Nicholas Blake

Centuria Metropolitan REIT (CMA) yesterday announced the sale of 3 Carlingford Road, Epping, for $36 million to a private buyer. The sale price represented a 118% increase on the purchase price of $16.5 million in December 2014.

The fully-leased office building sold with a tight passing yield of 5.4%, demonstrating the strength of suburban markets. The property gained a 27.2% premium between its last independent valuation in November 2017 and the sale.

CMA Trust Manager Nicholas Blake explained “With more than a dozen bidders competing for the asset, we are clearly continuing to see a strong demand for metropolitan property – and in particular for high quality properties with development potential.

“We usually look for and manage properties with an eye to leaving their purpose and use open-ended. Such flexibility is the best strategy to future-proof assets for investors, as well as addressing the need for high quality suburban stock.”

It’s clear that investors have sustaining appetite for such stock, against a limited supply of the same.

The sale campaign was run by Guillaume Volz and Henry Burke of Colliers International, and Tim Grosmann and Graeme Russell from Savills.

Grosmann, Director, Capital Transactions at Savills, said “The excellent result on Epping is a direct result of prime property fundamentals; a corner block, close proximity to a train station and strong rental reversion in a market that is starved of commercial suburban stock.”

Guillame Volz, National Director, Development Sites – Residential for Colliers, affirmed that “The sale demonstrates that strong buyer interest still exists from both local and offshore buyers for well-located suburban properties, with passing income and good development potential.”

Blake went on to say that “Applying a forward-looking lens is key to our acquisition strategy, and it pays dividends when done well. On this occasion, we have been able to realise a premium on the asset, and achieve a tight passing yield of 5.4% which compares positively against typical yields we see in key NSW metro markets of around 6% to 7%.”

For investors in this REIT, the success is testament to the importance of fund managers with deep market knowledge and the skill of identifying good opportunities with the potential for capital gain, and of actively managing assets to capitalise for significant upside. With this arsenal, CMA continues to deliver value to its investors with significant return on investment.

Contracts have been exchanged and settlement is expected in September 2018. The proceeds will be used to unlock select, accretive acquisition targets and further capital management initiatives.

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Most importantly, this activity has ensured our listed entities continue to deliver predictable and reliable returns to our investors. Distributable earnings improved to $19.9 million and $24.2 million for CMA and CIP respectively, with distribution guidance reaffirmed for both entities.

The results come one week ahead of Centuria Capital Group’s (ASX: CNI) half year results announcement on Thursday 15 February by group CEO John McBain.

CMA half-year highlights

Financial highlights

• Statutory net profit of $39.2 million
• Distributable earnings of $19.9 million representing 9.4 cents per security (cps)
• Quarterly distributions paid during 1H18 totalling 9.05 cps
• Increased net tangible assets (NTA) to $2.39 per security, up 7 cps or 3.0% from December 2016
• Disciplined gearing of 29.6%, within target range
• Inclusion in the S&P/ASX 300 A-REIT index from September 2017
• Rolling 12-month total return of 20.9% outperforming S&P/ASX 300 A-REIT Index at 6.4%3 as at 31 December

Operating highlights

• Strong leasing activity with 20 lease transactions across 9,234sqm
• FY18 lease expiries of 1.2% provide solid earnings visibility for remainder of FY18
• Increase in portfolio valuations to $899.7 million since 1H17
• Like-for-like total portfolio increased by $41.6 million, or 7.0%
• Portfolio weighted average capitalisation rate (WACR) firmed to 6.87% (44bps) from 1H17
• Strong portfolio weighted average lease expiry (WALE) of 4.3 years
• Acquisition of four high quality, fully occupied assets totalling $210.9 million
• Average NABERS energy rating of 3.8

CIP half-year highlights

Financial highlights

• Statutory net profit of $49.6 million
• Distributable earnings^[1] of $24.2 million representing 10.1 cents per unit (cpu)
• Distributions of 9.7cpu paid in 1H18
• Total assets increased 16.7% to $1,075.0 million^[2], with NTA increasing by 4.7%[2] to $2.46 per unit
• Continued to deleverage with gearing reduced to 40.6% (43.1% at Jun-17)
• $31 million^[3] revaluation gain, driven primarily by leasing success

Operating highlights

• Agreed leases over 159,502sqm; representing 20.8% of portfolio GLA
• Portfolio occupancy increased to 95.9% (92.1% at Jun-17)^[4], with a 4.9 year WALE3
• Acquisition of 7.7% strategic interest in Propertylink Group^[5]
• Acquisition of four strategic, geographically diversified properties for $78.4 million before transaction costs

Centuria’s listed business has grown from an aspiration just over three years ago, to two significant, market leading S&P ASX 300 Index funds today. Full results in the attached ASX announcements.

