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Real estate trust Centuria Metropolitan REIT (ASX: CMA) has entered unconditional agreements to acquire $520.9 million worth of office properties in Melbourne, Brisbane and Sydney from Texan outfit Hines Global.
CMA will spend $500.9 million on the four properties with a $20 million contribution from affiliated entity Centuria Capital Group (ASX: CNI). The transaction will be partly funded by a $276 million equity raising.
The most significant of the properties is 818 Bourke Street, Melbourne with a $223.3 million valuation, while other assets to come under the portfolio comprise the Fortitude Valley, Brisbane properties of 825 Ann Street ($169.5 million) and 100 Brookes Street ($86.5 million), and a 25 per cent stake in 465 Victoria Avenue, Chatswood in Sydney for $41.6 million.
The remaining 75 per cent stake in the Chatswood property will be acquired by Sydney company The Lederer Group for $125 million via a co-ownership agreement.
This represents the third deal of its kind between Centuria and Lederer this year, adding to previous agreements for 201 Pacific Highway, St Leonards and 80 Grenfell Street, Adelaide.
CMA acting fund manager Doug Hoskins describes the acquisitions as "transformational" for CMA as it transitions to a leading pure-play office A-REIT, while "dramatically" improving the quality and scale of the portfolio.
"The acquisitions are well located in inner metropolitan locations in markets where Centuria has a track record of leasing success. 818 Bourke Street holds a prime location in Docklands, with uninterrupted river views and immediate river frontage. The Docklands precinct is highly desirable with one of the nation's lowest sub-market vacancy rates at 1.2% and strong growth in effective rents," says Hoskins.
"825 Ann Street and 100 Brookes Street are located in Fortitude Valley, an area supported by record infrastructure spending and strong interstate migration in Queensland. We believe Centuria's active management strategies, including leasing success in other Brisbane metro markets, offers the potential for attractive risk return at these assets.
"465 Victoria Avenue is one of only five prime investment grade assets in Chatswood. Future growth in the Chatswood precinct is driven in part by significant spending on infrastructure including the new North West Metro. The asset has potential upside from current below market rents and a large site area which may be reviewed for potential future development upside."
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