Charities cash in on rising land prices

The Australian Society of Medical Imaging and Radiation Therapy is selling its King St offices.
The Australian Society of Medical Imaging and Radiation Therapy is selling its King St offices.

As land values rise, charities and not-for-profit organisations have been taking advantage of their increasingly valuable headquarters to fund operations.

Several organisations have sold inner-city buildings to developers, either leasing back the space or moving to another location, and recycling the capital into their work.

In the latest example, a four-level brick building with a 644sqm of floor space at 25 King St at the west end of Melbourne’s CBD is coming to market.

The property is owned by the Australian Society of Medical Imaging and Radiation Therapy, which uses it as its office, but could be re-purposed as retail space or a hotel. Industry sources expect the property to sell for about $5 million. Agents are CBRE’s Nick Lower, Josh Rutman, Tom Tuxworth and Lewis Tong.

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The offer follows several buoyant sale prices recorded by not-for-profits over recent years.

In December, Vision Australia sold its office building and warehouse in Enfield, in Sydney’s west, for $35 million to ASX-listed, Hong Kong-backed developer Tian An Australia, which saw an opportunity for townhouses on the 12,600sqm site.

Vision Australia had only two offices in Sydney, and needed four or five instead to be closer to clients who often use public transport to visit the organisation as they cannot drive, chief executive Ron Hooton tells The Australian.

“What we needed to do was get out there and get our services to clients,” Hooton says. “We wanted to get out to the growth corridors of Sydney.”

Smith family Anton Leschen

Anton Leschen, GM of The Smith Family, Victoria. Picture: Stuart McEvoy

The proceeds of the sale will go into Vision Australia’s reserves, which are invested to in turn fund services for children, workers and older people who are blind or have poor vision.

Even after leasing another four properties in Sydney, the proceeds will increase the services the organisation can provide.

In 2015, the Victorian AIDS Council sold its building in inner-city South Yarra to a Hong Kong buyer for $14.6 million.

In mid-2014, a local developer paid $8.8 million for The Smith Family’s Melbourne headquarters in Collingwood, at a record land rate for the suburb at the time.

The building had become run down and sometimes needed repairs after heavy rain, meaning members had to spend time on maintaining the building, which was “miles from our core purpose,” says The Smith Family’s Victorian general manager Anton Leschen.

“We pride ourselves on our business acumen and respecting all the donations and gifts we receive,” he says.

“We need to make those gifts go as far as possible and every asset that sits on our balance sheet needs to be high performing as well.”

The Smith Family now leases a modern office in Melbourne’s CBD, better suited for hosting supporters and still convenient to the communities the charity serves.

The sale proceeds are enabling the charity to increase the amount of educational scholarships it provides to disadvantaged children, recognising the importance of education in breaking the poverty cycle.

In 2014, the Salvation Army Training College in inner-northern Parkville sold for an undisclosed amount to Melbourne University, which expected to use the two properties for student accommodation.

Other sales included the Lort Smith Animal Hospital in North Melbourne to developer Mammoth Empire, and the Victorian Employers’ Chamber of Commerce and Industry’s East Melbourne headquarters to the Catholic Archdiocese of Melbourne to house its administration operations.

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