The property fund’s WA assets account for $18 million of the reduction in book value.
Centuria Capital Group has wiped off $98 million from its office real estate investment trust nationally, with Western Australia accounting for $18 million of that reduction.
The property fund giant has today released its office REIT results, reporting improved tenant occupancy but a reduction in book value of its office assets.
In WA, the group’s 235 William Street, also known as William Square, asset was valued at $155 million, compared with $172.5 million last financial year.
Its other Perth assets within the REIT had more modest value decreases, with 144 Stirling Street in Perth dropping from $73.3 million to $73 million and 42-46 Colin Street in West Perth reducing by $200,000 to $38.3 million.
Nationally, the book value of Centuria’s office REIT dropped from $2.335 billion in 2021-22 to $2.237 billion in FY23, a $98 million reduction.
The fund manager followed suit of the major institutional property players, with Dexus yesterday reporting a $752.7 million loss on the back of a 7.7 per cent reduction in its office valuations.
The office sector has been hit hard by rising interest rates and changing working patterns, with experts reporting a significant gap between what buyers are willing to pay for these assets and their actual value.
Centuria Capital Group head of office Grant Nichols spoke to Business News as the group released its portfolio valuations last month, which showed a 4.4 per cent reduction in its office portfolio.
He said the reduction in book values was not as severe as anticipated.
“There was a perception that you would see valuation deterioration [but] what has occurred is certainly less than what has been speculated,” he said.
“There is somewhat of a mismatch between where REITs are being priced at the moment and the valuations that have occurred, and also where some of the market or media speculation as to where valuations could head.
“I also think the impacts of work from home have probably been overstated, particularly in Perth and Brisbane, where we have seen positive net absorption or increasing tenant demand.”
Centuria’s office portfolio occupancy increased to 97.1 per cent, off the back of strong leasing activity this financial year.
The number of assets in its office REIT remained unchanged since last year, at 23.
Mr Nichols described FY23 as an operationally successful year for the office REIT, also referred to as COF, “with increased portfolio occupancy and a healthy WALE being maintained”.
“COF continues to be exposed to well-performing markets where tenant net absorption has been strong comparative to the Sydney and Melbourne CBD,” he said.
“In particular, the REIT has benefited from robust leasing activity in Brisbane and Perth, which is consistent with wider activity in these markets.”
COF’s shares were down 3.52 per cent to 5 cents at the time of writing.
