19 Charter Hall CorVal 787 Boundary Road 787 Boundary Road Darra QLD 8,500 $12,500,000 100% Investment Sale Feb-19 Fife Capital Group MaxiTrans 19-29 Bosso Street 19-29 Bosso Street Paget QLD 3,610 $12,400,000 100% Investment Sale Nov-19 Undisclosed Private 11 Elysium Street 11 Elysium Street Carrara QLD 6,180 $12,050,000 100% Vacant Possession Nov-19 Trilogy Private 69 Peterkin Street 69 Peterkin Street Acacia Ridge QLD 7,412 $11,900,000 100% Portfolio Sale Jun-19 GARDA Capital Limited (GARDA) Undisclosed 52-64 Sheffield Road 52-64 Sheffield Road Welshpool WA 4,937 $11,600,000 100% Investment Sale Jul-19 Private Warrington Capital Partners Turin Place Turin Place Salisbury South SA 4,680 $11,250,000 100% Investment Sale Oct-19 Private Windor Pty Ltd 131 Quinns Hill Road East 131 Quinns Hill Road East Stapylton QLD 14,505 $11,250,000 100% Investment Sale Feb-19 Tradetools Pty Ltd Jobema Investments Pty Ltd 20-24 Hall Street 20-24 Hall Street Hawthorn East VIC 1,600 $11,200,000 100% Investment Sale Oct-19 Nick Politis David Ben-David 11 Alfred Road 11 Alfred Road Chipping Norton NSW 8,903 $10,750,000 100% Investment Sale Jan-19 Wiseway Logistics Pty Ltd Mammone 4 Forbes Close 4 Forbes Close Knoxfield VIC 7,011 $10,700,000 100% Investment Sale May-19 APN Industria REIT Private 1425 Boundary Road 1425 Boundary Road Wacol QLD 5,698 $10,600,000 100% Investment Sale Jun-19 Harmony Property Investments Makybe Pty Ltd 12-14 Thompsons Road 12-14 Thompsons Road Geelong VIC 13,223 $10,600,000 100% Investment Sale Jan-19 Undisclosed Undisclosed 1032 Beaudesert Road 1032 Beaudesert Road Coopers Plains QLD 8,513 $10,500,000 100% Vacant Possession Aug-19 Zupp Property Group Jonwen Financial Services Pty Ltd 42-56 Grand Junction Road 42-56 Grand Junction Road Kilburn SA 12,347 $10,400,000 100% Investment Sale Feb-19 Bipco Properties Pty ltd Interior Joinery & Furniture 8 Steel Street 8 Steel Street Blacktown NSW 7,962 $10,350,000 100% Vacant Possession Apr-19 WEM Properties Pty Ltd Nestle Australia Limited 575 Burwood Highway 575 Burwood Highway Knoxfield VIC 5,303 $10,300,000 100% Investment Sale Nov-19 Private Undisclosed 96-108 Greens Road 96-108 Greens Road Dandenong South VIC 6,591 $10,000,000 100% Investment Sale Sep-19 Penrite Holdings Pty Ltd Undisclosed 16 Derby Street 16 Derby Street Silverwater NSW 2,942 $10,000,000 100% Investment Sale Mar-19 Private Undisclosed INDUSTRIAL INVESTMENT REVIEW | ANZ Introduction Key Findings Major Transaction Overview NZ Investment Market The Australian Industrial Property Difference Detailed Transaction List Team & Authors A CAPITAL MARKETS PUBLICATION | 25

NZ Detailed Transaction List ($20.0 Million Plus)

