investor daily logo

Centuria launches ‘counter-cyclical’ wholesale fund with $50m backing

By Jessica Penny
3 minute read

The Australasian fund manager is pursuing opportunities across diverse property and real estate finance sectors.

Centuria Capital Group has launched the unlisted Centuria Select Opportunities Fund (CSOF) for its wholesale investors, which seeks to execute a counter-cyclical strategy to access opportunities across property and real estate.

The fund manager has raised $50 million of equity from its Australian wholesale investors and aims to deploy its capital across the next 15 months, targeting a 15 per cent internal rate of return across a five-year term.

According to Centuria, the fund’s seed investment relates to a $20.6 million industrial logistics facility in south-east Melbourne’s industrial precinct Keysborough, where vacancy rates are less than 1 per cent.

Built in 2017, the facility will provide an 8,756-square-metre warehouse, access to 1.5 million households within an hour’s drive radius and provide a two-year weighted average lease expiry to generate positive rent reversions in line with market asking prices.

Jason Huljich, Centuria joint chief executive officer, commented, “We are looking at high-quality assets that can provide value-add opportunities such as positive rental reversions, as is the case for the Keysborough investment.

“We are also looking at industries with strong tailwinds that lend themselves to supply-demand imbalances and growth opportunities.”

Huljich added that the fund is positioned to capitalise on attractive medium-term market opportunities for Centuria’s network of wholesale unlisted investors.

“The fund is also targeting direct and indirect investments that lend themselves to the capabilities of our in-house real estate team, such as leasing, repositioning, refurbishment and development, as well as real estate credit opportunities,” he said.

“Centuria is co-investing alongside our wholesale investors because we believe in this high conviction investment strategy.”

Last month, Centuria announced operating net profit after tax (NPAT) of $49.4 million for HY24, down from $58.5 million for the corresponding period the year before.

In an ASX announcement, it said total operating revenue stood at $149.6 million which reflected lower performance fees and development profit and restrained transaction volumes.

“Centuria is proud of the diversity which has been built into the group over the past years. The need for this diversity has been highlighted by recent pandemic and financial market disruptions,” John McBain, Centuria joint chief executive officer, said at the time.

“The entire management team has worked diligently to expand into the financing and agriculture sectors and this has been a major factor in our ability to forecast reliable earnings to our securityholders.”

He highlighted strong interest from wholesale investors for its finance funds, which benefit from upward interest rate movements and provide short-term investment periods.

“These unlisted funds have become attractive, counter-cyclical investment options,” McBain added.