Centuria acquires Port Adelaide offices for $63m
Centuria has paid $62.75m for a Port Adelaide office building fully leased to the South Australian state government.
Shared Services SA is the primary tenant in the six-level office building, while Renewal SA also occupies a small portion of the 6393sq m of floor-space.
The deal for the A-grade building reflects an initial yield of 4.6 per cent.
Centuria confirmed the building would be added to a new single-asset, close-ended unlisted fund – Centuria Government Income Property Fund No. 2 – with an initial five-year term delivering a starting distribution yield of 5.25 per cent.
Centuria joint chief executive Jason Huljich said the property fund manager remained confident in areas of the country supported by long-term, government-backed infrastructure projects.
“The high quality Nile St office building 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 8000 additional residents and 1500 construction jobs,” he said.
“Additionally, Port Adelaide is the gateway to the federal government-backed Osborne naval shipyard, which will deliver $90bn of naval defence infrastructure throughout a 50-year pipeline.”
Centuria is a significant investor in South Australia, controlling a range of office buildings, industrial facilities, retail assets as well as agriculture, childcare and healthcare properties.
It is looking to raise $35m for the new acquisition, and is hoping to replicate its recent success raising $133m in three weeks for a $224m, government-leased office building in Footscray.
Construction of the Port Adelaide office building, on the corner of Robe and Nile streets, was announced in 2016 by the former Labor state government, with the intention of relocating 500 public servants to the Port and revitalising the industrial precinct.
A 15-year lease was entered into, but the move was met with a backlash from public servants who didn’t want to be shifted to the Port once construction was completed in 2018.
The Liberal state government then cancelled part of the move after it took power in 2018, and later transitioned staff from several departments including Treasury.
The building, which provides a 6-Star NABERS energy rating and 6-Star Green Star Design rating, comprises a total 6,393sq m of net lettable area across three office levels, two upper car park levels and ground floor entrance foyer with cafe and office tenancies.
Charter Hall acquired the property as a fund-through development in 2017.
Charter Hall Direct chief executive Steven Bennett said the property had delivered a “strong investment return” for investors in its unlisted PFA fund.
“This asset sale provides an opportunity for PFA to realise returns for our investors and re-deploy capital into new acquisitions and fund existing developments, such as 60 King William Street, in the Adelaide CBD,” he said.
Knight Frank’s Guy Bennett and Cushman & Wakefield’s Leigh Melbourne, Nick Rathgeber, Mark Hansen and Josh Cullen acted for the vendors on the transaction.