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Property fund manager Centuria Capital Group (ASX: CNI) has cashed in the second of three properties it bought in 2016, taking the funds manager closer to finalising a lucrative office property investment in Sydney’s inner south with a healthy gain of close to 160 per cent on the latest deal.
The sale of the Biomed Building at South Eveleigh for $103 million comes a year after Centuria offloaded The Belltower for $18.25 million.
While The Belltower – located at 6 Cornwallis Street in South Eveleigh - was sold at a 14 per cent premium to book value, the Biomed Building deal has been struck at book value.
But the Biomed Building, located at 1 Central Avenue, was acquired for $40 million with the divestment announced today representing a 157.5 per cent capital gain for the fund.
The Belltower building was originally bought for $3.3 million, with last year’s $18.25 million sale representing a gain of more than 450 per cent.
The office properties, along with the Data61 Building at 13 Garden Street in Eveleigh, were all part of the three-asset unlisted Centuria ATP Fund.
Capital growth of the assets - which were acquired for a total of $104 million in 2016 - led to the Centuria ATP Fund giving investors an early capital return of 47c per unit in February 2020.
“We acquired three South Eveleigh office buildings for the ATP Fund on the cusp of the area’s regeneration,” says Jesse Curtis, the head of funds management at Centuria.
“As one of the first institutions to support the precinct, our investors have since benefitted from significant social and commercial infrastructure in the area.
“Its fringe market location has developed into a thriving hub for large and medium-sized businesses, providing easy commutability and lifestyle amenities.”
The Biomed Building, which is anchored by The University of Sydney, comprises 7,716sqm of net lettable area. It was sold with occupancy sitting at 97.1 per cent and a healthy 6.6-year WALE (weighted average lease expiry).
Centuria says that if the ATP Fund’s remaining asset - the Data61 Building - is sold at or above its current book value, investors are expected to receive a total return of more than 300 per cent and an internal rate of return of 22 per cent since the fund’s inception. The fund has also given investors an average distribution yield of 15 per cent per annum.
The Biomed Building sale is expected to settle in August 2024.
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