Centuria Capital Group (Centuria or CNI) has today announced the appointment of Anna Kovarik to the role of General Counsel and Company Secretary.

Prior to joining Centuria, Ms Kovarik held the position of Group Risk Manager at Mirvac Group and was previously Head of Group Insurance for AMP and General Counsel and Company Secretary at AMP Capital Brookfield.

She holds a Masters of Information Technology, a BA (Hons) in Systems Management, and was awarded a distinction in the Global Executive MBA program at the University of Sydney. She is qualified as a solicitor in both the UK and NSW and was a senior associate at Allens law practice in Sydney.

Group CEO, John McBain, said;

“I am delighted to announce Anna’s appointment. Anna joins our senior executive team and her deep legal experience and extensive background in risk and governance will be essential to Centuria as it continues to grow.”

Trivia Night Cheque presentation 2018
Centuria’s annual Trivia Night has exceeded expectations this year, raising more than $80,000 for St Lucy’s School for students with disabilities last night.

Nearly 200 agents, business partners, suppliers and other associates packed KPMG’s offices on Thursday 28 June for a night of fun and generosity.

Whilst competition was hot for the coveted trivia crown, the big winner was St Lucy’s School with attendees digging deep to support this worthy establishment.

St Lucy’s School is a primary school for students with disabilities, which provides excellence in education that empowers students with the values, knowledge, attitudes and skills to flourish and participate fully in society.

Guests were deeply moved after hearing a heartfelt speech from Shannon on the life changing support that St Lucy’s school provides for its students, including her disabled 11 year-old daughter.

There was barely a dry eye in the room as she shared the challenges of having to “wear many hats” as a single mum, her unwavering love for her daughter despite the daily challenges of being a carer, and the phenomenal support, development and joy provided by St Lucy’s, which has made the world of difference in their lives.

In its seventh year, to date Centuria has raised more than $250,000 for St Lucy’s School from this annual event.

Centuria Capital Group CEO, John McBain said:

“I’m personally touched at how generous attendees have been, the result is outstanding.

“St Lucy’s is a cause close to our hearts, and we are delighted to have been able to contribute both financially and through our staff volunteer program to help make a difference in the lives of students and their families.

“Thank you to all our partners for attending and making the event a great success, and of course congratulations to Blackrock, who took home the trivia crown this year.”


Trivia Night Fun
Trivia Night Fun #2
Trivia Night Fun #3

Trivia Night Fun #4
Trivia Night Fun #5
Trivia Night Fun #5

Centuria Capital Group Limited (ASX:CNI) CEO, John McBain talks about a busy year during which Centuria Capital grew its property portfolio, added wholesale partners and increased recurring revenues.

Investor appetite for suburban metro properties demonstrated by high yield

Centuria Metropolitan REIT (CMA) today announced the sale of 3 Carlingford Road, Epping, for $36 million to a private buyer. The sale price represented a 118% increase on the purchase price of $16.5 million in December 2014.

The fully-leased office building sold with a tight passing yield of 5.4%, demonstrating the strength of suburban markets. The property gained a 27.2% premium between its last independent valuation in November 2017 and the sale.

CMA Trust Manager Nicholas Blake explained “With more than a dozen bidders competing for the asset, we are clearly continuing to see a strong demand for metropolitan property – and in particular for high quality properties with development potential.

“We usually look for and manage properties with an eye to leaving their purpose and use open-ended. Such flexibility is the best strategy to future-proof assets for investors, as well as addressing the need for high quality suburban stock.”

It’s clear that investors have sustaining appetite for such stock, against a limited supply of the same.

The sale campaign was run by Guillaume Volz and Henry Burke of Colliers International, and Tim Grosmann and Graeme Russell from Savills.

Grosmann, Director, Capital Transactions at Savills, said “The excellent result on Epping is a direct result of prime property fundamentals; a corner block, close proximity to a train station and strong rental reversion in a market that is starved of commercial suburban stock.”

