SYDNEY, AUSTRALIA: Centuria Office REIT (ASX: COF), a real estate investment trust that owns a portfolio of office properties across Australia, has announced that it has completed $225 million of debt refinancing and agreed to sell one of its properties in Canberra for $23 million.
The debt refinancing involved $175 million of existing loan facilities and $50 million of new liquidity. The REIT has no debt expiries until FY26 and its weighted average debt expiry (WADE) has increased from 2.7 years to 3.2 years.
The Centuria Office REIT has a diverse pool of six lenders and its interest rates remain in line with its earnings forecasts for FY23. The REIT’s all-in cost of debt is expected to be higher in FY24 than in recent past periods.
Grant Nichols, COF Fund Manager and Centuria Head of Office, said: “Well supported lender appetite for COF is reflective of the REIT’s high-quality portfolio composition, including its high 97.3% occupancy, staggered 4.1-year weighted average lease expiry (WALE) and young average building age of around 17 years. As a result of this proactive capital management, COF benefits from a longer term debt expiry profile with immaterial change to debt margins.”
The property sale involved 54 Marcus Clarke Street, Canberra ACT, which was sold for $23 million, representing a 1.7% discount to the book value of $23.4 million as of 31 December 2022.
The Centuria Office REIT acquired the property in 2015 for $14.2 million and generated over $7 million in income during the period of ownership, reflecting an internal rate of return (IRR) of about 11%.
The property is one of the REIT’s oldest buildings and the sale will improve the overall portfolio asset age and quality. The sale proceeds will be used to repay debt. The settlement is expected to occur in 2024.
Mr Nichols commented: “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.”