Centuria Brisbane office fund generated 10% returns and named unlisted fund of the year
A Centuria fund holding a non-CBD Brisbane office building has been named as the unlisted property fund of the year at the 18th Annual Property Funds Industry Forum this week.
The closed-end unlisted property fund comprises a two-storey office building at 19 Corporate Drive, Cannon Hill, six kilometres from the Brisbane CBD within the Southgate Corporate Park and was constructed in 2008.
Centuria was commended for its high level of income return and forecast capital gain the fund will provide investors.
The fund will deliver a return of 9.75% to investors in its first year, rising to 10% in its second year, with distributions paid quarterly.
Centuria expects capital growth from the asset from actively managing it as well as a wider recovery in the property market over the long term.
Centuria purchased the two-storey office building for $23.3 million in September (excluding stamp duty) at 4.9% discount to the independent valuation and a 19% discount to the previous sale in May 2008.
The building features over 6,000 square metres of net lettable area and is fully occupied, tenanted by Honeywell, Canon, Westpac, NAB, Optus, GM Holden, Orica, Rivercity Motorway QBuild and a number of state and federal government departments such as the National Archives of Australia (federal government) and the National Broadband Network Co, with a weighted average lease expiry term of just under five years and fixed annual rent increases of 3.8% per annum.
Retail tenants include McDonald's, Coffee Club and First Choice Liquor. There is also a childcare centre and a medical centre.
Investors were required to make a minimum investment of $100,000 held for six years with the aim of raising $15.8 million in equity.
Centuria notes that the only at-risk tenant is Rivercity Motorway (operator of the CLEM7 tunnel in Brisbane), which is currently in administration, though it is not currently in arrears on its lease.
Jason Huljich, chief executive of Centuria Property Funds, says the company is experiencing strong demand from individual investors and wealth management groups and has “great expectations” for the 19 Corporate Drive Fund.
“Investors are seeking opportunities that provide strong income returns backed by ‘hard assets’. Property as an asset class, with its high proportion of total return generated by income yields, is well positioned to meet this demand," he says.