Tobacco giant Philip Morris sells cigarette factory

Source from:  The Sydney Morning Herald 02/03/2016

Tobacco giant Philip Morris has sold its former manufacturing site ahead of relocating its Australian headquarters to Melbourne's South Wharf later this year.

The company stopped manufacturing cigarettes at the 6.27 hectare site in Moorabbin in 2014 when it transferred all production to its Korean factory.

The factory and administration buildings, which have been the group's Australian headquarters for more than 60 years, sold for an undisclosed sum in a transaction managed by JLL's Andrew O'Connell and James Kaufman.

"We experienced strong competition from seven parties during the bid process which reflected the lack of available development land in the Moorabbin area," Mr O'Connell said.

Market sources said Philip Morris was seeking more than $20 million for the property, with the final price above expectations.

Up Property plans to refurbish some of the old buildings and turn the site into a business park with new structures.

The group manages and leases other commercial properties including some at 88 Ricketts Road in Mt Waverley which it sold last year and a facility at 215 Browns Road Noble Park.

Philip Morris signed a long-term agreement for 8000 square metres of space across three floors in South Wharf Tower for 300 of its Melbourne-based staff.
The industrial property sector is expected to follow a similar trajectory to last year which saw a surge in offshore buyer activity – foreign buyers more than tripled their presence in the market in 2015, accounting for 37 per cent of sales, according to CBRE.

By comparison, in 2014, foreign buyers accounted for just 10 per cent of purchases.

CBRE's national director of industrial and logistics, Chris O'Brien, said 2015 was a strong year, with investors aggressively seeking portfolios weighted with strong covenants.

"With improved fundamentals, and an increase in off shore owners we are expecting investors to go higher up the risk curve in 2016, which should further compress secondary yields," Mr O'Brien said. Enditem