Sydney fund purchases second city fringe holding
AN ACQUISITIVE Sydneybased fund has snared its second fringe Brisbane office building for the year with expectations that the local market is in a growth phase.
Centuria Diversified Property Fund paid $65.4 million for the office building at 25 Montpelier Rd, Bowen Hills, that was developed over a decade ago by Watpac.
Centuria’s joint chief executive Jason Huljich said the purchase of the fully leased Agrade building was in line with the group’s strategy to accelerate assets under management growth.
He said the fund sought to increase its balance of direct property exposure for investors on the heels of the purchase earlier this year of 381 Macarthur Ave, Northshore Hamilton, for $19.7 million.
“Brisbane markets are steadily improving with continuing yield compression and decreasing vacancy rates,” Mr Huljich said. “The fund’s strategy is to buy properties that enhance the quality and diversity of its portfolio and contribute to strong distribution returns for its investors.”
The property has a six-year weighted average lease expiry and has about 7000sq m of office space and an additional 700sq m of ground floor retail.
According to CoreLogic it last changed hands in 2012 when it was bought for $37.8 million by the Greater Western Corporation, a private investment vehicle of the Thornton family.
The latest deal was struck by JLL’s Seb Turnbull and Luke Billiau.
Mr Huljich said the latest acquisition would further diversify the portfolio in a market where he expected to see growth ramp up in the next six to 12 months.
“Vacancy rates are falling, net absorption is up, and this means that effective rental growth is very likely to follow, particularly as infrastructure projects currently in the works start to come online,” he said.
The ASX-listed Centuria recently announced it has paid $89 million for a 15-storey office tower at 348 Edward St in the Brisbane CBD which will be placed in an unlisted single asset fund.