This article is from the Australian Property Journal archive
TERRAPLEX is offloading a prime Melbourne office asset, with the St Kilda Road property expected see a sale price in excess of $65 million.
The 7,647sqm building at 570 St Kilda Road was acquired by the investment manager group in 2012, with the asset having since undergone a repositioning effort, with major leases being signed with Simonds Homes, Accolade Wines and ALM Williams Partners.
The property changed hands at the time for $23.8 million on a yield of 10%.
Kiran Pillai, Scott McGlone and Hugh Thomson from CBRE, as well as Leigh Melbourne, Nick Rathgeber, Mark Hansen and Josh Cullen are managing the sale via an expressions of interest campaign.
“Despite a COVID backdrop, the Melbourne CBD and St Kilda Road precincts have stood up as robust and resilient markets and 570 St Kilda Road is no exception. All major tenants have re-committed to the building recently, which will drive confidence from a market that is very focused on income rigidity,” said Pillai.
Melbourne’s fringe markets have been emerging as safer bets for investors throughout the pandemic, with around $250 million worth of property being offered in Cremorne, while Australia Post skips out on the city centre for Charter Hall’s $410 million fringe office development in Richmond
However, in the six months to July St Kilda Road’s fringe office market vacancies hit 16.3%, while the city’s CBD office vacancies reached levels not seen since the 1990s recession.
The repositioned property is being entered to market with a WALE in excess of three years, offering potential investors a secure medium term income stream.
“We are incredibly proud of the building’s performance over the past nine years, however the closed end fund in which 570 St Kilda Road sits has reached its natural conclusion,” said Anthony Wilson and Charles Raymond, directors at Terraplex.
The expressions of interest campaign for 570 St Kilda is scheduled to close 10 November, 2021.
“The vendor has created an ideal platform for the next owner to leverage and capitalise on significant uncaptured upside. These factors, coupled with St Kilda Road being an extremely tightly held market, will result in the opportunity being incredibly well received,” said Melbourne.
