Centuria and MA Financial JV acquires Adelaide’s The Black Stump
$166m investment in 25 Grenfell Street
- 50:50 joint venture investment in A-Grade office asset, prime Adelaide CBD location
- 72% of income secured by Government/ blue-chip corporations; four year WALE1; c.90% occupancy2
- Single-asset, closed ended unlisted property fund.
Centuria Capital Group (ASX: CNI or “Centuria”) and MA Financial Group Limited (“MAF”) have acquired an A-Grade Adelaide office building in a 50:50 joint venture with each entity committing an equal $83.3 million to the acquisition. The parties will actively pursue other value-add opportunities, which meet the investment criteria of each group.
The 24-level building is located at 25 Grenfell Street, Adelaide SA, and known locally as “The Black Stump.” It is considered a landmark within Adelaide’s CBD skyline. Approximately 72% of the asset’s gross income is underpinned by government and blue-chip multinational professional corporations, providing a four-year Weighted Average Lease Expiry (WALE)1 and c.90% occupancy2.
Major tenancies include SA Health, PIRSA (Primary Industries), Minister for Energy and Mining, Reserve Bank of Australia, JLL, Aurecon, Lipman Karas and Minter Ellison. The latter recently renewed for a seven-year term.
Jason Huljich, Centuria Joint CEO, said, “This acquisition represents an opportunity to capitalise on the strong tenant demand for high-quality A-Grade office space within Adelaide’s prime CBD market. Adelaide’s office leasing enquiry levels are trending strongly, above pre-COVID levels, with a 42% increase in the 12 months to Q2 2021.
“We believe we can deliver ‘core-plus’ returns by repositioning this iconic asset to retain and attract high quality tenants, while also further bolstering leasing demand for the property. Centuria has a strong track record in providing hands-on asset management and in-house office leasing capabilities.
“Throughout 2021, Centuria has successfully launched four single-asset unlisted property funds. Like our recent Footscray and Port Adelaide acquisitions, Grenfell Street is underpinned by resilient Government and blue-chip corporate tenants. We believe these metrics will continue to attract strong investor appetite.”
Centuria’s stake will be part of a new unlisted single asset closed ended property fund, Centuria 25 Grenfell Street Fund (“Fund”), which is expected to be launched in early 2022. Settlement is expected in early 2022.
Centuria intends to reposition 25 Grenfell Street through CAPEX and refurbishment projects following the Fund’s launch with a target equity raise of c.$47 million.
The A-grade property comprises a c.25,000 sqm Net Lettable Area (NLA) with 23 levels of office accommodation with floorplates ranging from 1,044sqm to 1,078 sqm, 30-bay basement car parking, end-of-trip facilities, and the ground floor includes 10 retail tenancies. The building is located near major retail precincts, including the Rundle Mall shopping strip, and Leigh and Peel Streets provide a variety of food and beverage options.
CBRE’s Ian Thomas, Alistair Laycock and Stuart McCann and JLL’s Roger Klem, Luke Billiau, Simon Storry and Kate Low were responsible for 25 Grenfell Street’s expression of interest sales campaign.
1. WALE by income as at 1 March 2022
2. The property is currently c.90% occupied and is secured with 12, 18 and 24 month gross rental guarantee over the remaining vacant space and retail tenancies.
Centuria Capital Group secures a $70.6 million industrial logistics facility in North Rocks, NSW, on behalf of US private investment firm, Starwood Capital’s, Last Mile Logistics Partnership (LMLP).
Centuria Capital Group has successfully exchanged conditional contracts to divest two adjoining industrial facilities located at 114 and 120 Old Pittwater Road, Brookvale NSW, which is anticipated to deliver a forecast 13.8% IRR to the assets’ closed-ended fund investors.