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[1] Distributable earnings is a financial measure which is not prescribed by Australian Accounting Standards (“AAS”) and represents the profit under AAS adjusted for specific non-cash and significant items.  The CPF2L Directors consider that distributable earnings reflect the core earnings of CIP
[2] Since 30 June 2017
[3] Reflects gross increase, does not include capital expenditure incurred since 1 July 2017, excludes Mark to Market movement for PLG securities
[4] By income
[5] Centuria Capital Group (“CNI”) hold a 9.3% interest in PLG. CNI and CIP hold 17% of PLG when viewed in combination

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Jason Huljich

Centuria Capital Group (ASX: CNI) is pleased to announce that its subsidiary, Centuria Property Funds Limited, has unconditionally exchanged contracts to acquire 60 Brougham Street, Geelong, Victoria for $115.25 million.

The property will be acquired by the Centuria Geelong Office Fund, a new single asset unlisted property fund which will be launched in February 2018. On settlement, total Centuria assets under management (AUM) will be $4.5 billion.

The A-Grade building is 100% occupied, with 94% of its income underpinned by a long-term lease to AAA-rated Victorian State Government entity, the Transport Accident Commission (TAC).

Centuria’s property funds management business is led by Jason Huljich. Following a management restructure late last year, Mr Huljich is now responsible for both listed and unlisted property, the property services business, property acquisitions and disposals and special property and debt opportunities.

With the new Geelong fund enjoying a 10-plus year lease to a State Government tenant and a starting distribution of 7% p/a paid monthly, Mr Huljich expects strong demand from Centuria’s investors.

“The building is centrally located in the thriving regional city of Geelong, which is benefiting from the relocation of a number of Government agencies, including WorkSafe and the National Disability Insurance Agency.

“The acquisition complements our investment philosophy and offers reliable, long term income for investors.”

The acquisition caps off a busy first half of FY18. With around $655 million of quality, investment grade property assets already acquired, Centuria is proving to be one of the most active and fastest-growing fund managers in its peer group.

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Nicholas Blake

Centuria Property Funds Limited (CPFL), as Responsible Entity of Centuria Metropolitan REIT (ASX: CMA), is pleased to announce the following:

• Acquisition of two NSW metropolitan office assets for $119.1 million[1] (Acquisitions);
• An underwritten[2] accelerated entitlement offer to raise approximately $60 million (Equity Raising) at an issue price of $2.39 per CMA security (Issue Price);
• Independent valuations providing an uplift of $33.8m driven by strong market fundamentals, active asset management and increased investor appetite for non-CBD office assets; and
• Entered into an unconditional contract for the sale of 44 Hampden Road, Artarmon for $10.3 million, a 14.4% premium to book value generating an 18.4% IRR since acquisition

CMA Trust Manager, Mr Nicholas Blake commented: “Metropolitan markets are core to Centuria’s DNA, and these acquisitions increase CMA’s exposure to some of the highest performing submarkets in the nation at attractive pricing.”

“We see significant potential in St Leonards, with Sydney’s North Shore experiencing tightening vacancy rates, limited supply and strengthening rentals. St Leonards benefits from these strong fundamentals but has lagged the neighbouring North Sydney and Chatswood submarkets due to significant stock withdrawal for residential conversion. Accordingly, we expect this market to re-position as the residential development cycle abates.”

“Our investment in the A Grade asset 201 Pacific Highway, St Leonards, which is adjacent to CMA’s existing asset at 203 Pacific Highway consolidates our footprint in this near CBD market. Both assets are well-located above the St Leonards rail station with significant in-place amenity.”

“Similarly, 77 Market Street Wollongong is a high-quality, fit-for-purpose building in a well-defined market, anchored by strong commercial tenants.”

“Both acquisitions are highly complementary to our portfolio, and well positioned to deliver value for our securityholders”.

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Jason Huljich

Centuria Property Funds has announced a significant profit on the sale of a Sydney CBD office property, Swire House. The 10 Spring Street, Sydney property was purchased in 2013 for $91.64 million and has sold for $270.05 million.

The record breaking price for a B-grade office sale in Sydney means Centuria’s investors’ equity investment tripled over the four years in addition to their income return of 8% per annum.

