Freehold industrial units expected to be magnet for family trusts

The units at 525 Great South Rd are both secured, well-positioned assets. Photo / Supplied

Two new freehold units leased to two quality international brand name tenants in one building within the Penrose industrial hub are being sold by an owner seeking to "redeploy capital".

Units 1A and 1B at 525 Great South Rd, Penrose are being marketed by Colliers International brokers Andrew Hooper, Ben Herlihy and Hamish West and will be sold by deadline private treaty, closing at 4pm Thursday, on May 6 at Colliers' Highbrook office. "The sale represents the chance to buy a high-quality investment property in an established industrial location," Hooper says. "This is a secure, well-positioned asset offering strong cash flows with strong tenant covenants and in a prime setting."

"The newly developed industrial units have generous road frontage to Great South Road and any investment risk would be split due to having two strong international tenants on staggered lease terms."

Hooper adds that the vendor is prepared to "meet the market" and, as a strong investment opportunity, it is expected to attract family trusts.

The two units occupy a total of 2004.5sq m within one building forming part of a 1.943ha industrial park.

Unit 1A comprises a total of 1071sq m made of up of a 337sq m showroom, a 400sq m office and 347sq m of warehouse space. The property has 25 carparks of which 15 are covered.

Unit B totals 933.5sq m comprising a 231.5sq m showroom, 238sq m of offices and a 464sq m warehouse. It has nine covered and six uncovered parking spaces.

"The units are well proportioned with a good mix of office, showroom and warehouse," says Herlihy.

Unit 1A is tenanted to Redeal Limited, part of the Rexel SA Group which is a global electrical supplies wholesaler; and Hilti, a worldwide provider of construction technology.

Redeal Limited has signed a five year lease for Unit 1A that commenced on April 26, 2009, with one right of renewal of five years which would take a final expiry to April 25, 2019.

The unit generates rent of $283,730 plus GST per annum, with reviews every two years from the commencement date.

Unit 1B is occupied by Hilti New Zealand Limited, which has taken the space on a four-year and four-month term that began on August 1, 2009 with one right of renewal of four years. Final expiry is November 30, 2017.

The lease has locked in rental growth. From August 1, 2009 to November 30, 2011 rent is set at $150,000 plus GST, and from December 1, 2011 it rises to $170,000 plus GST.

In addition to 15 car parking spaces that come with its tenancy, Hilti has contracted to lease a further four carparks at $4160 per annum.

West says the property occupies a high-profile position on Great South Rd and has easy access to the State Highway 1 motorway via the on/off ramps at the Penrose/Ellerslie interchange.

"The property's position gives easy access to the Eastern suburbs on the South Eastern arterial road and to the west and the international airport," West says.