Qualitas has announced its acquisition of the Allied Pinnacle property portfolio for approximately $400 million.
The portfolio comprises ten flour-milling and bakery operations across Australia. Allied Pinnacle will maintain full control of the operations at the sites through 30-year, triple-net leases. Purchased from Allied Pinnacle, the portfolio is expected to provide a yield of 6%. The tenant has a 100-year trading history and is the largest supplier of flour for human consumption in Australia, with a market share of approximately 40% servicing major grocery retailers, industrial bakeries and over 2,000 independent bakeries nationally.
Mark Fischer, Managing Director, Principal Investments at Qualitas, said: “These properties represent core strategic assets of the tenant and provide a national network of irreplaceable production facilities that are critical to the nation’s food supply.
“The long-term leases provide operating certainty for the tenant and positive returns for investors, as the tenant has a long history and significant market share. The properties provide exposure to a resilient part of the food sector, with flour-based products making up over 20% of the Australian diet. The underlying real estate is predominantly urban infill land, with most sites in prime suburban locations of major cities.”
Mr Fischer said the properties have been placed into a wholesale vehicle, the Qualitas Food Infrastructure Fund. There has been strong investor support for the fund, predominantly from European and Asian pension and life insurance capital as well as domestic institutional investors, he said.
“This is a unique offering for investors, as it has elements consistent across real estate, infrastructure and agricultural investments, and brings benefits from each sector. Our thesis is that there is a developing universe of “cross-over” investors from each of those sectors who are increasingly focused on what we call ‘soft infrastructure’.
“This delivers long-duration income without the regulatory risk that comes with hard infrastructure or the tenant demand vagaries of traditional real estate.
“Deals like this don’t come along often, so we’re really pleased that Qualitas was the successful bidder,” Mr Fischer said.
James Ajaka, Allied Pinnacle CEO, said: “We are very pleased to have sold these ten properties to Qualitas. This partnership will allow us to maintain full operational control of our business, while Qualitas take ownership of a great suite of properties”.
An extensive sales process was run by CBRE and Charter Keck Cramer, with Arnold Bloch Leibler advising Qualitas on the acquisition and King & Wood Mallesons advising the vendor. Minter Ellison advised Qualitas on the establishment of the Qualitas Food Infrastructure Fund.