Fund manager Centuria Capital has swooped on a recently completed office tower in north-west Adelaide for nearly $63 million, struck on a yield of 4.6 per cent.
The 6500sq m commercial building at 21-25 Nile Street in Port Adelaide was completed in 2018 and is fully leased under a 15-year agreement to the South Australia government’s department of transport and infrastructure.
The building was sold by Charter Hall through a direct managed fund after it acquired the asset as a fund-through development in 2017, with a total completion value of $43.6 million.
Charter Hall’s direct business currently manages $7.5 billion in assets and cash inflow from retail investors has accelerated during the past two years to now enable the funds to be running between $90 million to $100 million a month.
Charter Hall Direct chief executive Steven Bennett said the divestment would provide an opportunity for the fund to realise returns for investors and re-deploy capital into new acquisitions and fund existing developments, such as 60 King William Street, in the Adelaide CBD.
“We have continued to curate the portfolio via selective divestments and importantly upgrade the portfolio through investments in core CBD and emerging precincts,” Bennett said.
For Centuria the asset will now provide a compelling investment proposition, with strong tenant covenants and resilient revenue streams.
As well, the suburb of Port Adelaide is a gateway for the federal government-backed Osborne naval shipyard, which will deliver $90 billion of naval defence infrastructure with a 50-year pipeline.
Centuria joint chief executive Jason Huljich said the group had been drawn to the “young property” within Adelaide’s commercial real estate market, which is currently underpinned by strong employment, regeneration and infrastructure projects.
“The A-grade 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 8000 additional residents and 1500 construction jobs,” Huljich said.
“[We] remain confident in Australia’s metropolitan and near city office markets, especially those that benefit from long-term government-backed infrastructure projects.”
The property will be held within Centuria’s unlisted real estate fund, Centuria Government Income Property Fund No. 2.
Centuria has been in a strong growth phase, expanding its funds management platform through corporate deals such as its takeover of Primewest.
It has also been active with direct deals, including its recent $224 million acquisition of a Footscray office tower from the Grollo family.
In August, Centuria picked up another recently 18,000sq m completed office tower, this time in South Melbourne, from the ell-known property clan the Deague family for $200 million.