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Centuria Capital Group's (ASX: CNI) shopping spree continues with the purchase of two office properties in Sydney and Perth for $380.5 million, both in fringe CBD locations with proximity to key transport infrastructure and retail.
After acquiring an office building in Adelaide's CBD for $127 million in June, Centuria has now entered agreements to buy a 50 per cent stake in 8 Central Avenue, Eveleigh (NSW) for $191 million, as well as a 100 per cent stake in William Square, Northbridge (NSW) for $189.5 million.
The company's Centuria Metropolitan REIT (ASX: CMI) is making the acquisitions, and its fund manager Grant Nichols highlights different inherent benefits in each transaction.
"8 Central Avenue is located in the South Eveleigh Precinct, 4km south of the Sydney CBD and in close proximity to Redfern Station, Sydney University and Newtown Entertainment Precinct," says Nichols.
"The area is rapidly gentrifying with significant adjacent developments creating a vibrant workplace with substantial amenity. The acquisition of 8 Central Avenue further consolidates CMA's exposure to key Sydney metropolitan markets."
He says William Square is about 350 metres from the Perth bus and train interchange, noting the Northbridge area has been the subject of approximately $6 billion of government and private investment with new hotels and retail offerings improving the appeal to tenants.
"The acquisition of William Square increases CMA's exposure to Perth as market conditions improve and provides an attractive value spread to comparable quality properties on the East Coast," he says.
"The Acquisitions are underpinned by a WALE of 8.1 years and fixed rental reviews of 3 per cent per annum or greater across 90 per cent of income.
"CMA's portfolio composition is enhanced with the introduction of a number of new high quality tenants, with the proportion of income from Government tenants increasing from 11 per cent to 20 per cent, and the portfolio WALE increasing from 3.9 years to 4.8 years."
To partially fund the acquisitions, CMA is undertaking a $273 million equity raising including a 1 for 10 accelerated non-renounceable entitlement offer to raise $102 million, an underwritten institutional placement to raise $141 million, and a conditional placement of $30 million to CNI which will be subject to CMA securityholder approval
The issue price at $2.86 per share representing a 3.2 per cent per cent discount to the last close price of $2.96.
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