Guillame Volz, National Director, Development Sites – Residential for Colliers, affirmed that “The sale demonstrates that strong buyer interest still exists from both local and offshore buyers for well-located suburban properties, with passing income and good development potential.”

Blake went on to say that “Applying a forward-looking lens is key to our acquisition strategy, and it pays dividends when done well. On this occasion, we have been able to realise a premium on the asset, and achieve a tight passing yield of 5.4% which compares positively against typical yields we see in key NSW metro markets of around 6% to 7%.”

For investors in this REIT, the success is testament to the importance of fund managers with deep market knowledge and the skill of identifying good opportunities with the potential for capital gain, and of actively managing assets to capitalise for significant upside. With this arsenal, CMA continues to deliver value to its investors with significant return on investment.

Contracts have been exchanged and settlement is expected in September 2018. The proceeds will be used to unlock select, accretive acquisition targets and further capital management initiatives.

Amazon’s entry into Australia at the end of 2017 has been heralded as a positive force for change – and a catalyst for efficiency improvements within the supply chain. Amazon’s influence will have implications for the way that the retail sector uses warehousing and for industrial property markets more widely. Here Ross Lees, Trust Manager for the Centuria Industrial REIT, looks at the effect of Amazon’s entry so far – and asks whether what we are seeing is a revolution, or merely an evolution in the way we shop, and what all this ultimately means for industrial property.

Ever since announcing its intention to set up shop in Australia, Amazon has been the name on everyone’s lips. Their first distribution centre opened in Dandenong at the end of last year and a second operation centre has since been announced in South West Sydney. Property investors are asking themselves how Australian retailing will be affected – whether we are witnessing the slow death of traditional retail, as e-commerce becomes ever more sophisticated and prevalent – and, most importantly, what this means for property markets.

As the manager of a large industrial property portfolio, I am asking myself the same questions: “What will the real effect of Amazon on the retail market be, and what are the implications for our portfolio?”. These are important considerations, because even if Amazon’s effect is felt more on prices and margins than on overall sales, which seems likely, there may still be a flow-on effect to property markets. Whether retail landlords suffer, and industrial landlords benefit in direct proportion, or whether the status quo remains largely unchanged is the big unknown.

For my part, the answer lies somewhere in the middle. The real question is not whether Amazon has the power to completely disrupt online retailing in this country, but rather what the effect of the rise in online shopping, including the entry of the world’s largest retailer1, is having on industrial property markets.

Demand for traditional retail space will fall as e-commerce grows, but it is also true that e-commerce retailers, like Amazon, require space too, albeit of a different nature. This means that investors and landlords are right to think seriously about how to tailor their portfolios to respond to a changing retail landscape.

And it is changing, fast. According to the NAB Online Retail Sales Index the total Australian online retail market was worth $24.2 billion last year, up almost 12% from 20162. But what is more interesting, when it comes to the impact of Amazon, is the acceleration in the shift from traditional retailing to online retailing. According to the 2017 eCommerce Industry Paper, online spending grew 6.9 percentage points more than spending in bricks and mortar stores3, up 10.2% compared with just 3.3% for traditional spending.

The online share of our retail spend is growing, and growing quickly, and there’s no reason to expect it will slow anytime soon. It isn’t, however, consistent across states. In cities like Canberra, where traffic is light and parking plentiful, going to the shops in person is easy – whereas in Sydney, where traffic is heavy, parking impossible and crowds large, it’s easy to understand why online shopping is more popular, and growing more rapidly.

So what changes are we already seeing in industrial markets as a result of online shopping and how should investors position their portfolio?

The good news: the move from shop to shed requires more industrial property

On the one hand, as online purchasing increases, demand for warehousing also increases – a phenomenon we refer to as the move from shop to shed. This is because the vast majority of online purchases pass through a warehouse or fulfilment centre before being dispatched to the consumer. And it makes sense that this demand for warehousing will underpin demand for industrial property looking forward.

