Singapore buyer breaks St Kilda Rd office tower price record

Properties on Melbourne’s St Kilda Road are attracting high prices. Picture: Mark Stewart.

Singapore’s Mapletree Investments has snapped up a $145 million ­office tower on Melbourne’s St Kilda Rd in a deal that shows the highest ever price for a building on the famed boulevard. 

The purchase, from an unlisted trust run by Newmark Capital, marked Mapletree’s first acquisition of an office property in Melbourne and adds to its $1.1 billion portfolio.

The 10-storey A-Grade office building at 417 St Kilda Rd was bought by Mapletree on its own balance sheet, expanding its real estate portfolio in Australia.

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The group said its strategy is to “identify and invest in income-producing, and quality assets in developed economies beyond Asia such as Australia”.

It is understood to have chased the purchase of a series of towers in Melbourne before landing the deal.

“With the acquisition, Mapletree currently has a total of seven office assets in Australia which are located across key Australian cities of Sydney, Melbourne, Brisbane and Perth,” the company says.

Mapletree forged into Australia with the purchase of an office building in South Brisbane in November 2014.

By the end of March, the group had grown its portfolio in Australia to $S1.14 billion ($1.05 billion) of logistics, office and serviced apartment assets.

Mapletree secured the tower via an off-market approach brokered by Leigh Melbourne and Nick Rathgeber of Colliers International, and it showed a yield in the sub-6% range.

The transaction generated a near $65 million uplift for Newmark, which picked up the building for $81.3 million in 2012 and added value by re-signing Oracle after making improvements to the building, including retail.

The tower spans a net leaseable area of 20,441sqm over 10 levels. Newmark capitalised on the surge in rents along St Kilda Rd as space in the city centre tightened by re-leasing almost all of the space.

The building has a four-star NABERS rating, parking for 472 vehicles and a reputation for attracting tech tenants. It could be considered for a residential conversion in the next cycle but Mapletree is unlikely to pursue the development.

Newmark Capital, run by led by Simon T. Morris and Chris Langford, is best known for buying Melbourne landmarks The Como Centre and the nearby Jam Factory in Chapel Street but keeps a low profile as it runs a collection of institutional grade properties.

Morris says the asset is “uniquely placed” for a repositioning strategy in a submarket that has experienced “significant” net absorption of space.

“We’re very satisfied with the outcome we’ve been able to produce on behalf of the investors in the trust,” he says, adding that Newmark remains active in the market.

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