Brady Group set to convert Lonsdale St apartments to hotel following $80m deal

Brady Property has snapped up the block of 147 completed apartments from a China-backed developer, Aurumstone.

Melbourne’s Brady Property has been revealed as the buyer of 388 Lonsdale St in the heart of the CBD, breathing new life into the unit complex through conversion to serviced apartments.

In a major deal, the private company has snapped up the block of 147 completed apartments from a China-backed developer, Aurumstone. The site is adjacent to Brady’s successful development on the CBD strip.

Taking advantage of the unique proposition – the complex was sold without a single pre-sale – the Melbourne developer has listed the project under its hotel brand as a serviced apartment block with the new moniker “Brady Hotels Hardware Lane”, which will start trading next month.

Aurumstone completed the 19-level residential tower midway through last year in the midst of the city’s second wave lockdown with the backing of financier PAG, after converting an existing 12-storey office building and adding additional floors above. The property is now owned by the private 388 Lonsdale Street Pty Ltd, which is controlled by the Brady family, with backing from some other investors.

JLL and Colliers handled the sale and had promoted the property as a potential build-to-rent opportunity. In addition to the apartments, the project sported 850.8sq m of retail space on the ground floor, a dual-level gym with sauna, a cinema and a lounge area and rooftop level including a spa.

Brady Group has bought 388 Lonsdale Street for about $80m.

Brady and the agencies declined to comment on the deal.

The hotel is positioned a stone’s throw away from Brady’s $500m residential and hotel skyscraper project 380 Melbourne, which just completed at 380 Lonsdale Street.

That 67-level project stands at almost 220m tall and features 728 residential apartments as well as 312 hotel rooms.

Deals like this are slowly starting to flow through the Melbourne market as confidence returns and light at the end of the pandemic tunnel emerges.

JLL Research has shown $6.91bn worth of commercial transactions across office, retail and industrial sectors were struck in the Victorian market over the first nine months of 2021.

The figure is a substantial increase on the $5.31bn recorded over the same period last year.

The city had remained popular with investors, JLL’s executive director and Victorian head of capital markets Josh Rutman said, adding there was still a great depth and diversity of buyers chasing core and value-add assets.

“There remains a strong focus on income-producing assets given the current environment,” Mr Rutman said. “This is evident through yields which are holding firm for core assets with low vacancy risk and strong lease covenants.”

“We are also seeing more value-add opportunities transact in the secondary market, with buyers more confident on the current outlook, and looking at refurbishment or redevelopment potential.

“We are seeing a supply and demand imbalance between the amount of capital looking for assets and the number of assets that are available,” he added.

Office assets have continued to trend year-on-year, with investment volumes settling at $3.05bn of sales to the third quarter. In other sectors, retail recorded $1.79bn in sales over the same period to double 2020 figures, while industrial also beat last year at $1.83bn in sales.