Centuria, MA Financial Secure $223m Perth Office Tower

Perth’s office market is heating up with fund manager Centuria Capital picking up of the CBD’s better-known landmarks, Allendale Square, from Mirvac in a transaction worth about $223 million.

Centuria, alongside MA Financial Group, conditionally secured the 25,900sq m, A-grade office tower, each taking a half stake on a capitalisation rate of 7.25 per cent.

Centuria joint chief executive Jason Huljich said the acquisition provided a great counter-cyclical investment opportunity being acquired with embedded capital value and within a market that benefits from strong tailwinds. 

“Perth has the country’s highest occupancy rate among all capital cities with a 71 per cent occupancy rate and the market is further supported by a strong outlook for tenant demand throughout the medium term,” Huljich said.

“Furthermore, the property benefits from its close proximity to Elizabeth Quay, which is Perth’s answer to Sydney’s Barangaroo.”

Huljuich said the building’s superior location recently attracted a positive re-rating value due to its proximity to Elizabeth Quay’s substantial regeneration activity, which has benefitted from retail and dining offerings, The Ritz Carton Hotel opening, and new residential towers in recent years. 

Over recent years, about $60 million of refurbishment works have been undertaken on the building by Mirvac, providing Centuria a springboard to enhance its position at 77 St Georges Terrace.

▲ The tower provides 25,900sq m of office accommodation and 2750sq m of food, beverage and non-discretionary retail space below. Image: Supplied

The office tower sits above a retail arcade that links to CBD shopping malls and provides access to the Elizabeth Quay train station and bus port. The tower’s tenants include Minter Ellison and the WA Bar Chambers.

Mirvac had put the 31-level tower on the market close to a year ago, after holding it for nearly a decade, through Cushman and Wakefield’s Josh Cullen and Colliers International’s Adam Woodward.

Earlier this year, boutique fund manager Fortius emerged as a potential buyer for the asset. But no transaction eventuated and the Fortius platform has since been taken over by ASX-listed Growthpoint Properties Australia.

The transaction now represents another example of ASX-listed MA Financial’s continuing expansion in its real estate management offering. 

The fund manager, chaired by Jefferey Browne—who recently became the president of Collingwood Football Club, has transacted over $900 million of office, retail and logistics assets over the past two years. 

Huljich said Centuria would provide property management for the asset while each party would be responsible for the asset management of their respective investment funds.

Both parties’ split investment in Allendale Square will be part of their respective new unlisted single-asset close-ended wholesale property funds. The funds will provide an initial five-year term and open for investment in September, 2022. 

Centuria’s Allendale Square Fund has a minimum entry investment of $100,000 with the group targeting a raise of $70 million to launch the fund.

Over the past 18 months, Perth has maintained its position as one of Australia’s most attractive property markets to invest in, underpinned by the stability of the WA economy and an improving leasing market in the wake of the pandemic. 

According to a recent report by CBRE, $5.1 billion in capital has been actively vying for about $740 million worth of office assets in Perth since June, 2020.

CBRE associate of capital markets Nicholas Volk said that an improving leasing market was attracting investors to Perth. 

“Given an attractive yield premium for prime Perth office assets and $4.3 billion in unsatisfied capital, we expect demand for the right opportunities to continue rising,” Volk said.

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