This article is from the Australian Property Journal archive
CANBERRA’S Optus Centre office building, at 10 Moore Street, is Centuria Diversified Property Fund’s second acquisition following a $35 million deal with Quintessential Equity.
The unlisted fund made its first direct property purchase a month ago, paying $19.74 million for a three-level A-grade office building in Brisbane’s BTP Northshore commercial precinct.
Quintessential Equity listed the Optus Centre in March shortly after taking the nearby 14 Moore Street building to full occupation after an upgrade and refurbishment.
The six-level 10 Moore Street building – also recently refurbished – has a net lettable area of 6,709 sqm and is on a 1,554 sqm site fronting Moore and Rudd Street in Canberra’s Civic precinct.
It has a 4.3 year weighted average lease expiry and is currently 98% leased to a mix of high tenants, with a 12-month rental guarantee on approximately 2% (123 sqm) of vacant space, which Centuria’s head of real estate and funds management, Jason Huljich said is confident about leasing.
“One of Centuria’s AREITs, the Centuria Metropolitan REIT, 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.
Demand for office space in Canberra was 109% higher in the first quarter of 2019 compared to the same period last year, according to Colliers as new entrants and expanding tenants hone in on larger spaces in the nation’s capital.
The Optus Centre is one of the few Civic buildings with a 5.0-star NABERS energy rating and has modern end-of-trip facilities and upgraded lobbies, lifts, bathrooms, and exterior.
“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,”
“Canberra is Australia’s second fastest-growing city (after Melbourne) and this – combined with 10 Moore Street’s central location – was a key factor in our decision to buy.
“We believe Moore Street will also quickly benefit from significant public and private investments nearby.”
Huljich said public transport to the area is excellent and stage one of the light rail, currently under construction, will improve links further, with a terminus just 100 metres from the building.
CDPF’s assets under management has now increased to more than $100 million.
“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,” Huljich said.
Russell Bullen, Quintessential Equity’s chief executive officer, said the group had completed “a full regeneration and successful re-leasing campaign at the property, future-proofing it for years to come”, since acquiring the asset in 2014.
“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.”
Earlier this month, Singaporean-based SC Capital Partners emerged as the buyer of the Finlay Crisp office complex in Canberra for $62 million from Dexus. Encouraged by conditions on the capital’s office market, will undertake a $50 million refurbishment in partnership with local asset manager Artifex Property Group.
Another offshore investor, Munich-based investment manager Real IS, has also just acquired the 5,572 sqm office building at 40 Macquarie Street in Barton, close to the Prime Minister’s office. The asset, built in 1997 and refurbished in 2014, will seed its new closed-ended Australia 10 private investment fund that will run until mid-2030, and have an overall investment volume of around $37.5 million and forecast yield of 4.75%.
Australian Property Journal
