Centuria Capital Group will seed an unlisted, single asset fund with a modern Footscray office acquired from the Grollo family.
The 14-level building, 1 McNab Avenue, is costing $224 million – reflecting a 4.7 per cent capitalisation rate.
It will be part funded via a $133m capital raising.
The property will then be held in the Centuria Government Income Property Fund, scheduled to run for five years.
Knight Frank’s Paul Kempton represented the vendors, Bruno Grollo and two of his children, Adam and Leeanna, who inherited the asset in 2012 following a split with the family’s construction division, which is run by another son, Daniel.
The sellers still retain a modern Dandenong commercial building, rented to the Department of Human Services, and a half stake in the CBD’s QV Centre.
Footscray is about six kilometres west of Melbourne.
1 McNab Avenue, Footscray
Completed seven years ago, 1 McNab Ave was the first stage of a now defunct mixed-use project incorporating the then-publicly owned neighbouring site.
It contains 20,191 square metres of fully let, A-grade area over 10 storeys and a four floor car park.
Victorian government backed enterprises contribute to the bulk of its income including City West Water (32pc of the revenue), State Trustees Limited (31pc) and the Department of Treasury and Finance, which pays 27pc (story continues below).
The Weighted Average Lease Expiry is 11.8 years.
CGIPF forecasts to distribute 5.25pc to shareholders in FY22.
“Centuria has a 22 year track record for delivering successful fixed-term unlisted funds,” joint chief executive Jason Huljich said.
The capital raise is the company’s biggest to date for a single-asset unlisted fund.
It is also the country’s largest for a one property trust since 2005.
“In this low interest rate environment, there is a strong appetite from retail investors who are searching for investments with compelling yields,” according to Mr Huljich.
“We continue to witness this strong appetite with the oversubscription of our recent unlisted fundraisings,” the executive added.
“With rising white-collar employment and workforces increasingly returning to the office, we believe office asset investments will increasingly deliver strong results”.
Following a merger with Primewest becoming unconditional this month, the Centuria platform will manage assets worth $16 billion.
Subscribe to our newsletter at the bottom of this page.