This article is from the Australian Property Journal archive
ASX-listed Centuria Capital Group has teamed up with MA Financial Group to buy Perth’s Allendale Square from Mirvac for $223 million through a 50-50 joint venture, with an eye to the repositioning opportunities of the A-grade tower.
The counter-cyclical acquisition was made on a capitalisation rate of 7.25%.
Centuria will provide property management for the asset, which has 15% of space vacant and near-term expiries for a 5.8-year weighted average lease expiry, providing an opportunity for the joint venture parties to generate lease repositioning upside.
Some $62 million worth of refurbishment works have been put into the 31-storey office building at 77 St Georges Terrace in recent years, which has 25,908 sqm of office space and 2,745 sqm of food, beverage and non-discretionary retail space below the tower.
It was valued at $207 million as at June 30.
“Allendale Square provides a great counter-cyclical investment opportunity being acquired with embedded capital value and within a market that benefits from strong tailwinds,” Centuria Joint CEO, Jason Huljich said.
While Perth has the highest vacancy rate of the country’s major CBD markets at 15.8%, according to the Property Council, it also has close to the highest occupancy rate and Huljich said the city has a strong outlook for tenant demand throughout the medium term.
“Furthermore, the property benefits from its close proximity to Elizabeth Quay, which is Perth’s answer to Sydney’s Barangaroo,” Huljich said.
“This A-grade office building provides direct access to the new, rejuvenated waterside precinct while being in the heart of Perth’s CBD.”
Julian Biggins, joint CEO of MA Financial Group said the calibre of Allendale Square means it is well positioned to take advantage of the flight-to-quality trend occurring throughout the office market.
“This is particularly relevant in a market like Perth’s CBD where the sub-lease vacancy is at its lowest in a decade. Prime quality investments are set to capture growth as rising costs constrain new supply and upward pressure on economic rents increases.”
Cushman & Wakefield’s Josh Cullen and Colliers’ Adam Woodward negotiated the deal.
Allendale Square is the second joint-venture acquisition between Centuria and MA Financial, following their $167 million acquisition of the “The Black Stump” building at 25 Grenfell Street in Adelaide last year.
Both parties’ investment in Allendale Square will be part of their respective new unlisted single-asset close-ended wholesale property funds. The funds will provide an initial five-year term and open for investment in September 2022.
Each party will each seek to raise circa $70 million to launch their respective funds.
