ASX-listed Centuria Office REIT (COF) has sold an office building in Canberra for $23 million, representing a 1.7% discount to its end-2022 valuation.  

The REIT acquired 54 Marcus Clarke Street in 2015 for $14.2 million, which has generated more than $7 million in income returns during the period of ownership, reflecting an IRR of c.11%. 

The property was one of its oldest buildings, with the sale proceeds used to repay debt.  

“This divestment demonstrates solid ongoing investment demand for quality assets that are of an accessible size, enabling a wider pool of potential investors. COF is well positioned with a diversified portfolio of quality and affordable accommodation solutions,” Grant Nichols, COF Fund Manager and Centuria Head of Office, said.  

The deal is expected to settle next year. 

The sale comes as the REIT reported a 4.4% value decline across 70% of its office portfolio in its latest valuation as of end-June 2023.  

COF completed external valuations on 13 of its 23 investment properties and found a like-for-like decrease of $102 million on prior book values. 

The Weighted Average Capitalisation Rate (WACR) across the total portfolio expanded by 25 basis points over the last half from 5.75% at 31 December 2022 to 6.00% at 30 June 2023.   

“COF provides well positioned, affordable office accommodation, which continues to attract high-quality tenants including government, ASX-listed and multinational corporations,” Nichols said.  

“COF’s diversified tenant customers provide the portfolio with a staggered lease expiry profile and broad income streams, supported by strong leasing covenants. Importantly, COF maintains a high portfolio occupancy3 with a minimal 2.7% vacancy.”   

COF also recently received a MSCI ESG rating4 of BBB, an improvement from its previous B rating, which is credited to the portfolio’s enhanced sustainability metrics.  

Additionally, the REIT achieved an increased NABERs Sustainable Portfolio Index (SPI) energy rating of 4.9 stars.