On the other hand, the type and location of the warehouse favoured by retailers is likely to evolve in line with consumer expectations of delivery times. Three years ago, 63% of consumers said that 2 days was a fast delivery, whereas today over 96% consider ’same day’ as fast delivery, and these expectations are having a real effect on sales. Online retailers report that most sales are abandoned at the checkout stage if expected delivery is two days or longer – providing strong incentive to respond. This means that retailers need to look to speed up the delivery cycle.

The challenge: shorter delivery times

There are two things that can help in this regard. If success in online retailing requires short delivery times, the flow-on effect is that processing centres must be located as close to the consumer as possible. And we are already seeing a downstream effect on demand in industrial markets. Two smaller or medium-sized facilities (20,000 sqm or less) located in different markets suddenly become more attractive than one large facility (80,000 sqm) located further away.

At the same time, building new facilities in locations close to consumers is often not possible, because greenfield land in centrally-located, high-demand infill areas is very rare. This means that adapting existing properties is key, because location is everything. Proximity to a motorway access point, distance from the CBD; these are the kinds of factors that make the difference to delivery times – and therefore to sales volumes in online retailing.

In addition to location, there is frequency of delivery. If the growth of online retailing can be described as a move from shop to shed, what we are now seeing in the push for fast delivery is a move from the big truck to the small, nimble white van.

The role of technology and its effect on industrial markets should not be underestimated

The evolution of technology is changing more than just retailing. Manufacturing has also evolved substantially as a result of more and more sophisticated technology. Automation has become more prevalent, which is positive for consumers, but the flipside is that the cost of technology is higher, and requires large financial commitments from businesses.

The effect of these higher costs can be seen in the length of lease terms. Businesses are not willing to invest in expensive technology unless they are confident of their financial strength, and expect to be operating for the long term.

Fifteen years ago, a 5-year lease was considered to be a long lease in industrial markets, and 3 years was far more usual. Now the average lease length in our portfolio is 5 years, and leases of 7-10 years are not uncommon. This is certainly a positive for industrial landlords.

The bottom line? Amazon is more a symbol of the shift to online retailing, than a fundamental game changer

To date, Amazon has taken a lease on a warehouse in Dandenong, Victoria and announced recently that it will lease a new 43,000 square metre fulfilment centre in Moorebank in South West Sydney. This second centre will become operational in the second half of 2018. This take-up of space is important because it is evidence of Amazon’s commitment to the Australian market, but when seen against the backdrop of the approximately 600,000 to 800,000 square metres of new warehousing built in Australia each year, it is not as significant as some may expect.

Whether or not Amazon’s direct demand will grow so quickly that industrial property markets will be fundamentally affected is difficult to predict with any certainty, but its journey in Canada is a case study that offers some insight.

Canada is good proxy for Australia – the population is larger, at around 36 million compared with our 24 million, but its demographics are similar and its relative physical size and population density similar. Given this, it would be ambitious to believe that Amazon will achieve a greater rate of penetration into the Australian market than it has in Canada.

Currently, Amazon occupies 12 industrial facilities in Canada, adding up to a total of around 300,000 square metres of warehousing. Yet, when we consider the 600,000-800,000 square metres of new warehousing built each year, we can safely say that even if Amazon were to take up the same amount of space that it currently occupies in the larger market of Canada, it would occupy only half of the new warehousing already being built here annually.

In conclusion, there’s no doubt that the entry of Amazon into the Australian market is a significant event. However, in my view, it is better seen as evidence of an evolution in retailing that is prompting demand for space change: affecting traditional retail space and industrial property markets alike.

Demand for warehousing in different forms and in more central locations is growing, and in this respect, portfolios which invest in smaller warehouses – located close to consumers, with easy access to transport and the CBD – are likely to be the winners over the next few years. Amazon is certainly at the centre of this evolution in retailing, and its effects will continue to be felt to a degree in property markets, but whether it is not fundamentally changing industrial markets on its own.


