Centuria Diversified Property Fund’s second acquisition to take AUM over $100m

From

10 Moore Street, Canberra.

Centuria Capital Group (Centuria) has announced the acquisition of 10 Moore Street, Canberra. The property known as the ‘Optus Centre’ will be directly purchased by Centuria Diversified Property Fund (CDPF) for $35 million from commercial property group Quintessential after contracts were exchanged last week.

Commenting on the acquisition, Centuria’s Head of Real Estate and Funds Management, Jason Huljich, said “Strong support from investors and financial advisers in the CDPF has seen the fund’s inflows increase significantly this financial year, allowing the fund to make strategic purchases. 10 Moore Street is a centrally-located property – ideally positioned in Civic, the heart of Canberra’s CBD precinct. Public transport to the area is excellent and Stage 1 of the light rail, currently under construction, will improve links further with a terminus only 100 metres from the building.”

“Canberra is Australia’s second fastest-growing city (after Melbourne)[1] and this – combined with 10 Moore Street’s central location – was a key factor in our decision to buy. And we believe Moore Street will also quickly benefit from significant public and private investments nearby. The building has been fully regenerated to a very high standard by Quintessential Equity – all the work done over the years has been of a high quality, and the actions undertaken to improve the environmental footprint of the building has resulted in a 5-star NABERS energy rating, further enhancing the quality of this acquisition.”

10 Moore Street’s metrics are also solid. It has a 4.3 year WALE (as at 1 June 2019), and is currently 98% leased to a mix of high-quality tenants, with a 12-month rental guarantee on approximately 2% (123 sqm) of vacant space, which Mr Huljich is confident about leasing.

“One of Centuria’s A-REITs, the Centuria Metropolitan REIT (CMA), owns two properties nearby – at 54 and 60 Marcus Clarke Street, about 100 metres from 10 Moore Street – so we are familiar with the area, and have had very good leasing success there: we understand what appeals to tenants,” he said.

Russell Bullen, Quintessential Equity’s Chief Executive Officer, said the group is very pleased with the sale of the 6,709sqm building, which he calls a “top-tier office investment”.

“Since we acquired the building in 2014, we’ve completed a full regeneration and successful re- leasing campaign at the property, future-proofing it for years to come. There are diverse, high- quality, long-term tenants, strong environmental credentials and an ideal location in an area that will benefit from further investment and significant infrastructure projects.”

Mr Bullen said Quintessential Equity is committed to delivering quality projects that provide secure, long-term cash flow and risk-mitigated returns to investors. Quintessential Equity has a solid property investment track record in the nation’s capital, experiencing success in the past, delivering consistent high returns to its investors.

Growth in the CDPF, particularly via direct acquisitions of quality property, is a key part of the fund’s strategy and this acquisition – combined with the recent purchase of an office property in Hamilton, Queensland – will see CDPF’s assets under management (AUM) increase to over $100 million[2]. Mr Huljich explains “CDPF is likely to continue to invest in Centuria’s unlisted property trusts, due to their high quality income streams, however, we also intend to make more direct acquisitions, because it gives us more control over the geographical diversity of the trust, and the ability to tilt our portfolio to where we see the most potential.”

“It also means direct property exposure for our investors – with the added benefit that directly- held property improves liquidity and we believe this to be in the best interests of our investors.”

Mr Huljich concluded by saying that he is always on the lookout for quality properties to add to CDPF’s portfolio, and that while he considers commercial offices the most appealing sector at present, he is not ruling out other sectors.

“We are asset-specific buyers, so we are happy to consider all markets if we believe we can identify value – and our asset management team are experts when it comes to leasing, managing, and improving our property assets with the aim of achieving strong returns for our investors.”

About the property

10 Moore Street is a 6-level office building with 6,709 sqm of net lettable area on a 1,554 sqm site, fronting Moore and Rudd Street in Canberra’s Civic precinct. Its current 14 tenants are a diverse group of high- quality occupants, some of which have been in the building for over 25 years. The building has recently been refurbished, not only to become one of the few Civic buildings with a 5.0-star NABERS energy rating, but also to provide modern end-of-trip facilities (including showers, lockers and bike storage) and upgraded lobbies, lifts, bathrooms, and exterior.

[1] https://www.abs.gov.au/ausstats/[email protected]/latestProducts/3218.0Media%20Release12017-18
[2] Forecast AUM is based on the settlement of 381 Macarthur Ave, Hamilton (contracts exchanged) and the settlement of 10 Moore Street, Canberra. Various reasonable assumptions have been made in respect to equity inflows and does not consider potential redemptions.

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