Centuria acquires Zenith Centre, launches new fund

23 May 2016

Publication: Financial Standard

Date: 23 May 2016

Author: Kerrie Sydee

FinStd
Centuria Property Funds has exchanged contracts on the Zenith, an institutional grade office asset located in Chatswood.

Centuria has also launched a new unlisted property fund, the Centuria Zenith Fund, which will co-invest with global investment firm Blackrock to acquire the property. The purchase price of the asset is $279.1 million and remains subject to FIRB approval, with settlement expected to occur in late July 2016.

The company’s unlisted property funds chief executive officer, Jason Huljich, said he was confident the fund would provide attractive returns to investors due to the property’s location and quality.

“Sydney’s North Shore office market is already performing strongly, and we expect that it will continue to experience falling vacancies and strong rental growth over the next few years. The withdrawal of commercial office space in the CBD and North Shore due to residential conversion and the construction of the Metro will drive above trend rental growth and mean excellent total returns for our investor clients.

“Chatswood is a dynamic office, retail and residential area and is the North Shore’s major rail and bus hub. The new Sydney Metro rail infrastructure will further improve connectivity,” he said.

The Zenith has a diversified tenant mix, with approximately 40% of rental income from government tenants. It is currently 94% occupied and has around 44,000 sqm of net lettable area available.

Distribution yields from the Zenith Fund are forecast to be 7.6% in the 2017 financial year, growing to 7.7% in 2018.