1https://retail.emarketer.com/article/worlds-largest-ecommerce-players-outpace-rest-of-retail-sector/59d7dc77ebd4000aa48d8e65
2January-December 2017; $21.65 billion between January-December 2016
3for the 12 months to December 2017

9-13 Caribou Drive, Direk SA

9-13 Caribou Drive, Direk completed in 2009, the property is located 25 kilometres north of Adelaide, 3 kilometres from the Northern expressway and is the state distribution facility for Kimberley Clarke. The building comprises 6,612 sqm of warehouse with 9.65 metre internal clearance. The property also incorporates 5,900 sqm of driveway and hardstand.

Current leasing opportunities:

Suite/LevelArea
(sqm)
Rent
(per sqm)
TimingCommentFloorplan
9-13 Caribou Drive7,027.30$100Oct 19Located within the Direk industrial precinct a freestanding well presented office warehouse facility with large hardstand area allowing for easy truck access and container unloading.View floor plan

Outgoings: $20.00 per square metre per annum + GST.
Car parking: There are a total of 35 car spaces.

Figures exclude GST.

Contact

Leedwell Property
136 Grenhill Road
Unley, SA 5061
Steve Smith
T: 
(08) 8212 8880
M: 
0410 532 022
E: 
steve.smith@leedwell.com.au
Henry Treloar
T: (08) 8212 8880
M: 0412 404 426
E: henrey treloar@leedwell.com.au
JLL
Level 18, 25 Grenfell Street
Adelaide SA 5000
Kym Hutchins
T: 
(08) 8233 8846
M:
0438 836 817
E: 
kym.hutchins@ap.jll.com
Centuria
Level 41, Chifley Tower
2 Chifley Square
SYDNEY NSW 2000
Stephen Dale
T:
+61 8923 8956
M: 0420 881 935
E: stephen.dale@centuria.com.au

 

South Australia’s premier CBD office property the latest addition to $4.7 billion portfolio

Centuria Capital Group (CNI) today announced that it exchanged unconditional contracts for the purchase of a 50% stake in the Bendigo & Adelaide Bank headquarters at 80 Grenfell Street, Adelaide, for $92.3 million. Acquisition of the $184.6 million office tower was made in partnership with Centuria’s capital partner, the Lederer Group, which will take up the remaining 50% stake in the property.

Key acquisition and impact information

  • Total purchase price of $184.6 million will be split 50/50 between a Centuria unlisted property fund and the Lederer Group.
  • Centuria’s total assets under management (AUM) will rise to $4.7 billion as a result of the acquisition.
  • Centuria’s acquisitions now stand at $747.3 million for the 2018 financial year to date.
  • Centuria’s 50% stake in the property will be offered to investors as a single-asset unlisted fund – the Centuria 80 Grenfell Street Fund – which will be open to investors in late May.
  • Initial investment term for the 80 Grenfell Street Fund will be 5 years, with a forecast commencing distribution yield of 7.0% p.a.

Key property information

  • 80 Grenfell Street is Adelaide’s premier A-grade office building, situated in a core CBD location above Rundle Place and adjoining Rundle Mall.
  • The property lies at the centre of Adelaide’s premium retail precinct and offers easy access to public transport.
  • It is 96% let to Bendigo & Adelaide Bank, Australia’s 5th largest retail bank.
  • The weighted average lease expiry (WALE) is long, at 7.3 years and rental increases are fixed at 3.75% p.a.

Commenting on the transaction, Centuria Head of Real Estate and Funds Management, Jason Huljich said the acquisition is complementary to Centuria’s ambitious growth strategy and demonstrates the business’s capability to find quality investment opportunities for its investor clients.

“We continue to build on the significant growth we achieved in the 2017 financial year, using our increased access to capital markets and our strong market position to move quickly when we identify an opportunity.

“So far this financial year, we have achieved $747.3 million in organic acquisitions to grow our assets under management to $4.7 billion,” he said.

