This article is from the Australian Property Journal archive
REAL estate fund manager Centuria Capital Group has sold an office asset known as the Biomed Building in Sydney for $103 million to a local private investor.
Located at 1 Central Avenue, South Eveleigh, NSW, Centuria initially acquired the asset for $40 million as part of $104 million three-asset portfolio deal for the unlisted Centuria ATP Fund.
Centuria has now divested two assets for a collective $121.25 million, with one further asset still owned by the fund.
The $103 million sale reflects a 150% capital appreciation over eight-year ownership period, with the asset was sold at book value.
While the fund’s first asset, The Belltower, was divested for $18.25million, reflecting a 450% increase to its original acquisition value of $3.3million.
“We acquired three South Eveleigh office buildings for the ATP Fund on the cusp of the area’s regeneration,” said Jesse Curtis, head of funds management at Centuria.
“As one of the first institutions to support the precinct, our investors have since benefited from significant social and commercial infrastructure in the area. Its fringe market location has developed into a thriving hub for large and medium-sized businesses, providing easy commutability and lifestyle amenities.”
The 1998-built 1 Central Avenue spans 7,716sqm of NLA and was sold with 97.1% occupancy and a WALE of 6.6-years, with The University of Sydney as its anchor tenant.
Scott Timbrell from Rebus Property negotiated the off-market sales process, with the purchaser advised by Kurraba Group.
Just this month, Centuria has picked up the Coles and Aldi-anchored Halls Head Central sub-regional shopping centre from ISPT for $70 million and Katunga Fresh’s 21-hectare tomato-growing facility in Victoria’s Goulburn Valley for circa $100 million.
The transaction for 1 Central Avenue, South Eveleigh is expected to settle in August 2024.
Meanwhile the sale of Biomed building has given Sydney’s office investment market a boost after latest data shows volumes are down 56%, in a market dominated by private investors, according to Savills.
According to MSCI Real Assets, total investment volume ($10m+) reached approximately $815 million in the March quarter, down 68% on Q4 and 56% lower than Q1 2023.
Capital values continued to decline in March driven by the office sector. According to the MSCI/Mercer Australia Core Wholesale Monthly Property Fund Index, net capital growth for office specialist funds declined by 4.0% in March to be 16.4% lower over the year. This compares with year-on-year falls of 7.8% and 5.5% for retail specialist and industrial specialist funds respectively.
Acquisitions of secondary office assets for repurposing were a key driver of deal activity in Q1, with 499-501 Kent Street selling for $66 million to Icon Oceania, which intends to reposition the asset into a 229-room luxury hotel, while 82 Sussex Street sold for $29 million to a private investor, with plans for a mixed-use redevelopment, comprising residential and office space.
Keppel’s purchase of a 50% stake in 255 George Street from Mirvac for $363.8 million in Q2 is an encouraging sign that repricing in the office sector is gaining momentum. The asset sold at a 17% discount to its peak book value.
