Centuria Capital Group (ASX: CNI) has announced plans to launch Australia's largest single-asset industrial fund to date, underpinned by its acquisition of Port Adelaide Distribution Centre for $216 million.
The opportunity to secure the industrial estate, at a 70 per cent discount to its replacement cost, was too good to pass up for the real estate manager which secured the 32-hectare industrial estate at a 70 per cent discount to its replacement cost.
Centuria's investment thesis is based on macroeconomic tailwinds including strong local population growth and a 17 per cent allocation of the state's expenditure for significant infrastructure projects
The asset at 25-91 Bedford Street spans 13 buildings and nine titles, and is leased to 17 national and international tenants including Visy Logistics, agricultural product supplier Ameropa Australia, Toll Transport and Spendless Shoes.
Adelaide's northwest industrial precinct where the centre sits has a current vacancy of 1.5 per cent, slightly below the Adelaide industrial market average of 1.6 per cent and well below the national average of 2.8 per cent.
The asset will form the basis for the unlisted Centuria Port Adelaide Industrial Fund (CPAIF), which is anticipated to open in September targeting an equity raise of $116 million with investments starting from $50,000 from retail, wholesale and institutional investors, and an expected property settlement in October.
"This was a rare opportunity to secure a trophy Adelaide asset at a time when the local market benefits from cyclical tailwinds credited to low vacancy, strong leasing demand and limited new supply," says Centuria chief investment officer Andrew Essey.
"Adelaide has one of Australia’s strongest leasing markets with materially lower rents in comparison to other capital cities. We are very excited to secure this asset at a substantial discount to replacement cost.
"With 60 per cent of Adelaide’s industrial pipeline already pre-committed, we believe supply constraints will continue to drive opportunities for positive rental reversions within the industrial park. The estate has a long history of low vacancy due to occupiers’ preference to be within close proximity to the port and road and rail infrastructure."
Centuria believes several high-profile infrastructure projects could potentially influence occupier demand, including the $368 billion AUKUS defence project within the Osborne Naval Precinct, the Port Adelaide (Gillman) Renewal Project, and Henderson Defence Precinct.
"The acquisition is a strong start to FY26 and we expect significant investor interest due to the decreasing interest rate environment," adds Essey.
"We anticipate further, attractive investment opportunities for both domestic and international capital over the year.
"We continue to see improving conditions within the transactional market with falling debt costs, strong international investor interest for well-priced and well-located property, and healthy retail/wholesale investor appetite."
Centuria's head of funds management, Jesse Curtis, notes the asset's 175,000sqm building area makes it 10 times the size of the Adelaide Oval.
"Centuria Port Adelaide Industrial Fund is an attractive opportunity for investors to gain exposure to an industrial investment that provides potential for strong income yield and capital and income growth from anticipated rising rental rates and value-add potential," says Curtis.
"It houses quality national and international tenants, providing a diversified income profile and potential to generate income growth from capturing higher market rents.
"Additionally, given the size of the estate, future value-add potential is available through subdivision, repositioning or redevelopment options. Investment in the fund will be open to national and international retail and wholesale investors as well as institutional capital."
Centuria, one of Australia's largest real estate funds managers with more than $20 billion in assets under management, recently completed a successful $115 million oversubscribed raise for the Centuria Logan Super Centre Fund, which acquired the Logan Super Centre in Queensland.
"Centuria has a strong track record in delivering returns to investor within the industrial sector with our active management team," says Curtis.
"Across Australia and New Zealand, Centuria manages Australia’s largest-listed industrial REIT, Centuria Industrial REIT (ASX: CIP), three industrial mandates on behalf of institutional capital as well as managing numerous industrial-specific unlisted funds.
"This acquisition increases our industrial assets under management to over $6 billion and expands on our strong track record within the sector."
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