The final sale price is an outstanding outcome for investors, reflecting a capital value rate per square metre of $19,477.

Speaking about the sale of the property, Jason Huljich, CEO Unlisted Property Funds for Centuria, said he was unsurprised by the strong level of buyer interest.

“High quality properties in such an excellent location don’t often come onto the market, and 10 Spring Street has the advantage of appealing to a range of buyers,” said Mr Huljich.

“We believed it would be attractive for purchasers looking to buy and hold the property, with a strong passing net income and the upside of fixed annual rental increases of around 4%. In addition, the weighted average lease expiry (WALE) is relatively short at around three years, offering the chance to capitalise on the strong demand for B-grade office space in the Sydney CBD when leases come up for renewal,” Mr Huljich said.

According to the Property Council of Australia, the Sydney CBD is currently experiencing its lowest vacancy rates in close to a decade, and net effective rents in B grade offices have increased by 60% in 2016 alone.

Mr Huljich went on to explain that the lease expiry profile also means that buyers looking for prime development opportunities were excited by the property.

“The site is large, at 1505 sqm, has dual street frontages, and will benefit from the new infrastructure and transport initiatives currently under construction. Furthermore, any development would result in spectacular views over Sydney Harbour.

“Prior to the sale, we worked with our architects on the redevelopment potential of the site and we were able to show interested buyers two broad indicative schemes. One involves redevelopment of the existing property, and a second envisages amalgamation with surrounding sites to create a significant mixed-use development.” Mr Huljich said.

While the building was 20% vacant at the time of acquisition, Centuria was attracted to the property because of its prime location, in what is now a Strategic Site as identified in the City of Sydney Draft Planning Strategy 2016, providing the potential to construct a tower of up to 290 metres in height. In addition, Centuria’s active management of the property, including a program of upgrades and investment, has seen record B-grade rents achieved of up to $1,200 psqm and the building becoming fully leased.

In conclusion, Mr Huljich said that Centuria was very pleased with sale price of 10 Spring Street, and explained that the decision to sell was made in line with the Group’s overarching strategy.

“10 Spring Street has been a spectacular performer for our investors since we purchased it in 2013, but the time is right for us to sell and to redirect the funds to other investment opportunities where we believe we can add more value in the future,” Mr Huljich said.

The sale was handled by Josh Cullen and Rick Butler of INC RE and Simon Fenn, Graeme Russell and Ben Azar of Savills.

Simon Fenn said “10 Spring Street attracted aggressive local and offshore capital looking to secure an asset that has the potential to be part of a rare super site in the future whilst also offering the immediate opportunity to capitalise on the strength of Sydney’s B grade leasing market.”
Josh Cullen added “This result is a clear demonstration of the strong appetite from various sources of capital seeking to enter into the Sydney market.”

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Nicholas Collishaw

Centuria’s listed property trusts have announced their FY17 profit results, with both Centuria Metropolitan REIT (ASX:CMA) and Centuria Industrial REIT (ASX: CIP), announcing positive returns for investors with net profits of $37.7 million and $50.8 million, respectively.

Nicholas Collishaw, CEO of listed property at Centuria said he’s delighted with the results, which reflect the significant support of both retail and institutional investors in Centuria’s listed funds.

“Over the past financial year, the listed property division has successfully completed two capital raisings, acquired the majority of 360 Capital’s property funds, merged the Centuria Urban and Metropolitan REITs to create a market leading metropolitan office REIT, and taken control of CIP from 360 Capital. All these movements have contributed to a very positive return for investors.”

Nicholas Blake, Trust Manager, CMA, said the results highlight the benefits for investors in choosing a specialist manager.

“CMA has delivered a strong total return of 49.5% (as at August 2, 2017) since listing in December 2014, outperforming the S&P/ASX 300 Index which returned 39.6% (as at August 2, 2017) over the same period. The trust is well-positioned to continue to deliver predictable and growing returns to security holders, and we will continue to seek opportunities to extract additional value from the portfolio through active asset-management initiatives.

“In Australia’s metropolitan office markets, superior asset selection, active asset management and close relationships with tenants are the cornerstones of success. CMA represents an opportunity for investors to gain exposure to an investment-grade portfolio managed by hands-on professional managers, specialised in generating value throughout the property cycle.”

Ross Lees, Trust Manager, CIP, said Centuria’s activity since taking over control of CIP In January demonstrates the manager’s active approach.

