The ASX dividend share Centuria Office REIT (ASX: COF) could still be a great dark horse investment after rising more than 6% in 2025 to date.

This business is Australia's largest pure-play office real estate investment trust (REIT). It describes its portfolio of office properties as high-quality assets situated in core submarkets throughout Australia. It aims to provide income and the opportunity for capital growth.

During COVID-19, it suffered from the headwind of the work-from-home trend. Over the past three years, high interest rates have also hampered office property prices and led to an increase in the cost of debt.

But, those trends are now reversing – the RBA official cash rate is coming down and more businesses are changing their expectations about how often workers need to come into the office.

The ASX dividend share is outperforming

Pleasingly for investors in this REIT, its portfolio occupancy was 91.4% at 31 March 2025. That favourably compares to the average national office market of 84%.

Centuria Office REIT says its portfolio is "well-positioned to service tenant requirements, as tenants gravitate towards sustainable, modern accommodation, especially those with existing fit-outs."

The ASX dividend share continues to secure new leases with tenants. In the year to date, the ASX dividend share has agreed lease terms representing 7.7% of portfolio net lettable area (NLA).

However, while recent leasing enquiries have been steady, the business said:

…downtime periods remain extended due to pockets of soft tenant demand, long tenant lead times and a more cautious approach to relocation capital expenditure. Elevated vacancy rates have also kept incentive levels above long-term averages.

So, while the industry isn't booming, the business continues to "actively work on known vacancies and upcoming lease expiries across its portfolio."

Attractive valuation

The ASX dividend share expects to pay a distribution per unit of 10.1 cents in FY25, which translates into a distribution yield of 8.3%. That's despite only expecting to have a distribution payout ratio of 86% – it's retaining some rental profit for improving the business' financials.

At 31 December 2024, it reported net tangible assets (NTA) of $1.72 per unit. That means the business is trading at a 29% discount to that value, which I think looks very appealing at a time when RBA interest rate cuts could both boost the NTA and reduce the discount.

When the business announced its FY25 third quarter update, the fund manager of Centuria Office REIT, Belinda Cheung said:

Despite recent global macroeconomic and geopolitical volatility impeding on business and investor confidence, we remain optimistic on Australian office markets over the medium-term. This optimism is underpinned by significantly diminishing forecast supply, apart from developments currently under construction, elevated replacement costs associated with development and capex requirements, and signs of improving net absorption and reduced sub-leasing activity.

These drivers have led to improved capital transaction volumes, with domestic and offshore investors looking through the near-term leasing headwinds.

The prospect for returns looks good with this ASX dividend share with it priced so cheaply, in my view.