Centuria Capital has launched a new Australian office trust which will co-invest in two office buildings in central Sydney purchased from Brookfield Properties for around A$450m (€278m).
Centuria is seeking to raise A$268m in equity for the close-ended Centuria Sydney CBD Prime Office Fund, which will invest alongside the manager in the 680 George Street and 50 Goulburn Street buildings, located in World Square, a mixed-used complex in an area known as the mid-town precinct.
The Australasian real estate manager said the counter-cyclical acquisition of the towers reflected a discount to replacement cost of approximately 60%.
Centuria said: “Today’s office market is no longer moving as one. Demand is concentrating in high-quality, well-located buildings with strong amenity and transport accessibility, while secondary buildings face greater leasing and capital expenditure challenges.”
It said that the current environment had created “rare opportunities” to acquire high quality assets that had been temporarily mispriced.
“This is not a broad bet on an office recovery. It is a targeted allocation to a landmark Sydney CBD asset, chosen after 13 years of restraint, at a point in the cycle where uncertainty has created opportunity.”
“Net office supply within the Sydney CBD is projected to reduce by approximately 20,000sqm each year over the next five years. Furthermore, there is no new office supply forecast in the Midtown precinct from 2026 to 2032. Around 300,000sqm of office stock is potentially being withdrawn from the Sydney CBD and approximately 200,000sqm is located in the Midtown and Southern precincts, placing pressure on both rents and vacancy rates,” it said.
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