Centuria Diversified Property Fund announces acquisition of first direct asset
Purchase of 381 Macarthur Ave for $19.74 million
Centuria Capital Group (Centuria) has today announced the acquisition of 381 Macarthur Avenue, Northshore Hamilton, QLD. The new-build office, purchased by the Centuria Diversified Property Fund (CDPF, the Fund) for $19.74 million, is the Fund’s first direct property acquisition. Settlement is expected by the end of May 2019.
CDPF is an open-ended unlisted property fund with a limited liquidity facility, which offers investors access to a diversified property investment. Its objective is to provide monthly tax- effective income to its investors with the potential for long-term capital growth.
Centuria’s Head of Real Estate and Funds Management, Jason Huljich, said the acquisition was in line with the Fund’s strategy: “We have always intended to acquire direct assets for the Fund, and 381 Macarthur Avenue is a high-quality, well-located asset with financially strong tenants.” said Mr Huljich.
The commercial office building within Brisbane’s BTP Northshore office precinct is a three-level, A-grade office building developed by Alceon Graystone in April 2018. The 2,847 sqm property has a 5.1-year WALE1. It will generate an initial yield of 7.0%.
Northshore is the transformation of 60ha of State-owned industrial port land into a vibrant $5 billion mixed-use destination, and is Queensland’s largest waterfront urban renewal precinct.
BTP Northshore has attracted national and multi-national occupiers seeking high-quality urban accommodation within a near-city, mixed-use precinct. Consequently, high net worth and institutional investors have secured modern, mid-rise suburban, ‘A’ grade commercial office buildings with strong covenants. The next phase of commercial development will feature an additional 16,000 square metres over four office developments, plus plans for an integrated health and medical precinct to be delivered directly across the street from 381 Macarthur Avenue.
“The asset occupies a prominent location in Northshore – a well-known area with many small- to-medium enterprises whose employees prefer to work close to home, while being conveniently located 6km from Brisbane’s CBD, 5km to Brisbane Airport, and 1km to vibrant shopping precincts, cafes and the iconic Eat Street Northshore. This makes it a good fit for Centuria’s active management approach, demonstrated by the fact that Centuria’s Metropolitan REIT (ASX: CMA) owns a nearby property at 483 Kingsford Smith Drive,” said Mr Huljich.
Selling agent Sam Biggins of Colliers said ‘This investment by Centuria is an endorsement of the institutional quality of office assets being delivered in Hamilton BTP and a sign of faith in the rising Brisbane metropolitan office market’.
Mr Huljich went on to say that he expected increasing investor demand throughout Southeast Queensland, including Brisbane.
“The Fund’s exposure to QLD follows our view that Brisbane office markets are steadily improving. In the last half we’ve seen yield compression, vacancy rates at five-year-lows, and rising demand for prime office – trends we expect to continue,” he said.2
In conclusion, Mr Huljich said that the deal demonstrated Centuria’s overarching strategy across its direct and listed property divisions.
“We are asset-specific buyers, so we consider all markets where there is opportunity to find value. We rely on our team’s expertise in active asset management to add value to our properties. This means we purchase properties with the aim of unlocking value through our hands-on approach to refurbishment, facility upgrades, and development of spec fit-outs, undertaken by an in-house team of asset managers.
“When it comes to accessibility for advisers and smaller investors, because the Fund is open- ended and offers some liquidity, it sits on a number of platforms and wrap platforms so is easy to access,” said Mr Huljich.
1 As at 1 April 2019. This includes a 12-month rental guarantee on approximately 288 sqm (around 10% by net lettable area) of the property and 35 car bays.
2 Colliers’ ‘CBD Office First Half 2019’ p.12.