Address Region Price Stake Sale Type Sale Date Purchaser Vendor 11 Puaki Drive, Wiri Manukau (LOGOS deal) Auckland $78,626,067.00 100% Investment Jun-19 LOGOS and AustralianSuper Fletcher Concrete and Infrastructure Limited 122 Ingram Road Hamilton $71,020,000.00 100% Investment Jul-19 Gasoline Properties Limited Private Investor 2-6 Monahan Rd (T&G Global) Auckland $65,000,000.00 100% Investment Sep-19 Goodman Property Trust Turners and Growers Global 39 - 49 Miami Parade Auckland $56,000,000.00 100% Investment Jul-19 Private Investor Ports of Auckland Limited 2 Mary Muller Drive Christchurch $53,758,095.00 100% Syndication May-19 Augusta Industrial Fund Castle Rock Properties Limited 3 Boundary Rd Auckland $41,150,000.00 100% Investment Mar-19 Catalina Bay No.1 Investments Limited Catalina Bay Holdings Limited Partnership Partnership 510 Mount Wellington Hwy Auckland $37,950,000.00 100% Syndication Jan-19 Augusta Industrial Fund Mt Wellington Nominees Limited 270 Neilson Street Auckland $37,000,000.00 100% Investment Apr-19 Sahara Limited Private Investor 152/114 Swanson Rd Auckland $36,360,000.00 100% Syndication Jan-19 Augusta Industrial Fund SCA Hygeinie 43 Seaview Road (The Ford Motor Company) Wellington $35,265,306.12 100% Investment /Syndication Sep-19 Pacific Property Fund Building Solutions 3/1 Selwood & 6-12 The Concourse Auckland $35,000,000.00 100% Investment Jun-19 Stride Property Limited Goodman Property Trust 340 Port Hills Road Christchurch $30,500,000.00 100% Syndication Mar-19 Desi Place Limited Partnership Hilton Haulage Limited Partnership 113 Elwood Road (Heinz Wattie) Auckland $29,100,000.00 100% Syndication Dec-19 Erskine + Owen Asset Plus NZ Limited 42, 60 & 70 Favona Rd (T&G Global) Auckland $29,000,000.00 100% Investment Sep-19 Goodman Property Trust Turners and Growers Global 1 Depot Street Christchurch $28,480,000.00 100% Investment May-19 Private Investor Calder Stewart Development Limited 20 Puaki Drive Auckland $27,920,000.00 100% Investment Mar-19 GPC Asia Pacific Limited Calder Stewart Development Limited 26 Sharpe Road Hamilton $27,765,521.00 100% Investment Nov-19 PMG Capital Fund Limited Raynes Road Warehouse Limited Partnership 21 Beach Road Auckland $25,650,000.00 100% Syndication Sep-19 Augusta Industrial Fund 21 Beach Road Otahuhu Limited 120 Hutt Park Road Wellington $25,650,000.00 100% Investment /Syndication Sep-19 Pacific Property Fund Building Solutions 27-29 Neales Road, East Tamaki, Auckalnd Auckland $25,223,809.00 100% Syndication Oct-19 Augusta Industrial Fund GEK Property Nominees 12 Brick Street / 83 Mihini Road Auckland $22,360,000.00 100% Syndication May-19 Augusta Industrial Fund Brick Street Nominees Limited 8 Parkhead Pl / (265 Albany Highway) Auckland $20,100,000.00 100% Syndication Jan-19 Augusta Industrial Fund Albany Highway Nominees Limited

Source: CoreLogic, Colliers International Research INDUSTRIAL INVESTMENT REVIEW | ANZ Introduction Key Findings Major Transaction Overview NZ Investment Market The Australian Industrial Property Difference Detailed Transaction List Team & Authors A CAPITAL MARKETS PUBLICATION | 26

Authors & Team

AUTHORS

GAVIN BISHOP SEAN THOMSON LUKE CRAWFORD Head of Capital Markets | Industrial Associate Director | Industrial Associate Director | Research Sydney National Sydney NSW Sydney NSW +61 401 146 051 +61 418 943 452 +61 421 985 784

DANIEL SHAFFERMAN SIMON ANDREATTA CHRIS DIBBLE National Director | Industrial REM Head of Industrial | Valuations & Director | Research & Communications Brisbane QLD Advisory Services New Zealand +61 406 499 801 Sydney NSW +64 21 242 9447 +61 414 560 401 INDUSTRIAL INVESTMENT REVIEW | ANZ Introduction Key Findings Major Transaction Overview NZ Investment Market The Australian Industrial Property Difference Detailed Transaction List Team & Authors A CAPITAL MARKETS PUBLICATION | 27

Authors & Team

TEAM

GAVIN BISHOP MALCOM TYSON SEAN THOMSON ALYSIA REILLY Head of Capital Markets | Industrial Managing Director | Industrial Associate Director | Industrial Director | Industrial Sydney National Sydney National Sydney NSW Melbourne VIC +61 401 146 051 +61 412 248 883 +61 418 943 452 +61 487 576 881

SIMON BEIRNE NICK SAUNDERS PAUL TIERNEY GREG O’MEARA State Chief Executive, National Director | Industrial National Director | Industrial Director | Industrial Agency National Director | Industrial Melbourne VIC Adelaide SA Perth WA Brisbane QLD +61 407 542 210 +61 401 145 028 +61 434 659 842 +61 413 765 098