ASX-listed beverage company Coca-Cola Amatil is selling a major manufacturing property in Brisbane that could fetch more than $150 million and help cover the costs of the company's capital expenditure plans.
The company, which flagged about $50 million of restructuring costs and $75 million of capex for 2017, has previously said it would attempt to offset costs through the potential sale and leaseback of properties.
The major capex project is a $75 million fully automated warehouse on the site it is now planning to sell and leaseback for 20 years. Real estate agents lined up last week to pitch on the sale of the property at 220 to 260 Orchard Road, Richlands, which includes a 20-hectare site. A deal could see a record yield be broken for Brisbane industrial property with some expecting a yield of the low 5 per cent range.
Coca-Cola Amatil is also leasing an asset owned by an Australian Unity fund at 278 Orchard Road, Richlands, and plans to vacate that building in about two years in favour of a brand new expansion which could add a further $20-$30 million to an overall deal that may be transacted through one of the shortlisted real estate agency groups.
The company, headed by Alison Watkins, has declined to comment on its plans for the asset. The company is expected to make a final decision in coming weeks.
Separate division
A plan to create a separate property division to hold hundreds of millions of dollars of property, including its warehouses, was signalled last year. The businesses that use these properties are to be charged rent, with the division reporting into the corporate, food and services segment of the company.
The industrial asset will be the largest to come to the market this year following a very busy 2016 with major portfolios of industrial properties such as JP Morgan's being sold while the world's largest private equity group, Blackstone, cemented its presence by buying up a $640 million portfolio of industrial properties from Goodman Group.
With such a blue-chip brand as Coca-Cola Amatil offering itself as a tenant for 20 years, it is likely that there will be plenty of competition for the asset among the groups looking to buy in. Whilst there has been strong offshore interest from groups such as Mapletree, Cache and Ascendas the local groups such as Charter Hall, Goodman Group and Frasers are all likely to bid competitively, especially for the development component of the deal.
Sale and leasebacks are expected to be a growing part of the industrial property market this year as companies seek to rationalise their operations.
However, such sale and leasebacks can be troublesome. Market sources have said that Coca-Cola Amatil's sale and leaseback deal in Eastern Creek, Sydney, has created some difficult financial constraints.
