Open borders open the economy
by John McBain, Joint CEO
We have passed a significant milestone on the road to Australia’s economic recovery as we reached the two year anniversary since Australia and New Zealand shut their international borders on 20 March 2020 and 19 March 2020, respectively. Adding to this milestone is the good news Western Australia has reopened its borders to domestic travellers earlier this month.
Throughout the opening and closing of arrival/departure gates across the nation and the Tasman, Centuria learnt an important lesson – the value of experienced teams “on the ground” to enable us to keep our capital transactions and funds management teams active, and thus continuing Centuria’s assets under management “AUM” growth across diverse geographic regions.
In 2020, despite not being able to visit the land of the long white cloud, we merged with a real estate platform, Augusta Capital, in New Zealand, which has since been renamed Centuria NZ and has expanded its AUM by 33% to $2.6 billion.
In 2021, we headed in the opposite direction to the western seaboard, merging with the Perth-based real estate funds management business, Primewest. It has grown its AUM base by 31% since integrating with Centuria, to $6 billion.
Why did we choose to broaden our geographical reach to two markets that have effectively been shut off for two years? Because, with our strong balance sheet, wider distribution base and updated platform systems, we could foster strong expansion in these new markets enhancing results for the wider Centuria Group.
Let’s take a closer look at the Primewest operations. Since July 2021, the Perth-based division has acquired $1.16 billion worth of daily needs retail and agricultural assets, not only in WA but across QLD, NSW and VIC. The interstate transactions were made possible by our Brisbane, Sydney and Melbourne teams who were able to physically inspect several assets prior to acquisition. In fact, the integration of the Primewest and Centuria Capital transaction executives has produced one of the most effective “cap trans” teams in the business. They have become a poster child for our integration process!
In New Zealand, the team has acquired $593.3 million worth of real estate since integrating with Centuria. This includes the NZ$178 million Visy Glass manufacturing facility in Penrose, Auckland, at the time, the largest unlisted single asset capital raise in Aotearoa directed to retail investors. More recently, the Centuria balance sheet supported the acquisition of the NZ$291 million Heritage Lifecare aged care real estate portfolio and has just launched its first pure-play healthcare fund, Centuria NZ Healthcare Property Fund Limited, with a target raise of NZ$121 million.
We don’t doubt that a number of transactions have been held back within the WA and NZ markets due to border closures. Based on the way QLD, NSW and VIC’s real estate markets have flourished since state travel restrictions were lifted we expect there is further opportunity to come in WA and NZ. Trophy office, industrial and agriculture assets, in particular, have come to market and attracted strong cap rate compression and strong values.
Accordingly, we believe that further transaction potential is waiting across the Tasman and throughout Western Australia as borders open and we look forward to spending more time with our Western Australian and New Zealand teams, in person, when the travel gates open fully.
by Jason Huljich, Joint CEO
Does it feel like a long-time ago or in the blink of an eye since the #covid19 pandemic took hold in Australia? Monday 20 March marked the three year anniversary of this black swan event.
by Jason Huljich & Ross Lees
Investors looking at real estate investment may only consider the risks posed by inflation such as rising debt costs, share market investor risks appetite (for A-REITs) and any potential impacts on valuations for property purchases chasing yield. However, investors often overlook positive factors.