Aviva Investors makes A$100m Australian logistics foray

The global asset management business has kick-started a A$500m Australia logistics joint venture investment vehicle with listed real estate company Mirvac with the purchase of one of country’s largest industrial developments.

Aviva Investors is to increase its exposure to Australian logistics real estate after agreeing the A$97.4 million (€70.2 million; $94.7 million) acquisition of a 50 percent stake in the Hoxton Distribution Park in Sydney, one of the country’s largest industrial developments.

The global asset management business of London-based insurance giant Aviva, has formed a joint venture with Australian Securities Exchange-listed property company Mirvac Group through which it will acquire the stake and is expected to acquire a further four assets for another approximately A$100 million.

Aviva Investors is investing via a bespoke investment vehicle called the Aviva Australian Logistics Property Trust (AIALT) which contains capital from various core strategy driven institutional investors including pension funds and insurance companies as well as capital from Aviva itself. Aviva plans to invest up to A$400 million into the Australian logistics sector through AIALT with capital committed by investors on a deal by deal basis.

Daniel McDonald, head of real estate fund management for Aviva Investors in Asia Pacific, told PERE the vehicle is expected to return a core-plus IRR of about 13 percent over a five year period although it does not have a predetermined lifespan meaning investments can be held indefinitely.

“We ran our initial numbers over a five year period as we’re seeing most investors looking at three or five year investment periods. This is us aligning our strategy to our investors’ needs.”

Speaking about Australian logistics properties, he said: “It’s an asset class that we don’t have exposure yet in Australia and it’s a low debt strategy so it’s also very much aligned with our clients needs.”

The investment in the Hoxton Distribution Park is conditional on approval by Australia’s Foreign Investment Review Board and the commencement of leases to the park’s tenants, Dick Smith Electrical and Woolworths, both of which are expected to take occupation when the park is completed in March 2012. Once completed, Mirvac will manage the properties on behalf of the joint venture.

Aviva Investors currently manages more than £269 billion of assets across its various funds. The firm has 22 offices in 16 countries.