A fully occupied A-Grade office asset in the Queensland capital has changed hands for north of $37 million.
Centuria Office, Australia’s largest listed pure-play office fund, has exchanged unconditional contracts with Brisbane-based fund manager Exceed Capital for 555 Coronation Drive, Toowong, a decade after it acquired the three-storey building.
The transaction was consistent with the asset’s December 31, 2023 book value, Centuria said, and that it “reflects strong investment appetite for smaller scale, well-located metropolitan offices with strong leasing and sustainability credentials”.
The building, which was opened in 1989, has two levels of basement parking and three levels of office space with floorplates from 1622sq m to 1983sq m for a combined net lettable area of 5568 square metres
Refurbishments in 2020 included a new foyer, lifts, bathrooms and end-of-trip facilities.
The building provides a 3.4-year Weighted Average Lease Expiry (WALE) and holds a 5.5-star NABERS energy rating and 4.5-star NABERS water rating.
Centuria acquired the asset in late 2014.
Fund manager for Centuria Office Fund Belinda Cheung said the fund had now divested four metropolitan office assets either at or close to their book values this financial year.
“These have been assets where the REIT has extracted value through a series of refurbishments and measures to improve amenity and sustainability efficiencies,” she said.
“The value-add strategies have resulted in strong leasing and occupancy for the assets, which in turn has generated comparably strong investment demand.
“The Toowong divestment is also consistent with REIT’s strategic focus on improving portfolio assets by age and quality.
“Most of Australia’s office transactions completed in the past 18 months have been for smaller scale assets below the $100-million threshold, demonstrating market demand and a deeper buyer pool for assets in this category nationwide.”
Cheung also cited mid-term market tailwinds based on Australia’s population growth and falling supply of new office developments in metropolitan markets.
“Looking forward, development feasibilities have been impaired due to rising construction costs, increased finance costs and softening capital market transactions, pushing economic rents significantly above prevailing rents in the majority of Australian office markets, especially those COF is exposed to,” she said.
“Coupled with this is forecast population and white-collar employment growth.
“We expect 2.6 million more workers in Australia by 2033 and estimate that 27 per cent will be white-collar workers, which is likely to generate up to 7 million square metres of additional office space demand.”
During this financial year, the fund has divested $139 million of non-core office assets including 54 Marcus Clarke Street in Canberra, 35 Robina Town Centre Drive, Robina Queensland—also bought by Exceed, for $40 million—and 1 Richmond Road at Keswick, SA.
Sales proceeds would be used to repay debt, Colliers said.
Knight Frank’s Justin Bond and Blake Goddard and CBRE’s Jack Morrison and Adelaide O’Brien were the agents on behalf of Centuria.
This was Exceed’s third acquisition in three years after the Robina buy and another Gold Coast office building, this one at Varsity Lakes, bought for $12.6 million from the listed Garda Diversified Property Trust.
