Centuria will create a single asset unlisted fund with the purchase of a modern Port Adelaide office.
Fully leased to the state government, the six storey building, 21-25 Nile Street, is costing $62.75 million – a price reflecting a 4.6 per cent yield.
The vendor, Charter Hall, paid $43.6m on a funds through basis in 2017 – holding it upon completion the year later in the Charter Hall Direct managed PFA Fund.
The property is within a major urban-renewal precinct – anticipated to be home to 8000 residents by 2041.
Defence SA’s Osborne Navy Shipyard hub – where the federal government has committed to a 50 year, $90 billion defence infrastructure pipeline – is nearby.
Port Adelaide is about 12 kilometres north west of the CBD.
Knight Frank’s Guy Bennett with Cushman & Wakefield’s Leigh Melbourne, Nick Rathgeber, Mark Hansen and Josh Cullen represented Charter Hall.
21-25 Nile Street, Port Adelaide
On 3236 square metres, also with frontage to Nelson and Robe streets, the building contains three levels of offices over a two storey car park and ground floor, with retail.
The lettable area is 6393 sqm.
Shared Services SA occupies 94 per cent of it with the balance rented to the Urban Renewal Authority; their leases allow for fixed annual rental revies of 3.1pc.
The asset’s Weighted Average Lease Expiry is 11.1 years.
“The high quality Nile St office…is situated in the heart of the state-backed Port Adelaide Rejuvenation Project, a 20 year regeneration initiative that is anticipated to attract up to…1500 construction jobs,” Centuria co-chief executive officer, Jason Huljich said.
“Additionally, its exemplary sustainable features, and being a young property, prevents capital expenditure leakage, providing value for investors,” he added (story continues below).
Capital raising coming
The Nile St office will be held by Centuria Government Income Property Fund No 2 (CGIPF2), which is promising a 5.25pc starting distribution.
“In August, 2021, Centuria completed Australia’s largest single-asset retail capital fundraiser, within three weeks raising $133m for a $224m A-grade office building in Footscray, Victoria, which is more than 90pc leased to the Victorian government,” Mr Huljich said.
“CGIPF2 aims to replicate the success of Footscray with this high-quality, sustainable Port Adelaide office building”.
“Throughout the past 12 months, South Australia’s economy has demonstrated its resilience,” according to Centuria head of funds management, Ross Lees.
In the state, the executive said, the manager owns four offices, 10 industrial facilities, three daily needs retail centres, agricultural assets, and essential services product, including childcare and healthcare investments.
“We are confident in Adelaide’s commercial real estate market, which is underpinned by strong employment, regeneration and infrastructure projects,” he added.
CGIPF2 will run five years.
Centuria will launch a $35m capital raising on October 25.
Charter Hall Direct chief executive officer Steve Bennett said the sale allows it to re-deploy capital into new acquisitions and deliver its development pipeline, which includes a recently announced Adelaide office at 60 King William St.
The fund has grown $2.3b since it acquired 21-25 Nile St.
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