Mr Huljich went on to comment on the Adelaide market, explaining that over the past few years it has become increasingly attractive to property investors for a number of reasons.

“The South Australian government’s decision to reduce stamp duty has been a positive strategic move to help drive investment in to the State. Compared with other states, where stamp duty averages 5.5%, South Australia’s is currently 1.8%, moving to zero on July 1, 2018.”

“When transaction costs are lower, yields are higher,; which means better returns for our investors. And at the same time, the South Australian economy is on the up and up. Significant investment in defence infrastructure and health are driving growth in employment and economic activity generally – all good news for property markets,” Mr Huljich said.

Paul Lederer, Chairman of The Lederer Group, said: “We are pleased to once again be able to partner with Centuria on another quality acquisition, following the recent purchase of 201 Pacific Highway St Leonards. Adelaide is a stable, income driven market with strong credentials and, with the support of Centuria’s property team, we are confident the asset will perform well and support the growth of our property division.”

The Lederer Group continues to demonstrate they are a key player in the property market, with this latest acquisition further strengthening an already diversified property portfolio, including shopping centres, commercial office and residential properties, along with a number of significant development projects, both under construction and in the pipeline.

1. Annualised forecast yield for the period 23 July 2018 to 30 June 2019. The forecast returns are predictive in nature and are calculated in accordance with a number of underlying assumptions set out in the Product Disclosure Statement. As such, returns may be affected by incorrect assumptions or by known or unknown risks and uncertainties and may differ materially from results ultimately achieved. Returns are not guaranteed.

75 Owen Street, Glendenning, NSW

75 Owen Street, Glendenning is an established industrial precinct located at the intersection of the M7 and M2 motorways. The property is a modern, generic industrial warehouse with associated office space constructed 2013. The property is a modern, generic industrial warehouse with associated office space.

Current leasing opportunities:

Suite/LevelArea
(sqm)
Rent
(per sqm)
TimingCommentFloor plan
75 Owen Street4,670.30$140October 19Located within the popular Glendenning industrial precinct a freestanding well presented office warehouse facility with large hardstand area allowing for easy truck access and container unloading.View floor plan

Outgoings: $33.50 per square metre per annum + GST.
Car parking: There are a total of 35 car spaces.

Figures exclude GST.

Contact

CBRE
Level 5, 10-14 Smith Street
Parramatta NSW 2150
John Micallef
T: (02) 9891 3330
M: 0476 222 333
E: john.micallef@cbre.com.au
Moshe Greengarten
T: (02) 9891 3330
M: 0404 277 993
E: Moshe.Greengarten@cbre.com.au
Centuria
Level 41, Chifley Tower
2 Chifley Square
SYDNEY NSW 2000
Stephen Dale
T:
(02) 8923 8956
M:
0420 881 935
E:
stephen.dale@centuria.com.au

457 Waterloo Road, Chullora, NSW

457 Waterloo Road, Chullora is an established industrial precinct and is located approximately 15 KM west of the Sydney CBD and is accessed via the Hume Highway and is in close proximity to both the M5 and M4 Motorways and the Enfield Intermodal. The property comprises a refurbished office and warehouse storage facility.

Current leasing opportunities:

Suite/LevelArea
(sqm)
Rent (per sqm)TimingCommentFloor plan
Office1,329.30$130NowLarge office space featuring great natural light.NA
Warehouse Storage304.00$130NowWarehouse storage facility with private roller door access.NA

Outgoings: $24.95.00 per square metre per annum + GST.
Car parking: There are a total of 46 car spaces.

Figures exclude GST.

Contact

Centuria
Level 41, Chifley Tower
2 Chifley Square
SYDNEY NSW 2000
Stephen Dale
T:
+61 8923 8956
M: 0420 881 935
E: stephen.dale@centuria.com.au

 

Please choose an option to download Unit-Linked Bonds

To immediately access and download the Investment Bonds Product Disclosure Statement, please complete the brief form below...