23/09/2015 - 13:46

Property groups target Market City

23/09/2015 - 13:46

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Kerry Stokes’ private company and three property investors are among five bidders shortlisted for the privatisation of Perth's major fruit and vegetable market, which includes the largest land development site in Canning Vale.

Kerry Stokes’ private company and three property investors are among five bidders shortlisted for the privatisation of Perth's major fruit and vegetable market, which includes the largest land development site in Canning Vale.

In a statement today, Treasurer Mike Nahan said the bidders for Market City in Canning Vale included Australian Capital Equity - the private holding company of Perth billionaire and Seven West Media chairman Kerry Stokes.

Other bidders include diversified property group Stockland (through Stockland Trust Management), DEXUS Property Group (through Dexus Funds Management) and Sydney-based Propertylink.

The fifth bidder is the Chamber of Fruit and Vegetable Industries in WA, which is leading an industry consortium known as Perth Markets Ltd, wanting to ensure the site's long-term use as a wholesale market.

Dr Nahan said the shortlisted bidders demonstrated a commitment to sustain a long-term operation of the wholesale market, and would be invited to submit a request for detailed proposals.

“The sale of Market City is on track for completion as planned in early 2016, with a number of key milestones already met,” he said.

“We are confident the shortlisted bidders will have the ability to deliver an outcome that benefits both the industry and the people of WA.”

Market City has 100-plus tenants and trades more than 200,000 tonnes of produce valued at $617 million in 2014-15.

The site is expected to sell for more than $190 million, judging by the recently published annual report of the Perth Market Auhtority for the year to June 30, 2015.

Its property, plant and equipment is valued at $194.9 million, based on valuations conducted during the year by Landgate.

The annual report also diclsoed annual income of $21.8 million, including rental income of $11.2 million and $5.2 million from provision of electricity.

The site covers 50.9 hectares, of which more than 13ha is vacant and available for development. 

It represents the largest industrial land holding in Canning Vale and one of the largest freehold industrial sites in the Perth metropolitan area.  

The sale process includes a requirement for the new owner to continue operating the central trading area exclusively as a wholesale fruit and vegetable market for a period of 20 years.

It also includes contractual measures to assist tenants with the change to private ownership, including limitations on the new owner’s ability to charge tenants for the recovery of land tax over a period of six years and to profit from the distribution of electricity to tenants.

Dr Nahan said private ownership would allow the new owner to realise the potential of the site by investing in expansion and upgrades to deliver greater levels of efficiency and productivity to tenants. 

"This has been demonstrated in the precedent cases of the Sydney and Brisbane markets, which successfully transferred to private ownership in 1997 and 2002 respectively," Dr Nahan told parliament.

"Both markets continue to support the industry and have enjoyed strong growth following their sales."   

Perth Markets chairman Paul Omodei said "a future privatisation of Market City opens up tremendous opportunity for the industry, but also represents a significant risk if the ultimate buyer of the market is not aligned with industry".

"All successful privatisations of comparable fruit and vegetable markets in other Australian states have resulted in an industry-backed consortium acquiring the market and associated infrastructure – with a smooth transition to industry ownership, and ongoing investment and growth," Mr Omodei said.

"If our bid is successful it will secure a long term and central home for Perth’s only wholesale fruit and vegetable market.”

The chamber has engaged Azure Capital to advise on the bidding process.

Market City is one of several state-owned assets currently on the chopping block as the government tries to realise up to $5 billion.

Fremantle Ports, the Utah Point berth in Port Hedland, the TAB and the state's softwood timber plantations are among other assets that the state government plans to privatise.

 

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