Centuria moves on South Melbourne Office

20 August 2021

Centuria Capital is speculated to be in due diligence on Deague Group’s 101 Moray Street office building at a price just over $200 million.

101 Moray is a traditional A grade commercial office building of 16,000sqm of NLA. Its features reflect that of a 5-star hotel. The building includes seven levels of premium commercial office space and features an interactive ground floor with a digital wall that showcases local artists and works of tenants within the building. The building is situated in the idyllic location of South Melbourne between bustling Clarendon Street and Kings Way.

The building is fully leased to ASX-listed and international tenants such as Fox FM, Triple M, oOh! Media, Central House and Adobe with a WALE of 6.6 years and no major expiries until 2026. Southern Cross Austero were the latest tenant to sign up to space in the building, taking a 10 year lease for 3,000sqm on level 2.

Cushman & Wakefield’s Nick Rathgeber, Leigh Melbourne, Josh Cullen and Mark Hansen were appointed to sell the building following a number of off market approaches to Deague Group.

The price for 101 Moray Street is believed to reflect a circa-five per cent market yield.

Deague acquired the DA approved site for $24.65m in 2017 and appointed Hutchinsons as the builder at a cost of $69m. Completion was in 2020.

Centuria have a number of options to house the investment. The Centuria Office Fund is the most obvious fund with a mandate to invest in metropolitan office markets. The REIT has
$106m of undrawn capital but would need to raise equity to complete the sale. Centuria may also look to house the investment in a single asset trust as they did recently for the $224m acquisition of 1 McNab Ave Footscray. Centuria Capital were able to raise the equity within 3 weeks. The group also has the capacity to warehouse the investment on its own balance sheet.

Centuria declined to comment on our enquiries.