Discussions continue for $130m RMIT tower sale
A strict lockdown is not stopping commercial property deals being struck in the heart of Melbourne, with a group of investors in talks to buy an RMIT-owned building for about $130m.
RMIT said in July it would sell and lease back its prominent Bourke Street tower in the Melbourne CBD.
The move comes as lockdowns gradually ease and it is believed to be consortium driven by high profile players Phil George of Futuro Capital and including an Asian group, Baring Private Equity Asia.
Futuro, an independent investment property company, was set last year to focus on Australian and New Zealand real estate, and identifies real estate with development or value add potential.
The Sydney-based investment group company last month put the Tivoli Arcade – a strata retail, office and car park leased to RMIT – that is at the bottom of the building under contract.
While the university has a five-year lease, Mr George and his partners would have effective control over a major CBD site that would suit a mixed use project in the next cycle.
Baring is stepping up after last year tapping Sydney-based Paul Gately as managing director and head of asset management for the company’s Asian real estate division.
Gately joined Baring after eight years with CLSA Capital Partners in Singapore and more recently Sydney, where he headed the private equity firm’s Australia Real Estate Fund until late 2018. He was charged with seeking Australian opportunities for Baring Private Equity’s real estate fund.
The move is one of the first major office sales in Melbourne in the wake of the pandemic and shows that deep-pocketed players will chase an exposure to Melbourne‘s expected recovery.
Office investors appear to be looking through the current problems of the market, with leasing expected to be hit, and some tenants shrinking requirements.
More universities are tipped to follow RMIT in selling off assets and UBS has estimated the 10 largest universities hold a $25bn pool of property assets, some of which they could choose to sell if international students are slow to return.
RMIT’s 23,014 sqm tower comprises a blend of office and teaching space and has been significantly refurbished in recent years.
CBRE’s Kiran Pillai, Mark Coster, Scott McGlone and Stuart McCann with Gross Waddell’s Andrew Waddell, Raoul Salter, Michael Gross and Danny Clark are managing the sale of the building at 235 Bourke Street, but the firms declined to comment.
RMIT had said the property was outside of its core city campus location and was not considered a long-term strategic asset for the university. The pandemic hastened its sale which had been considered since the completion of the Swanston Academic Building in late 2012.
RMIT owns the strata lot comprising levels four to 17 and the sale would involve a lease back for five years with options. The university and purchasing consortium declined to comment on Tuesday.
This article originally appeared on www.theaustralian.com.au/property.
