CBD BUILDINGS SELL FOR $40M
A HIGH net worth Victorian investor has paid close to $40 million to buy neighbouring office buildings on Ryrie St, Geelong.
The deal to secure the buyer for 235 and 237 Ryrie St involved obtaining indications or precommitments from several tenants whose leases were set to expire in the next 18 months.
MP Burke Commercial’s Pat Burke negotiated the private sale in conjunction with Dawkins Occhiuto’s Andrew Dawkins, which sold with a yield of about 7.8 per cent.
The building at 235 Ryrie St also has a planning permit and advanced drawings for two new lightweight floors and a rooftop garden, which would add more than 2000sq m to the 1980s era building.
Mr Burke said growth prospects were exceptional.
“Geelong has a strong local economy which is being fed with consistent population growth driven by affordable housing and increasing em- ployment opportunities,” he said.
“Astute investors now have Geelong on their preferred list as a city which offers affordable investments with outstanding capital growth potential and the significant amount of inquiry we received has underscored that in no uncertain terms.”
The agents ended up with two strong bids, he said.
“We had good interest from Sydney, Melbourne and Geelong and toward the end of the campaign from a number of offshore buyers. But once we agree to terms we had to shut that down,” he said.
Mr Burke said he couldn’t disclose the buyer’s identity.
“They own property in Melbourne and Geelong and their intention on these two buildings is to continue to improve the weight of average lease expiry,” he said. “It is a passive investor who has got the capacity to take on some leasing renewals and leasing risk and square up the building leases.”
Mr Burke said the buyer needed an indication that some tenants intended to recommit past 2018 and 2019, though options to find bigger or better space in the city was hard to find.
“A lot of the major buildings that are being built in Geelong have got full precommitment or are close to full, so it’s not allowing any more space to be freed up in the market for local businesses that may be seeking smaller areas from 800sq m to 2000sq m,” he said.
Mr Dawkins said prospective purchasers were attracted to the security of the fully leased buildings, which returned more than $3 million a year in rental income.
Major tenants include Bendigo Bank, Victorian Regional Channels Authority, Morris Finance, Clinical Laboratories and the Victorian Department of Human Services.