Brickworks frees up capital with new manufacturing property trust

Building products group Brickworks has moved to free up capital tied up in ownership of its manufacturing sites, announcing a new $416 million Brickworks Manufacturing Trust.

The trust is a joint venture manufacturing property trust with Goodman Group which will initially house a portfolio of 15 manufacturing plants, tenanted by Brickwork’s businesses including Austral Bricks, Bristile Roofing, Austral Masonry and Austral Precast.

Brickworks will retain 50.1 percent ownership of the new trust, with the remaining 49.9 percent interest sold to Goodman.

The operating sites comprise 496 hectares in land area and have a gross asset value of $416 million.

Brickworks will tenant the sites with long duration leases of five to 20 years, with options to extend.

Brickworks told investors that the transaction would trigger a net profit on sale of around $90 million recorded up front in 2H2022, with the remainder deferred, and recognised over the life of the property lease term.

After allowing for tax, duty and transaction costs, net proceeds of around $193 million are anticipated, with these proceeds to be used to pay down group debt.

Brickworks managing director Lindsay Partridge said: “The partial sale and lease back of these properties will deliver significant cash proceeds, allowing Brickworks to realise value for shareholders and capitalise on the strong growth in industrial land values over the past few years.

“Importantly, the lease terms have been structured to ensure minimal impact to the operational flexibility of our Building Products businesses, which will continue to operate on these sites.”

Partridge said several of the properties had the potential for additional development and greater utilisation.

Picture: Brickworks

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