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$142m industrial real estate deal for redeveloped quarry

Asia-Pacific industrial real estate company ESR has purchased a 21ha redeveloped quarry site in Western Sydney from building products supplier CSR.

Hong Kong-based ESR, which launched its Australian business in 2018, announced on 4 November, 2019 that it had purchased the site within CSR’s Horsley Park industrial development in Burnley Road, 40km west of Sydney, for $142.5 million.

When fully operational, ESR expects to offer up to 110,000m2 of industrial space across as many as six warehouses, strategically located near major transport links. It forms part of the company’s continued expansion into the Australian industrial and logistics real estate market.

“With the addition of these recent acquisitions to our existing land bank, we are well positioned to deliver on our strategic priority of developing premium logistics properties in high demand, low supply locations for our customers,” ESR Australia CEO Phil Pearce said.

CSR has been undertaking the 50ha Horsley Park redevelopment in three stages, with stage one (10ha) sold to Frasers Property Group for $58m in April 2018. ESR has purchased the second tranche of land, which has involved significant development of a former clay quarry.

A CSR spokesperson said the quarry ceased major operations 30 years ago but there had been limited quarrying activity as recently as five years ago. The operation provided clay for bricks and pavers produced by the PGH Bricks plant located adjacent to the site.

The stage two redevelopment of the quarry pit and associated bund walls has required extensive geotechnical works to recompact the site that once reached 26m in depth. It is anticipated CSR will take another seven to 13 months to complete the geotechnical works before building the necessary road network and services.

CSR has also constructed a substantial bund wall at the rear of the property, which incorporates mature trees, to separate the development from neighbouring rural residential properties.

CSR CEO and managing director Julie Coates said the ESR sale is expected to generate about $90 million in property earnings before interest and tax.

“The strong demand for this property highlights the value uplift we can deliver by managing large scale redevelopment projects with a number of major developments underway as CSR continues to optimise its site network,” she said.

Once developed, the site will be called ESR Horsley Logistics Park. According to ESR, it is situated within the highly sought-after Western Sydney industrial market and near major transport links, including the M4 and M7 motorways and the future Western Sydney Airport.

Since its 2018 entry to the Australian market, ESR has exchanged contracts for a number of industrial sites in Sydney, Melbourne and Brisbane, accounting for around 70ha of land and 330,000m2 of logistics space. With Horsley Park in hand, it brings ESR’s total development pipeline in Australia to around $1.8 billion.

“Since establishing our business in Australia last year, we’ve been focused on building a strong foundation on which we can grow in this market. We’re pleased to already have achieved substantial growth,” Pearce said.

“We will continue to add to our land bank to ensure ESR is well-positioned to keep capitalising on the opportunity that the Australian market offers with an established presence, substantial team of experts on the ground, and proven capabilities in Australia.”



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