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Centuria continues to deliver for its established unlisted property division

Centuria Property Funds Limited (Centuria) has exchanged contracts to divest 2-10 Wentworth Street, Parramatta NSW for $105.3m following the completion of the closed ended property fund’s five year term.  The property was acquired in December 2014 for $45.1 million.

The successful sale reflects Centuria’s proactive asset management capabilities and the current strength across the commercial transaction markets. Centuria refurbished the common areas in the building and reset 90% of the building leases during the hold period. Rental levels were also significantly increased with an average uplift of 34%. Important to note is Centuria’s foresight of investing in Parramatta as cap rate compression has contributed significantly since it was bought at 8.75% and sale yield is around 5.63%.

2-10 Wentworth Street, Parramatta NSW

December 2014 December 2019
Price $45.1m $105.3m1
WALE (years) 5.4 6.2
Office Gross Market Rent $459 per sqm $617 per sqm (most recent)

Centuria also recently wound up the expiring unlisted Centuria 8 Central Avenue Fund delivering an IRR for investors of 20%3.  The building is located in Sydney’s South Eveleigh precinct, previously known as the Australian Technology Park.

8 Central Avenue, South Eveleigh NSW

September 2013 September 2019
Price $99.6m2 $191m2,3
Office Gross Face Rent $475 per sqm $850* per sqm

*In line with the Fund’s investment strategy Centuria recently concluded the material leasing and rental review process with the Department of Education and the Cancer Institute NSW. The rental determinations for these leases resulted in gross face rents of approximately $850 per sqm, which is approximately 80% growth in average gross office face rents. 

Proceeds from the sale of 2-10 Wentworth Street and 8 Central Avenue will be distributed to investors within these funds following the finalisation of each sale.

Jason Huljich, Joint CEO, commented “Centuria’s unlisted division remains well positioned across this core and long-standing division within CNI’s platform. Both the Centuria 2 Wentworth Street Fund and Centuria 8 Central Avenue Fund have delivered strong IRR’s of 25%4 and 20%5, respectively, while the recently completed Centuria Zenith Fund also delivered an attractive IRR of 23%4. These three recent fund completions have delivered very positive outcomes for fund investors.”

“We are focused on continuing to enhance our established unlisted division. Centuria has a good history of through-cycle performance with at least five of our funds7 being included in the top ten funds in an MSCI/IPD index each quarter for the last eleven quarters.”

The outcomes outlined above provide a selected example relating to three of Centuria’s office funds. It is in summary form only and they have no correlation to any other property or fund. Each fund managed by Centuria will have different characteristics, properties and risk and should be assessed by an investor independently of the performance of completed funds. Past performance is not a reliable indicator of future performance.

1 Accrued performance fees at 30 June 2019 included $2.9m 

2 Based on 50% ownership of the property

3 Accrued performance fees at 30 June 2019 included $7.8m

4 IRR calculated on a levered basis from December 2014 to March 2020

5 IRR calculated on a levered basis from December 2013 to November 2019

6 IRR calculated on levered basis from July 2016 to August 2019

7 Five funds in the Top 10 in The Property Council of Australia/MSCI Australia Unlisted Retail Quarterly Property Fund Index (Unfrozen) to 30 September 2019 and six for each previous quarter for the last ten quarters (overall investment for the twelve months to the end of each quarter)