Century cautious about growth

Author: Ben Wilmot
Date: 18/03/2004
Publication: Financial Review
Section: Property

High net worth property funds manager Century Funds Management has an appetite for growth but is cautious about moving too fast.

The Sydney property manager added a new trust to its commercial portfolio earlier this month after buying an office building at 601 Bourke Street in Melbourne for $23.95 million. The deal took Century to $205 million of funds under management.

Century director John McBain was bullish. "I honestly believe the market has underrated it," he said. But the manager did not make the purchase in a hurry.

"We've only been looking for two years ... we've got a file of buildings we are going to buy but the owner just doesn't know it yet," he said.

Last year was a relatively quiet one for Century. "We made over $300 million of offers last calendar year until we bought something," said Century director Jason Huljich.

Notwithstanding this diligence, Mr McBain sees Century operating 20 individual funds, mostly passive and some opportunistic, by 2006. "This will represent a portfolio of around $400 million but still maintain a core investor list of around 300 to 350," he said.

Mr McBain was quick to point out that Century's growth will never be meteoric. "If we get huge we can't do what we are doing now," he said.

Instead, Century is focusing on several niches it sees as underdone.

Mr McBain noted that Century had been successful in metropolitan office markets within five to eight kms of the CBD.

"The total vacancy rate in our portfolio is 1.8 per cent," he said. "We're getting higher rents than in the CBD in some of our buildings."

Century is keen to emphasise the importance of each site.

"We would very rarely buy a property that's not on a corner site," Mr McBain said.

Century also carefully assesses infrastructure surrounding properties. "We were one of the first people looking at Epping when train lines were to converge," he said. He believes Hurstville has unique infrastructure and transport characteristics.

Over the next two years Century will continue to focus on metro and CBD commercial offices but also plans to expand more into homemaker centres.

Century recently invested in a Griffith homemaker centre with an end value of $18.85 million.

The trust also acquired an office block in Hurstville for $13.65 million and a nearby homemaker centre anchored by Harvey Norman for $7.05 million.

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