Big W DC purchase part of strategic plan: Pelligra

The Big W DC on East Street in Warwick.

By Jeremy Sollars

The new owners of the Big W Distribution Centre site in Warwick have big plans for when the current lease to Woolworths Group is up in 2023.

Ross Pelligra, chairman of Melbourne-based property development group Pelligra has a vision of the site being the future base of both warehousing and logistics operations and manufacturing, and says his company’s purchase is a long-term strategic one.

The Pelligra group acquired the 23.25 hectare distribution centre site on East Street in early 2020 – understood to be for $17 million – with it having previously been owned by Genox, a company controlled by Melbourne-based Andrew White and Roseanne Amarant.

Ms Amarant is the daughter of late Melbourne property identity Ezriel Rabinowicz and her business entities also owned a similar regional distribution centre covering 16 hectares in Goulburn in NSW – leased by Coles until 2022 – which the Pelligra group also purchased earlier this year, for a reported $53 million.

The Warwick site was originally sold by the Woolworths Group – who built the Big W DC – to Genox in 1996 for $25 million, with a lease-back arrangement to Woolworths.

As well as the DC site itself, Pelligra now also owns the internal warehouse infrastructure.

It is understood the total annual rental return of the two distribution centres is just over $16 million, with Ross Pelligra appearing confident he can achieve the same rate of future rental return currently brought by Big W and Coles.

There has been local speculation Big W could extend their Warwick DC lease beyond 2023 but as of this week Woolworths Group says it still plans to vacate when the lease expires.

“LONG-TERM”…

The Pelligra group has a business strategy of purchasing and ‘re-purposing’ large-scale industrial and commercial sites.

Pelligra in 2019 purchased the former Ford Australia factories in Campbellfield and Geelong, and in 2017 acquired the former GMH plant in Elizabeth in South Australia, which it has re-developed as a mixed-use industrial park with multiple tenants, and has similar plans for the ex-Ford sites.

Ross Pelligra told the Free Times this week the Big W DC purchase was “not a random one” and said his company sees significant future opportunities in non-metro locations like Warwick.

He said Pelligra also has property assets in other parts of south-east Queensland including outer Brisbane and Yatala.

“Obviously Big W has a lease until 2023 so our plans for Warwick aren’t immediate but this is a strategic purchase by us and we’re already looking ahead to the possibilities,” Mr Pelligra said.

“We like regional areas, we see there’s real growth potential – Warwick is a strategic location and we’re also interested in the neighbouring regions.

“What we’re about is long-term investment and we’re there for the long-term play – we’re patient and we can wait.

“We’re not just simply land-bankers.

“COVID-19 doesn’t really affect these kinds of longer-term decisions even though of course the impact will be with us for some time.

“But as a country Australia will come out of it.

“The Warwick site we see as potentially housing a number of different businesses, multiple tenancies, into the future – both existing businesses in the Warwick area who want room to expand and those who might want to re-locate from elsewhere.

“Those operations could be warehousing and logistics, using the plant and equipment that’s already there.

“But there’s also huge potential for manufacturing operations and parts of that site could be modified for those.

“I also see it as potential ‘incubator’ for new businesses, for start-ups.”

Mr Pelligra said factors like highway access and the Wellcamp airport in Toowoomba were part of his firm’s decision to invest in Warwick, as well as our proximity to Brisbane.

He also said his group may look to acquire other sites in Warwick, potentially adjoining the Big W DC site and elsewhere.

Mr Pelligra said he is looking forward to working with the newly-elected Southern Downs Regional Council administration down the track.

He expressed disappointment when told now-former council CEO David Keenan had recently left the organisation, saying he had previous dealings with Mr Keenan in Victoria and had found him to be “a good operator”.

Mr Pelligra also has something in common with new Mayor Vic Pennisi – namely a Sicilian heritage, with the Pelligra group having been started by Mr Pelligra’s Italian migrant grandfather and still family-owned.

BIG W SAYS IT STILL PLANS TO LEAVE…

Some had speculated locally that Big W could change its mind about the Warwick DC, in light of short-term changes to Woolworths operations due to COVID-19.

For example Woolworths partially re-purposed a DC in Sydney’s Hoxton Park to support supermarket operations in recent months.

The Free Times this week asked Woolworths Group for comment, with a spokeswoman saying the closure of the BIG W Distribution Centre at Warwick “was announced last year and I can confirm timing for closure will be in 2023”.

“There have been no changes to this timing since it was announced last year,” the Woolworths Group spokeswoman said.

On the bright side she said there is no plan to close the Big W retail outlet in Rose City Shoppingworld.

Woolworths announced a fortnight ago it would close its Calamvale outlet in southern Brisbane, following its announcement in 2019 of the closure of NSW stores at Fairfield, Auburn and Chullora.

Big W’s commercial performance has been mixed in recent years.

COUNCIL STATEMENT IN MARCH…

The Southern Downs Regional Council released a statement in early March about Pelligra’s Warwick purchase, saying the Big W DC site “is heading in an exciting new direction with the announcement that it has been sold to Melbourne based company Pelligra”.

“The centre is currently leased to Woolworths and occupied by Big W, however the lease expires in October 2023 and Woolworths has indicated it will not be renewing,” the council statement said.

“Pelligra has recently purchased the site and has a history of acquiring and regenerating large industrial buildings.”

Then-CEO David Keenan said the sale “signifies a substantial investment by Pelligra in the growth and sustainability of the Southern Downs region”.

“Our region is fast gaining a reputation as a prime industrial destination and Pelligra’s purchase represents a substantial investment and confidence in our region’s future,” Mr Keenan said.

“This comes on the back of Integria Healthcare recently announcing a further investment of $7M to expand its existing processing and distribution site in Warwick.

“Our region is uniquely positioned to accommodate business growth with the perfect blend of available space, a willing and skilled workforce and a supportive community.

“Being only a short two hour drive from Brisbane positions our region as desirable and affordable for business and industry.”

 

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