Listed investment house Centuria Capital has acquired a $224-million office building in central Melbourne for a new single-asset fund.
The 14-level commercial building in Footscray is the basis for Centuria’s Government Income Property Fund, a fixed-term, single-asset fund.
The A-grade asset, at 1 McNab Avenue, is fully occupied, leased to a number of Victorian government departments and agencies with a 11.8-year weighted average lease expiry at a market capitalisation rate of 4.7 per cent.
The 20,200sq m building was built in 2014 and includes nine levels of office accommodation and four levels of secure parking, and has strong sustainability credentials, including 5.5-Star NABERS energy and water ratings.
Centuria, led jointly by John McBain and Jason Huljich, said the property manager would call on its more-than-22 years of delivering successful fixed-term, unlisted funds to raise upwards of $100 million for the fund.
“This will be our largest capital raise to date for a single-asset unlisted fund with a target of approximately $133 million,” Huljich said.
“In fact, it’s the largest retail equity raise undertaken in Australia for a single-asset fixed-term unlisted fund in the past 15 years.”
So far this year, Centuria’s unlisted division has executed six capital raises across four single and multi-asset fund mandates.
Combined, it has secured $184 million in capital to deploy across unlisted real estate opportunities on the east coast.
“With rising white-collar employment and workforces increasingly returning to the office, we believe office asset investments will increasingly deliver strong results,” Huljich said
“Already within the past few months, we’ve witnessed several large office transactions in the domestic market.”
Huljich said Centuria’s recent merger with West Australian real estate group Primewest meant it would become one of the largest unlisted property fund managers in Australasia.
The merger would push Centuria’s assets under management across its unlisted platform to $10 billion, and $16 billion in assets across the group platform.
Centuria agreed to a bid implementation deed with Primewest’s board, led by executive chairman John Bond, in April, through an off-market takeover offer.
The deal will combine two complementary real estate platforms, and the merged entity is expected to have assets under management of more than $15 billion, with a market cap of $2.2 billion—well placed for S&P-ASX 200 index inclusion.