Centuria secures $63m Port Adelaide office building
100% leased to SA Government, proximity to Australian naval infrastructure precinct
- High quality, A-grade commercial office building, 100% occupied, 11.1 year WALE1
- Predominately leased to Shared Services SA, proximity to $90 billion Osborne shipbuilding precinct
- 6 star NABERS energy rating, 6 star Green Star Design rating
- Secured for single-asset, closed ended unlisted fund, five year term, 5.25% forecast starting distribution.
Centuria Capital Group (ASX: CNI) has secured a $62.75 million, A-Grade modern office building in the heart of Port Adelaide’s urban regeneration precinct, for its new single-asset close-ended, unlisted real estate fund, Centuria Government Income Property Fund No. 2 (CGIPF2)2.
Located at 21-25 Nile Street, the high quality asset is 100% occupied by the South Australian State Government (Shared Services SA, 94%3, and Urban Renewal Authority, 6%) with a healthy 11.1 year Weighted Average Lease Expiry (WALE) and fixed annual rent reviews of c.3%p.a.4.
Jason Huljich, Centuria Joint CEO, said, “Centuria remains confident in Australia’s metropolitan and near city office markets, especially those that benefit from long-term Government-backed infrastructure projects. The high quality Nile Street office building is situated in the heart of the State-backed Port Adelaide Rejuvenation Project, a 20 year regeneration initiative that is anticipated to attract up to 8,000 additional residents and 1,500 construction jobs.
“Additionally, Port Adelaide is the gateway to the Federal Government-backed Osborne naval shipyard, which will deliver $90 billion of naval defence infrastructure throughout a 50 year pipeline. Nile Street provides a compelling investment proposition with the building fully leased to the SA Government, providing strong tenant covenants and resilient revenue streams. Additionally, its exemplary sustainable features, and being a young property, prevents capital expenditure leakage, providing value for investors.”
In August 2021, Centuria completed Australia’s largest single asset retail capital fundraise5 within three weeks, raising $133 million for a $224 million A-Grade office building in Footscray, VIC, which is more than 90% leased to the Victorian Government. CGIPF2 aims to replicate the success of Footscray with this high quality, sustainable Port Adelaide office building.
The Nile Street asset was completed in 2018 and provides a 6-Star NABERS energy rating and 6-Star Green Star Design rating.
Ross Lees, Centuria Head of Funds Management, added, “Throughout the past 12 months, South Australia’s economy has demonstrated its resilience. Centuria is a significant investor within the state and Nile Street adds to our local portfolio of four office buildings, 10 industrial facilities, three daily needs retail as well as agriculture, childcare and healthcare properties. We are confident in Adelaide’s commercial real estate market, which is underpinned by strong employment, regeneration and infrastructure projects.”
Positioned within a 3,236sqm island site, with main street frontages to Nile Street, Nelson Street and Robe Street, the A-Grade six-level office building provides a total 6,393sqm Net Lettable Area (NLA) across three office levels, two upper car park levels, and ground floor entrance foyer with café and office tenancies.
The property provides large, flexible floor plates averaging c.1,900sqm with excellent natural light from all facades and a vista across the harbour, Port River and Fisherman’s Wharf Markets.
21-25 Nile Street will be the sole asset for CGIPF2. The fund will have an initial five-year term6, delivering a starting distribution yield of 5.25%7 in 2022, rising to 5.30%7 in 2023. CGIPF2 has a target equity raise of $35 million. The fund is expected to open from Monday 25 October 2021 and anticipated to close on Friday 19 November 2021.
Knight Frank’s Guy Bennett and Cushman & Wakefield’s Leigh Melbourne, Nick Rathgeber, Mark Hansen and Josh Cullen acted for the vendors on the transaction.
1. As at 1 December 2021
2. This fund is not yet registered with the Australian Securities and Investments Commission (ASIC).
3. By gross income
4. 2.95% review in 2022 for Minister for Transport and Infrastructure, then increasing to 3.00% thereafter. Market review with ratchet and cap in 2028
5. Australia’s largest retail single-asset capital fundraise within the past 15 years as there are no further records dating beyond 15 years. Source: Core Property Fund Research & Ratings.
6. Subject to assumptions and risks set out in the PDS (expected to be issued on or around 25 October 2021) and over the initial five-year term
7. Forecast returns are predictive in nature and are calculated in accordance with a number of underlying assumptions set out in the Product Disclosure Statement (expected to be issued on or around 25 October 2021). 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.
Centuria Capital Group secures a $70.6million 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.