Centuria Capital Group has launched a new fund that invests solely in a $224 million building in Victoria.
The Centuria Government Income Property Fund (CGIPF) will become the new owner of 1 McNab Avenue, a 14-storey building located in Footscray. CGIPF will raise $133 million to fund the transaction.
State Trustees, City West Water and the Victorian government's Treasury and Finance Department are some of the current tenants.
In 2014, the Victorian government partnered with the now-defunct construction company Grocon, which went into voluntary administration in November 2020, to revitalise 1 McNab Avenue, Footscray, as a government work precinct.
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Centuria joint chief executive Jason Huljich said: "In this low interest rate environment, there is a strong appetite from retail investors who are searching for investments with compelling yields. We continue to witness this strong appetite with the oversubscription of our recent unlisted fundraisings."
"With rising white-collar employment and workforces increasingly returning to the office, we believe office asset investments will increasingly deliver strong results. Already within the past few months, we've witnessed several large office transactions in the domestic market."
Huljich forecasts that the fund will yield 5.25% in FY22 and will grow to 5.35% in the ensuing financial year.
Following the merger with Primewest, Huljich said Centuria will be one of the largest unlisted property fund managers in Australasia with about $10 billion of assets across its unlisted platform.
Primewest accepted the acquisition offer on June 4 that will see the co-founders of Primewest hold a 53% stake in the newly merged company.