Singapore fund TCA snaps up $383m Monash University building in Melbourne

The Monash College campus has sold to TCA.

Foreign investors have signalled they will make a return to buying buildings in the beaten down Victorian capital when they are not slugged by punitive taxes.

Their desire to get set amid bargain conditions has been put on display as Singapore-based TCA has forked out $383m to buy a complex occupied by Monash University in the Docklands

The fund manager picked up the building at 750 Collins Street, Melbourne from a GPT-managed fund in a move flagged by The Australian.

Foreign investors have been deterred from investing in Victoria due to the absentee owner surcharge slugging their returns.

However, Monash University, like other universities in Victoria, is generally exempt from paying land tax due to its status as a charitable institution. This meant the absentee owner surcharge did not apply, effectively opening the field to offshore groups.

TCA executive chairman Chris Cheah called out the attraction of investing in the safety of Australia. “TCA has always regarded Australia as a strategic long-term investment destination, and this acquisition emphasises the confidence that we have in the Australian real estate market. Our investors are delighted with the transaction and we continue to look for more opportunities to invest in Australia,” he said.

The building, sold by the unlisted GPT Wholesale Office Fund, which has been selling down some holdings ahead of a liquidity event, also marks out the chase for education assets by offshore players.

Monash University.

The Monash College Docklands campus hosts international students from countries including China, Japan, Indonesia, Vietnam, Hong Kong and Saudi Arabia. The building comprises 41,110sq m of net lettable area across ten storeys.

The precinct is considered problematic due to high vacancy levels but the GPT fund has been protected as the property was overhauled to win over Monash and there is an unexpired lease term of about ten years. The sale of the property backs GWOF’s strategy to actively rebalance its $8.4bn portfolio to position the fund.

“The divestment of 750 Collins Street aligns with GWOF’s strategy to thoughtfully recycle capital for redeployment into opportunities that will drive performance for investors,” GWOF fund manager and head of investment management, office, Micah Schulz, said.

“This result underscores our disciplined approach to capital management, while the strong sales result reflects improving office fundamentals and the confidence in Melbourne’s commercial office market as the sector’s recovery gains momentum,” he said. The fund has previously sold off sites in North Sydney and Parramatta.

The off-market sale was managed by Cushman & Wakefield and Colliers after strong engagement with several interested parties.

Cushman & Wakefield’s Leigh Melbourne and Nick Rathgeber said the targeted off-market approach attracted strong bids from a mix of international and local investors due to the high quality fully repositioned building with long ten year WALE to Monash with the added benefit of a large corner Collins Street land holding with significant future development upside to a range of potential uses.

“It’s the first asset to trade in Melbourne over $350m since mid-2022 owing largely to the fact no absentee owner surcharge was applicable due to Monash being the full building user, therefore enabling participation from Foreign investors,” they said.

Colliers’ Adam Woodward said it was the largest Melbourne CBD office transaction in over three years, with significant depth of bidding from both domestic and offshore groups. “The sale demonstrates the resurgence of investor confidence for a well-located Melbourne office with strong covenants,” he said.