This article is from the Australian Property Journal archive
The National Australian Bank Superannuation Fund has sold a commercial building in Melbourne’s CBD to diversified property group Trinity for $41.2 million.
Located at 383 King Street, the property comprises 12,989 sqm of space including ground floor retail/office and office accommodation over two podium levels and seven upper towers.
In addition, the property has 256 sqm of basement storage and a 104 bay car park across two levels in the basement.
The 10 level building is 100% leased to the NAB for a period of eight years, which commenced in June 2005.
The NAB bought the property for $50 million in February 1989.
Trinity chief executive Ben McCarthy said the property will be jointly owned by the Trinity Stapled Trust and the unlisted Trinity Property Trust.
“The property is located in a high-profile corner position toward the north-west of Melbourne’s CBD, opposite Flagstaff Gardens and close to Flagstaff Railway Station, Docklands and the CityLink Freeway Network,” he added.
Selling agent Knight Frank’s Paul Burns, who sold in the property in conjunction with Clinton Baxter, said the property is a unique offering to the market.
“The property is close to public transport and the Melbourne law courts and is an accountable commercial address,” Burns added.
The tenant, NAB is currently leasing the property at $165 per sqm – which is below the market rent of $200 plus per sqm. Whilst the property is subject to a rent review at 3% per annum, the market rent until the end of the lease, which is in seven years.
McCarthy said that the property’s net passing income of $2.5 million per annum is considered to be well below market, providing Trinity with growth potential far in excess of general market parameters.
The building is the second property jointly acquired between two of Trinity’s trusts. The first property was Melbourne’s Mulgrave Business Park, in May this year.
“The latest acquisition will have a positive impact on both Trusts’ capital appreciation, whilst maintaining the quality of assets and improving leasing covenants,” McCarthy said. “Furthermore, it reflects a capital value of $3,172 per sqm and corresponds with Trinity’s bias toward managing a portfolio of assets with high underlying value or “bricks and mortar” value.”
Trinity has been very active in the Melbourne property market. Last week, the group’s Trinity Property Trust bought a 705-bay car park on 28 Latrobe Street, Melbourne from OFM Group for $24 million.
McCarthy said that the car park is fully leased to Car Care Pty Ltd, a national car park organisation, until mid-2013.
McCarthy said that the listed Trinity Stapled Trust would make further investments totalling $10 million over the ensuing months into the Trinity Property Trust.
“This investment is consistent with our determination to retain a strategic stake in TPT of around 19%,” he added.
Trinity has a clear growth strategy to have $1 billion of funds under management by 2009 and source at least 70% of Group earnings from recurrent rent and fees.
By Nelson Yap
