Centuria, BlackRock to acquire office property in Sydney’s Chatswood

25 May 2016

Publication: Property Observer

Date: 25 May 2016
Author: N/A

Property Observer
ASX-listed Centuria Property Funds Limited (Centuria) and global investment firm BlackRock have agreed to jointly acquire an institutional grade office asset in Sydney’s Chatswood for $279.1 million.

Centuria, which has $1.9 billion in funds under management, said contracts have been exchanged on the Zenith, the 821 Pacific Highway property in Sydney’s Chatswood.

The purchase remains subject to FIRB approval, with settlement expected to occur in late July.

A new Centuria unlisted property fund, the Centuria Zenith Fund, will co- invest with BlackRock to acquire the property.

“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,” said chief executive of Unlisted Property Funds, Jason Huljich, adding he was confident the fund would provide attractive returns to investors due to the strong fundamentals of the location and the property itself.

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.”

The Zenith has a diversified tenant mix with about 40 percent of its rental income underpinned by government tenants. It is currently 94 percent occupied and has around 44,000 sqm of net lettable area.

“In the current low interest rate environment, there’s no question that investors are becoming increasingly yield-driven. Distribution yields from the Zenith Fund are forecast to be 7.6 percent in the 2017 financial year, growing to 7.7 percent in the 2018 financial year. These are very attractive rates for such a high quality asset,” Huljich said.