Logos’ $418 million transaction highlights the strength of the Australian logistics sector, confirming a strong outlook for select REITs.
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Marking one of the largest Australian industrial transactions of the year, Singapore-listed ARA LOGOS Logistics Trust (SGX: K2LU) has acquired $418 million of logistics assets on Australia’s eastern seaboard. Sydney-based logistics specialist Logos, which runs the trust, managed the deal.
Why did ARA LOGOS Logistics invest in Australian facilities?
As the Australian Financial Review reports, the trust’s manager – ARA Logos Logistics Trust Management Limited (a subsidiary of Logos) is bullish on the outlook for Australia’s industrial and logistics markets:
Australian industrial and logistics market, especially the eastern seaboard cities, continues to be highly sought after by investors due to its strong market fundamentals, limited supply and favourable demographics.
Industrial and logistics investment volumes for the year-to-date ending August 2020 have exceeded $3.5 billion… and 83 per cent of these transactions had taken place during the COVID-19 period since mid-March.
The outlook for Australia’s industrial market remains stable over the long term, underpinned by the fundamental role of logistics in keeping basic day-to-day necessities of Australians in supply, unprecedented infrastructure investment and growth in defensive downstream industries such as e-commerce.
Advantage ASX logistics shares
There were no ASX listed shares involved in the Logos deal. But the $418 million transaction does highlight the strength of shares involved in the Australian logistics sector while many office, residential and retail property-related shares remain under pressure.
One of the shares that’s currently on my radar is the APN Industria REIT (ASX: ADI).
The Australian real estate investment trust (REIT) owns a portfolio of 32 industrial and business park assets in Sydney, Melbourne, Brisbane and Adelaide.
The APN Industria share price is up more than 52% since the 23 March post-panic selling lows but is still down nearly 9% year to date. That puts it right on par with the performance of the All Ordinaries Index (ASX: XAO). Although today, APN Industria outperformed, with the share price falling 0.76% compared to a 1.77% loss from the All Ords by market close.
Now, the APN Industria share price is highly unlikely to see another 51% gain over the next 6 to 7 months. But with the growth of e-commerce continuing to drive demand for well-positioned warehouse and logistics facilities, I believe this is one ASX share to keep an eye on.
APN Industria also pays a 6.5% annual dividend yield, unfranked.
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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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