This article is from the Australian Property Journal archive
THE Centuria Office REIT (COF) has divested five strata office levels fully-leased to government tenants in the Adelaide CBD for $20.9 million, at a circa 10% premium to book value as investors continue to back the rebound of cities.
The 4,059 sqm of offices at 131-139 Grenfell Street had been repositioned over the past 18 months and are now nearly 70% leased to the South Australian government with the balance occupied by the federal government. It has a weighted average lease expiry (WALE) of 2.8 years. The bulk of the expiry is in 2024.
It was last valued at the end of June last year at $19 million, on a capitalisation rate of 7.00%.
Built in 2009, the 19 storey mixed use building has a 4.0-star NABERS rating and is on 1,253 sqm of land, overlooking Hindmarsh Square and close to Rundle Mall, and includes 10 secure car parks.
“The disposal demonstrates Centuria’s strong leasing and transaction capability, achieving a sale result that reinforces COF’s underlying NTA,” the trust said. Settlement is expected this month.
Elsewhere in the Adelaide CBD, German group Atlantic Funds is hoping to reap $180 million for the Riverside Centre after undertaking a refurbishment and leasing program of the distinctive government-tenanted tower, while expressions of interest also closed last month for BlackRock’s 151 Pirie Street office building that also overlooks Hindmarsh Square and has government tenants.
COF said in its quarterly update yesterday that is has also settled on its acquisition of the remaining 50% share of 203 Pacific Highway in St Leonards.
Throughout the year to date, terms were agreed or leases completed across its portfolio for 22,970 sqm across 30 separate deals. They included 6,820 sqm of new leases, representing 2.3% of portfolio net lettable area, 16,150 sqm of renewals, representing 5.3%. Six leases of over 1,000 sqm in the period accounts for over half the leased area.
Portfolio occupancy increased to 94.1% and WALE is 4.1 years.
COF reiterated its full year funds from operations guidance of 18.3c per unit and distribution guidance of 16.6 cpu, representing a FY22 distribution yield of 7.5%.
