Centuria, MA partner again for office

Mirvac completed a $62 million refurbishment of Allendale Square in 2016.

Centuria has teamed with MA Financial to acquire a Perth CBD office listed 13 months ago.

The buyers will each hold a 50 per cent stake in Allendale Square, at 77 St Georges Terrace, in single asset funds now seeking wholesale investors.

Almost 10 per cent of 77 St George Terrace’s lettable area is retail.

The deal, with Mirvac, is worth c$223 million, speculated to reflect a passing yield of just over six per cent.

The vendor valued the asset at $207m in June, assuming a 6.75pc capitalisation rate.

Mirvac is proposing a 31 level office at 383 La Trobe Street, Melbourne.

When it hit the market, price expectations were c$250m.

Mirvac listed the asset to focus on its development pipeline which in Melbourne includes the 383 La Trobe St office and several Build to Rent investments to support a new brand, Liv.

Following the 77 St Georges Tce sale it still holds, in Perth, the 32 level David Malcolm Justice Centre.

At 28 Barrack Street – about 400m form Allendale Square – that property was valued at $248.3m three months ago.

For Centuria and MA, Allendale Square is the second recent office co-investment, coming off the $166.7m deal with Blackstone for Adelaide’s 25 Grenfell St, last October.

Allendale Square

Mirvac paid $231m for Allendale Square in 2013, for the Mirvac Property Trust.

The manager also undertook a $62m renovation six years ago.

With c25,772 sqm of A-grade office area over 2745 sqm of retail – a precinct dubbed Underground at Allendale Square – 77 St Georges Tce rises 31 floors, offering Swan River views.

There are 84 car parks too.

The site spreads 4057 sqm – just over an acre (story continues below).

Centuria and MA last October paid $166.6 million for Adelaide’s Grenfell Centre.

A sale earlier this year to Fortius, which was last week taken over by Growthpoint, was scuppered.

Negative into a positive

Allendale Square was listed 22pc vacant, but sold 85pc occupied.

The Weighted Average Lease Expiry was 6.2 years; it is now 5.8 yrs.

MinterEllison and WA Bar Chambers are the anchors – all up occupying c9476 sqm.

Colliers’ Adam Woodward with Cushman & Wakefield’s Josh Cullen were the agents.

According to the Property Council of Australia’s bi-annual Office Market Report, released in August, Perth CBD office vacancy is 15.8pc, up nearly a basis point since January, and the highest in the country.

Sublet vacancy however, is at its lowest, the buyers said.

Centuria, which controls its leasing and management in-house, said its Perth office portfolio has a relatively low 5.02pc vacancy rate and it plans to reposition 77 St George Tce, starting with a major renovation.

Joint chief executive officer Jason Huljich described the property, with its vacancy and staggered WALE, as a counter cyclical opportunity.

The manager is now seeking an initial $70m from wholesale investors for its fund.

MA meanwhile is calling out for a total of $70m to back its trust.

Each entity is scheduled to run five years.

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Marc Pallisco

A former property analyst and print journalist, Marc is the publisher of realestatesource.com.au.