- $224M Footscray acquisition to become part of single-asset unlisted fund
- Unlisted fund to seek $133M through a raise
- Currently has 100% occupancy to mostly Victorian Government
While a lockdown will certainly have stifled the office recovery in Melbourne, Centuria Capital Group (ASX: CNI) has taken a punt on office leasing with what the company said is Australia’s largest single-asset unlisted fund.
The $224 million A-grade office acquisition in Footscray will become part of a new unlisted fixed-term, single-asset fund, Centuria Government Income Property Fund (CGIPF).
Located less than 10km away from the Melbourne CBD, 1 McNab Avenue “was secured with 100% occupancy on an 11.8-year Weighted Average Lease Expiry (WALE) at a market capitalisation rate of 4.7%.”
“CGIPF forecasts a starting distribution yield of 5.25% in FY22 and the fund has an initial five-year term.”
Centuria Capital Group
Mostly occupied by Victorian Government departments and agencies, the acquisition is not the only government occupied acquisition in recent months, Charter Hall Long WALE REIT (ASX: CLW) saw promise in four government properties.
Investors seemed to pounce at the opportunity, CLW quickly raised the necessary $250 million through a fully underwritten 1-for-10.68 accelerated non-renounceable entitlement offer, at $4.65 per security.
CGIPF is expected to raise $133 million to partly fund the acquisition, Jason Huljich, Centuria Join CEO, said, “This will be our largest capital raise to date for a single-asset unlisted fund…”
“In fact, it’s the largest retail equity raise undertaken in Australia for a single-asset fixed-term unlisted fund within the past 15 years”
Jason Huljich, Centuria Join CEO
“In this low interest rate environment, there is a strong appetite from retail investors who are searching for investments with compelling yields. We continue to witness this strong appetite with the oversubscription of our recent unlisted fundraisings.”
The area also has strong government interest, Centuria said.
“The Victorian Government has identified Footscray for a new government work precinct. It is creating five government work hubs for Victorian Public Service (VPS) in metropolitan Melbourne areas to allow workers to be in close proximity to their homes.”