“We have actively pursued strategies to stablise and reposition the portfolio for long-term success following the transition of management of the industrial trust from 360 Capital to Centuria in January this year. In FY17 we achieved record leasing volumes, agreed to transact $95 million of assets and refinanced CIP’s entire debt book. During this period of heightened activity, we remained focused on our core objectives, and delivered earnings and distributions in line with the re-stated guidance provided in February. We commence FY18 in a solid position to continue growing value for unit holders.”

Key Highlights – CMA 

Financial Highlights as at 30 June 2017:

• Statutory net profit of $37.7 million
• Distributable earnings of $22.8 million representing 19.0 cents per security (cps)
• Increased net tangible assets (NTA) to $2.32 per security, up 14 cps or 6.4%
• Gearing reduced to 29.5% (from 33.2% since 30 June 2016)

Operational Highlights during FY17

• Improved portfolio occupancy to 97.3%
• Significant leasing success across the portfolio with 41 transactions across 20,321 sqm
• Increase in portfolio valuations to $610.0 million, up $234.9 million since 30 June 2016 due to the merger with Centuria Urban REIT valued at $210.0 million and asset revaluations of $24.9 million
• Portfolio WACR firmed to 7.19% (40bp improvement from 30 June 2016)
• Portfolio weighted average lease expiry (WALE) of 3.9 years
• Exchanged contracts on the to be constructed Target Headquarters in Williams Landing, VIC

Significant activity post-30 June 2017

• On strategy acquisition of two assets in Western Australia valued at $91.8 million
• Successfully completed a $90 million capital raising, increasing CMA’s market capitalisation to over $500 million with improved potential for inclusion in the S&P/ASX 300 Index
• Gearing reduced to 27.4% with significant debt headroom to fund the current acquisition pipeline and pursue further attractive acquisitions
• Further improved portfolio occupancy to 98.2% and increased WALE to 4.5 years

Key Highlights – CIP 

• Statutory net profit of $50.8 million
• Distributable earnings1 of $43.5 million, representing 20.5 cents per unit (CPU) in line with revised guidance
• Total assets of $921.5 million, with NTA increasing by 1.3% to $2.35 per unit
• Agreed leases over 134,000sqm; representing 17.7% of portfolio GLA
• Portfolio occupancy at 92.1%7, with a 4.4 year WALE
• Reduced FY18 lease expiry below 5.0%7
• Refinanced entire debt book with new $450 million common terms facility
• Conducted $35 million placement on 29 June 2017
• Divested two dated assets for $30 million; 7.9% premium to book value
• Acquired two assets, 100% occupied, for $65 million

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How can your clients help their children realise the great Australian dream of home ownership without having to sacrifice their own standard of living? In this article, Centuria explores the use of investment bonds as a strategy for your clients to help their children get a foot on the property ladder.

The housing affordability crisis

It’s no surprise housing affordability is in the news daily and receives political attention at both the state and federal levels of government.

To illustrate, statistics released on the day of writing by Domain Group, Melbourne house prices have jumped $100,000 in the year ended 30 June 2017, with the median now sitting at a record $865,712 – it broke through the $800,000 barrier just six months earlier.

Regional areas may have cheaper housing, however there are other issues to consider with such a move, such as the availability of employment opportunities. Given the high unemployment rates in many regional towns, such a move is not always an option.

CoreLogic’s 2016 report into housing affordability^[1] considered three measures of affordability and compared the current data to that collated 15 years earlier (data at September 2016 and 2001).

Growth in household income has not kept pace with growth in the property market. At the same time, the costs of essential items – power, petrol, food, health – have increased. This makes saving the 20% deposit increasingly difficult, in a market where the goalposts constantly shift.

As housing affordability continues to decline, the size of the average home loan has increased; as illustrated in figure two, this means a greater proportion of household income is required to service a mortgage. Bearing in mind that interest rates are at historical lows, this will increase further once the Reserve Bank moves to increase rates.

Is home ownership still the great Australian dream?

According to research undertaken by Australian National University^[2], in which it polled over 2,500 Australians, home ownership remains a national aspiration.

No annual tax reporting

As long as the client’s money remains invested, the manager of the investment bond will pay tax on investment earnings; there is no requirement for your client to declare those earnings in their annual tax reporting.

No limit on investment amount

There is no limit on the amount that can be invested to establish an investment bond. Investors can make subsequent investments up to maximum of 125% of the previous year’s contribution without restarting the ten-year period. Additional investments can be made annually or as a regular contribution. This way, parents can initiate an investment bond to help their children save toward a home, and make either regular or ad-hoc additional contributions.

