This article is from the Australian Property Journal archive
CENTURIA Group is looking at larger acquisitions in its next stage of growth, and the group is currently casting its eye over a number of opportunities.
Centuria operates a successful unlisted property fund management business and also listed Centuria Metropolitan REIT in 2014. Total FUM over both which is $1.4 billion.
CEO John McBain disagrees with some views in the marketplace that there is a lack of investment opportunities in the current competitive environment, because he said Centuria has been able to identify assets continuously.
McBain believes this is because the company has been able to leverage from its 20 years’ experience as an unlisted property funds manager, identifying properties with some vacancy, but with significant upside.
“I find it amusing when I hear that there are very little or no opportunities in the market.
“A lot of the time, purchasers don’t have the experience to acquire a property with some vacancy and reposition the assets.
“Large listed property managers are looking at vanilla assets to add to their portfolio and become rent collectors.
“Unlisted is in the business of buying, repositioning and selling. We have learned over 20 years as an unlisted property fund manager, and our in-house team understand the assets,” McBain pointed to the sale of 175 Castlereagh St Sydney, which Centuria purchased for $56 million in 2013 and sold in December last year for $98 million.
In another deal, Centuria sold two properties in Sydney’s Macquarie Park for$101 million after paying only $24 million for the assets.
Buoyed by these results, McBain said Centuria is ready for the next stage of growth, because he believes a larger Centuria will attract major institutions and capital partners.
“Centuria currently has no mandates from wholesale clients. But it was a good experience to partner with Mirvac on the ATP bid,” he said.
To fund the $104 million ATP acquisition, Centuria launched a retail equity raising for $62 million and it ended up receiving over $130 million of investor interest.
Centuria is reportedly working with global powerhouse BlackRock on the $280 million acquisition of the Zenith office complex at Chatswood. The 44,000 dual tower complex has a 94% occupancy rate.
“The problem we have right now is that the parent company is relatively small. We need to grow by another $100-150 million and once that happens, it would be easier to bring in institutions.
“And I see that happening in just 1 or 2 acquisitions,” he added.
McBain said Centuria’s new appointment of Simon Holt as CFO would be key to the group’s next stage of growth. Holt brings over 16 years of experience in local and global finance, property and listed securitisation.
McBain said Holt’s appointment adds to Centuria’s in-house expertise – unlisted property led by Jason Huljich and listed property headed up by Nicholas Collishaw.
Whilst the primary focus will be on growing the portfolio, McBain said the group is continually reviewing acquisition of further funds management platforms which would be accretive to the group.
“A fund manager’s job is not to get between a client and an opportunity because it is not in the fund manager’s best interest of growing their assets under management portfolio.
“We have a real strong discipline and we are reviewing the potential of our assets daily,” McBain said.
Australian Property Journal
