Centuria Office, Australia’s leading listed office fund, has successfully sold the fully occupied A-Grade office block at 555 Coronation Drive, Toowong, to Brisbane-based Exceed Capital for over $37 million.
Transaction Details
Known for its substantial portfolio, the company has confirmed the unconditional sale of the Toowong office block to Exceed Capital. This deal marks the end of a 10-year holding period since Centuria first acquired the property in late 2014.
According to Centuria, the sale price aligns with the property’s recorded book value as of 31 December 2023, showcasing the robust demand for smaller, strategically located metropolitan offices with impressive leasing and sustainability features.
Property Overview
Initially opened in 1989, the office block spans three floors of office space, with floor plates ranging from 1,622 to 1,983 square meters and a total net lettable area of 5,568 square meters. It also features two levels of basement parking.
Significant refurbishments were undertaken in 2020, enhancing the foyer, lifts, bathrooms, and end-of-trip facilities. The building is noted for its strong sustainability credentials, holding a 5.5-star NABERS energy rating and a 4.5-star NABERS water rating.
Strategic Divestments
Belinda Cheung, Fund Manager for the Centuria Office Fund, stated that this transaction is part of a broader strategy to streamline the fund’s asset portfolio by age and quality, focusing on metropolitan office assets.
Centuria has divested four metropolitan properties this fiscal year, with the transactions aligning with or surpassing their book values. These divestments reflect a targeted approach where value was enhanced through refurbishments and sustainability improvements, leading to robust leasing and high occupancy rates.
Ms Cheung highlighted the prevailing market conditions, noting a shift towards smaller-scale office transactions nationally, which have been predominant in the past 18 months. She emphasised the impact of Australia’s demographic trends and the decreasing supply of new office developments on future market dynamics. With rising construction and financing costs affecting development feasibility, economic rents are expected to rise significantly, favouring the types of assets Centuria holds.
Centuria anticipates continued demand for office space driven by a forecasted increase of 2.6 million workers in Australia by 2033, of which approximately 27 percent are expected to be in white-collar jobs. This demographic shift will demand up to seven million square meters of additional office space.
Portfolio Rebalance and Further Acquisitions
This financial year has seen Centuria divest $139 million worth of non-core office assets, including notable sales in Canberra, Robina, and Keswick. The proceeds from these sales are earmarked for debt repayment. The agents facilitating the sale were Justin Bond and Blake Goddard from Knight Frank, alongside Jack Morrison and Adelaide O’Brien from CBRE.
Exceed Capital’s acquisition of the Toowong office marks its third purchase in three years, following investments in Robina and another office in Varsity Lakes, highlighting their ongoing expansion and confidence in regional office markets.
Published 10-June-2024