Transfer of ownership

The ownership of the investment bond can be easily assigned or transferred at any time. The original start date is retained for tax purposes.

Beneficiaries

Investment bonds provide investors with freedom to nominate anyone as a beneficiary in the event of their death. As an investment bond falls outside of the estate, it is not distributed according to the will, nor is it affected if the owner dies intestate.

Paid tax-free to nominated beneficiary/ies

Once the ten-year investment period ends, or in the event of the death of the investor, the investment bond is paid tax-free to the nominated beneficiary/ies.

Case study

Matthew and Lisa are a hard-working professional couple with a 15-year-old daughter, Abbey. They have been concerned with talk of rising property prices and the difficulty for first home buyers to afford a property. They have set a goal of being able to assist Abbey with the purchase of a property by funding her deposit.

Based on the national median apartment price of $546,422, a 20% deposit of approximately $110,000 would be required to purchase an apartment without paying lenders mortgage insurance.

Mathew and Lisa have saved $25,000 in a cash account for Abbey. Both parents are paying the highest marginal tax rate, and want to be able to access the investment in 10 years’ time when Abbey reaches age 25 and is ready to take on the responsibility of a mortgage.

Matthew and Lisa consider other options, such as gifting or loaning the deposit to Abbey, or being guarantor and signing as joint borrowers on Abbey’s loan.

Their financial adviser explains the advantages and disadvantages of each option, and recommends they invest the $25,000 into the growth option of an investment bond. As well as the tax benefits of using an investment bond, Matthew and Lisa can make additional contributions up to $31,250 (125% of the initial $25,000 investment) each year.

Matthew and Lisa believe they can afford to add between $5,000 and $10,000 to the investment each year over the 10-year period. As illustrated in figure six, a regular contribution of $5,000 per annum, on top of the initial investment of $25,000, over the 10-year period would result in a tax-free deposit of $114,019; a $10,000 contribution would provide a tax-free amount of $183,582.

Investment bonds are a unique and useful investment vehicle. No other investment provides exposure to a range of underlying investment options with no tax liability on maturation after 10 years. It’s the ideal time span for parents to save a contribution toward their children’s first home; after all, even if the property bubble does deflate, on a relative basis, house prices in Australia are likely to remain high for many years to come.

[1] CoreLogic, Housing Affordability Report, December 2016
[2] ANUpoll of Attitudes to Housing Affordability, March 2017

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Disclaimer: General information only. Suitability of an investment in a Centuria Investment Bond will depend on a person’s circumstances, financial objectives and needs, none of which have been taken into consideration in this advertisement. Prospective investors should obtain and read a copy of the Product Disclosure Statement (PDS) and consider the information in the PDS in light of their circumstances, objectives and needs before making a decision to invest. We recommend that prospective investors consult with their financial adviser.  This document is not an offer to invest in any of Centuria’s Investment Bonds. Investment in Centuria’s Investment Bonds are subject to risk as detailed in the PDS. Centuria will receive fees in relation to an investment in its Investment Bonds. Issued by Centuria Life Limited ABN 79 087 649 054 AFSL 230867.

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Ross Lees

Centuria Property Funds yesterday announced two key leasing deals for its listed industrial trust, Centuria Industrial REIT (ASX: CIP). The trust has renewed leases with AWH, Australia’s largest wool-handling operation, for CIP’s existing asset at 310 Springwood Avenue, Bibra Lake, WA (44,296sqm), and for the recently-acquired adjoining asset at Lot 14 Sudlow Road (39,485sqm).

The term will come into effect with the settlement of Lot 14 Sudlow Road in September. As the largest tenant in CIP’s portfolio, AWH occupies 11% of the trust’s gross leasable area (GLA).

The deal caps off an active period since Centuria took control of CIP in January, demonstrating our active approach to management. The activity has helped stabilise and expand the portfolio, including increasing the size of the portfolio to $957m2, refinancing CIP’s entire bank debt facilities and leasing activity across 19% of the portfolio.

CIP Trust Manager, Ross Lees, said he is delighted to have secured Australia’s largest industrial leasing transaction for 2017: “AWH is one of Australia’s leading logistics and warehousing specialists, occupying over 650,000sqm. AWH provides storage, handling, freight forwarding and inventory management services for import, export and domestic distribution, and services over 55% of the nation’s traded wools. This deal will extend AWH’s tenure by an average of 5.6 years across both properties, significantly reducing CIP’s FY20 lease expiry profile, which is great news for CIP investors.”

