Tong Eng Group makes 1163m stake in St Kilda office precinct
Tong Eng Group makes $116.3m stake in St Kilda office precinct
| 15 December 2016
Singaporean developer Tong Eng Group has secured a presence in one of Australia’s most sought after business hubs, purchasing a tower within the St Kilda Road office precinct for $116.3 million.
CBRE’s Michael Andrews, Luke Etherington and Kiran Pillai – in conjunction with Colliers’ Leigh Melbourne and Nick Rathgeber – managed the sale campaign for the 5 Queens Road property on behalf of Charter Hall.
CHOT Fund Manager, Trent James said: “We maintain an active, through the cycle, asset management approach across our portfolio. Our recent divestments, including Queens Road, provides an opportunity to divest non-core assets above book value, with capital to be redeployed into core CBD acquisitions.
“This transaction reconfirm the CHOT’s focus on being an active seller in order to enhance returns for our capital partners,” Mr James added.
Located opposite Albert Park, the 11-storey tower comprises a net lettable area of 17,500sqm and is anchored by major tenants including Unico Computer Systems, Beca and Shape.
The property has undergone major refurbishment over the past five years, with circa $9 million spent on upgrades since 2011 – positioning it as St Kilda’s most sustainable building, with the only 5 Star NABERS rating in the area.
CBRE’s Mr Andrews said the strong sale result, which reflected an initial yield of circa 5.6%, highlighted the strength of demand for quality assets in the precinct.
“Charter Hall has completed a significant capital works program and leasing project on the building in recent years, which has positioned the asset as best in class,” Mr Andrews said.
“This strategy underpinned strong interest from both offshore and local groups and ultimately delivered one of the sharpest ever sale results within the precinct.”
Located on a substantial corner site of 5,167sqm, the property features extensive glazing and central core design that provides extensive natural light and sweeping views across the Albert Park lake precinct and Port Phillip Bay.
Mr Etherington said St Kilda’s recognition as one of the best office markets in the country attracted strong interest in the Queens Road asset.
“The St Kilda office precinct offers some of the most attractive fundamentals in the country, with an A-grade vacancy rate of 2.8% ensuring continued rental growth in this already strong market,” Mr Etherington said.
“St Kilda Road received its last new office building in 1990, and with no new supply forecast in the immediate future, the precinct is positioned to remain one of the country’s most tightly held markets.”
Terence Teo, Director of Feature Queens Pty Ltd (a unit of the Tong Eng Group), commented on the company’s latest acquisition: "We are proud to acquire this grade A office building, which is at a fantastic location at the confluence of Queens Road, Kingsway and St Kilda Road, and offers unrivalled protected views over Albert Park and Port Philip Bay.”
As the only 5 Star NABERS rating building in the St Kilda Road office precinct, the property’s sustainable features were a key factor underpinning investment interest, CBRE’s Kiran Pillai explained.
“Investors are increasingly viewing energy performance as key factor when considering the overall worth of a commercial asset, with it helping enhance the return value from a tenant demand and investment perspective,” Mr Pillai said.
Built in 1989, the Queens Road tower includes recently completed end-of-trip facilities comprising 104 lockers and 56 bike racks; highly efficient floor plates of 1,680sqm and 325 bays across two levels of basement car parking.
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About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2015 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.