Grollo family sells government office building in Dandenong for $165m
Melbourne’s Grollo family has sold a suburban office building leased to the Victorian government for $165 million.
ASX-listed real estate investment trust Growthpoint Properties Australia on Monday said it has exchanged contracts to buy Government Service Office Dandenong, an A-grade modern office building.
The Grollo family has been selling a number of assets controlled by family members not caught up in the collapse of the Grocon construction business.
GSO Dandenong was sold through an international expressions of interest campaign run by Knight Frank agents, who said it was the first long-leased government office in Melbourne to be offered to the market in 30 years.
Constructed in 2011, the building has a total net lettable area of 15,070sqm with ground floor retail, seven floors of office space and basement parking.
It is 99.7% occupied with a long weighted average lease expiry [WALE] of 9.5 years.
Most of the building is leased to the state government’s finance department, with that lease providing fixed annual 3.5% rent reviews. The remaining space is leased to eight retail businesses.
Growthpoint managing director Timothy Collyer said the high-quality, long-WALE asset has high green credentials and is centrally located in Dandenong, the hub of Melbourne’s growing south-east region.
“The acquisition further increases Growthpoint’s exposure to government covenants in strategic urban locations and is a great addition to our portfolio, supporting our strategy to maintain a portfolio of modern, high-quality resilient assets which meet our tenants’ needs now and into the future,” he said.
“We are confident in the market’s long-term outlook with recent urban renewal investment supported by further government investment initiatives.”
Mr Collyer said the state government’s initiative to revitalise central Dandenong is expected to attract more than $1 billion in private sector investment, while the federal government’s $15 billion infrastructure investment in the south-east will further improve transport connections.
Growthpoint said the property is being acquired for $165 million on a 5.3% initial income yield.
The company said the acquisition is subject to Foreign Investment Review Board approval, but it does not anticipate any issues with obtaining approval.