Mr Lees said that AWH was representative of the quality of tenants that CIP seeks to attract and retain.

“We are active managers and a relationship-based business. By maintaining close relationships with tenants and investors, we are aware of their needs and able to swiftly take advantage of market opportunities for the benefit of both,” he said.

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Nicholas Blake

Centuria Property Funds has announced that its listed office fund, Centuria Metropolitan REIT (ASX: CMA), has made three major acquisitions in Perth and Melbourne. The acquisitions mark Centuria’s first foray into the Perth office market, and strengthen CMA’s lead as the largest pure-play metropolitan fund manager in the market.

In Perth, Centuria has acquired two new commercial assets: The Hatch Building at 144 Sterling Street, and 42-46 Colin Street, for a combined sum of $91.8 million. Combined with Centuria’s acquisition of the Target Head Office at Williams Landing late last month, the deals are valued at $150 million, and will increase Centuria Capital Group’s (ASX: CNI) entire funds under management to $4.15 billion.

CMA Trust Manager, Nicholas Blake, said the group is always looking for opportunities that will benefit from CMA’s active management approach and thereby deliver strong returns to shareholders.

“We are asset-driven investors, and have purchased these properties on the basis that they are highly complementary to CMA’s current portfolio and our active management strategy. Centuria’s approach is to pay the fee and to take over the management from the agent, freeing them up to work on the next property, which enables us to generate income returns alongside the potential for capital growth.

“The two Perth assets are 100% leased, with the major occupiers being WA Police, Insurance Australia Group Ltd, and consulting firm Hatch. This diverse range of high-quality tenants, from government-owned and listed companies to international firms, means shareholders can feel confident in securing attractive and stable yield. Looking to Victoria, the new Target HQ at Williams Landing will be 100% leased and stands to benefit as the Williams Landing population grows, alongside ongoing infrastructure improvements in the area.”

The combined WALE of the three properties is 6.5 years and their fixed rental reviews sit between 3.25% and 3.75%.

The acquisitions have been partially funded by a $90 million equity raising, which will see CMA extend its lead as the market’s largest listed metropolitan market office fund, and the leading specialist manager within the space. The REIT’s property portfolio will increase in value by 25% to $760 million. It will see the trust’s market capitalisation increase from approximately $430 million to more than $520 million, improving its potential for S&P/ASX300 index inclusion (based on securities prices at 12 July 2017).

In addition, CMA has entered exclusive due diligence to acquire a development site for the construction of an A-Grade commercial office building in South West Sydney, expected to be valued at around $75 million.

Mr Blake said the Perth metro market was beginning to show excellent fundamentals, while AREITs in general are proving attractive to risk-averse investors, informing his approach and pipeline of deals.

“At CMA, we believe a truly quality property can provide unitholders with returns and yields over time in any market. CMA’s west-coast expansion, in line with our asset-driven and active management approach, will see shareholders benefit from the significant east/west pricing disconnect in the office market.

“Looking to AREITs in general, the transparency and certainty of earnings from solid property portfolios are perennially attractive to investors, particularly in light of continuing uncertainty in the global markets. We are confident these latest additions to our portfolio will meet investor appetite, via a complementary mix of income streams from long-term leases, high-quality tenants and the potential for value creation via CMA’s active management.”

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Nicholas Collishaw

Centuria’s listed property division yesterday announced it will merge its two listed property trusts, Centuria Metropolitan REIT (ASX: CMA) and Centuria Urban REIT (ASX: CUA).

Separate unit holder meetings conducted this morning saw unitholders for both funds vote to merge their respective REITs with over 99.9 per cent approval.

The merger is consistent with the Group’s strategy to expand CUA and CMA’s investor base and investment portfolio to create Australia’s leading listed metropolitan office REIT.

Nicholas Collishaw, CEO of Centuria’s Listed Property Funds, said “With a total portfolio valued in excess of $600 million and market capitalisation of approximately $430 million CMA presents as a strong candidate for inclusion into S&P ASX 300 index.”

CMA Trust Manager, Nicholas Blake commented “Investors in the expanded CMA will continue to benefit from Centuria Capital’s expertise and dedicated management of metropolitan assets. Within the markets we invest in, we continue to find compelling acquisition opportunities. With the expected financial benefit driven by economies of scale from the merger, CMA should reduce its cost of capital, making additional acquisitions possible.”

CMA was assisted in the merger by Moelis Australia Limited and Minter Ellison. CUA engaged BG Capital Corporation and HWL Ebsworth.

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