Centuria Launches $454m Sydney CBD Office Fund at 60% Discount
Centuria Capital Group has secured a 50% stake in prime Sydney CBD offices for $454 million, launching a new fund targeting a 7.5% annual yield and backed by domestic and Japanese investors.
- Acquisition at ~60% below replacement cost
- New $454m single-asset closed-end fund launched
- 7.5% initial forecast distribution yield over five years
- 4.0-year weighted average lease expiry, 93.4% occupancy
- Equity raise supported by domestic and Japanese institutions
Centuria Targets Undervalued Sydney CBD Office Assets
Centuria Capital Group (ASX:CNI) has exchanged contracts to buy a 50% interest in two A-grade office towers at 680 George Street and 50 Goulburn Street, Sydney, for $454 million. The price tags the assets at roughly 60% below their estimated replacement cost, marking a rare opportunity amid a repriced Australian office market.
The acquisition is structured through the newly established Centuria Sydney CBD Prime Office Fund (CSPOF), a closed-end unlisted vehicle targeting an initial forecast distribution yield of 7.5% per annum over a five-year term. The fund aims to attract private and institutional investors with a minimum $100,000 investment, and settlement is slated for the first quarter of FY27, subject to regulatory approvals including ACCC and FIRB.
Fund Features and Tenant Profile
The combined 67,700 square metre, 45-level office complex sits in the World Square precinct within Sydney’s Midtown, benefiting from strong transport links including the nearby Gadigal Sydney Metro Station, which serves over 15,700 passengers daily. The assets boast a 4.0-year weighted average lease expiry (WALE) and 93.4% occupancy, supported by a diversified tenant base comprising government, national and multinational occupiers.
Environmental credentials are robust, with the buildings achieving 5-star NABERS Energy, 6-star NABERS Waste, and 4-star Green Star ratings, aligning with growing investor demand for sustainability in commercial real estate.
Strategic Growth and Capital Deployment
Jason Huljich, Centuria’s Joint CEO, highlighted the strategic rationale, noting the dislocation in office markets has created a window to acquire institutional-grade assets at attractive yields and significant discounts to replacement cost. Huljich emphasised limited new supply and ongoing repositioning of existing stock as factors supporting medium-term outlooks for prime office assets.
Centuria has raised approximately $268 million of equity for the fund from its domestic network and Japanese institutional investors, underscoring international appetite for Australian commercial property. This acquisition follows Centuria’s recent larger property purchases totaling $384 million, reflecting a deliberate scale-up in deal size to underpin its $21.8 billion assets under management and growth ambitions.
The 50% interest was acquired from a Brookfield-managed fund, adding a layer of institutional pedigree to the transaction.
Bottom Line?
Centuria’s move into a repriced Sydney office market via a substantial closed-end fund signals confidence in prime assets despite sector headwinds, but investors should watch regulatory approvals and fund equity uptake closely.
Questions in the middle?
- Will regulatory approvals proceed smoothly to enable the planned Q1 FY27 settlement?
- How will the forecast 7.5% yield hold up amid potential interest rate volatility?
- Can Centuria sustain its acquisition momentum and scale-up strategy in the current office market environment?
