PGIM Real Estate partners up on $145m deal for logistics asset

PGIM Real Estate has partnered with real estate development and investment firm Cadence Property Group to acquire the St Mary's Intermodal Terminal.

The partnership marks the first time PGIM Real Estate, which has US$206 billion in assets, making it the world's third-largest real estate investment manager, has teamed up with Cadence.

The property, which will be acquired from Pacific National for $145 million, spans 157,669 square metres of land with a gross lettable area of 95,940 square metres. It also includes a 1.5-kilometre rail spur and a planned 20,000 square metre hardstand expansion.

In conjunction with the acquisition, the two firms have entered a new 20-year lease with the existing tenant ACFS Port Logistics, which will "secure-long term income" and provide "a strong foundation for future value creation," they said.

PGIM Real Estate managing director and head of Australia Steve Bulloch said the opportunity to acquire a "unique asset", with strong real estate and infrastructure characteristics, was attractive, and that the ability to substantially de-risk it by having a long-term tenant in place prior to acquisition added to the appeal.

"PGIM Real Estate has been very active this year across a range of real estate asset classes, but we have also been very selective in pursuing strategies with a strong underlying thematic and assets that will be well positioned for the heightened market volatility in the near term. This acquisition is another good example of that," he said.

Cadence Property Group chief executive Charlie Buxton, meanwhile, said this was a unique infrastructure-aligned asset that presented an opportunity to work with the sitting tenant to expand the asset and create value for all parties.

"Managing the purchase, lease and planned expansion works simultaneously required creativity and a high level of execution - both of which play to the strengths of our team and integrated business model. We're also delighted to welcome PGIM Real Estate as a new partner and look forward to building on this relationship," Buxton said.

The two firms touted that the Intermodal Terminal is a "rare, strategically located asset" with direct freight rail access to Port Botany.

They said it offers a sustainable alternative to congested road freight routes, with the potential to eliminate up to 3000 truck movements per day.

Separately, global asset manager Nuveen has provided a $205 million senior loan to Hale, Warburg Pincus, and Oxford Properties Group to support the development of a multi-story logistics facility at Rosehill, Sydney.

On completion, the building will have a total net lettable area of 49,173 square metres.

Construction has commenced with completion slated for mid-2026.

Nuveen senior director for Australian and New Zealand David Chan said the Sydney logistics market remains "very tight" and this is even more pronounced within inner city locations due to strong tenant demand and low competing supply.

"The building, once complete, will be a premium multi-storey logistic estate in a land-constrained logistics market with limited competing product," he said.