Centuria Office REIT (COF) announced on Monday that its portfolio value is set to advance to $2.3 billion, an increase of 2.3 per cent, following two office acquisitions in near-city and metropolitan Melbourne and Sydney, with a combined purchase price of $273.1 million.
The acquisitions have reduced the portfolio’s average building age to 15.5 years and improved its weighted average lease expiry (WALE) from 4.3 years to 4.5 years and occupancy from 93.1 per cent to 93.7 per cent.
“These high-quality, modern office acquisitions are strongly aligned with COF’s strategy and deliver benefits including broader geographic diversification, high occupancy, an enhanced portfolio WALE and, being young assets, limited capital expenditure requirements,” said Grant Nichols, COF fund manager and Centuria head of office.
The acquisitions are based in South Melbourne and St Leonards in Sydney, increasing COF’s combined NSW and Victorian exposure to 49.5 per cent.
“COF’s portfolio focuses on metropolitan and near-city office markets that provide excellent worker commutability via good public transport nodes and road arterials,” said Mr Nichols.
“These have been better performing office markets throughout the past 12 months, attracting occupiers seeking shorter travel time to and from work at affordable rents.”
COF’s acquisitions consist of a 100 per cent interest in 101 Moray Street, South Melbourne for $205.1 million on a 5.00 per cent capitalisation rate, alongside the remaining 50 per cent interest in 203 Pacific Highway, St Leonards, Sydney, for $68 million on a 5.75 per cent capitalisation rate.
The REIT already held the other 50 per cent interest in the St Leonards property.
101 Moray Steet is fully occupied with 6.3-year WALE, whereas 203 Pacific Highway was said to be 99.3 per cent occupied with a WALE of 3.9 years.
The acquisitions have been partially funded by a fully underwritten 1 for 6.4 accelerated non-renounceable entitlement offer to raise $201.0 million.
Alongside the news, Centuria has also announced that COF will be included in the FTSE EPRA Nareit Global Index from Monday, 20 September 2021, making it more easily compared to internationally listed peers.
COF is Australia’s largest ASX-listed pure-play office REIT.
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