Lendlease apartment play at Paris end of Melbourne’s CBD

An artists’ impression of plans for 63 Exhibition Street in Melbourne. Picture: Supplied

Embattled developer Lendlease is in talks to buy a key site from the wealthy Tarascio family at the Paris end of Melbourne’s CBD that could accommodate a 52-storey luxury apartment building.

The purchase at around $80m would open the way for the developer to bring its top end residential development skills to the Victorian capital and replicate its success in Sydney where it has had strong sales at its harbourside Barangaroo towers and at the One Circular Quay development.

The Tarascio family’s Salta Properties has looked to sell off the 13-storey office block that now occupies the site for some years, with Lendlease now in due diligence as the site comes with approval for a new luxury tower.

Salta, which declined to comment, is now focused on its growing build-to-rent platform as well as other logistics projects. It bought the building at 63 Exhibition St in the city’s east end in 2014 and then sought to win approval for a 64-level high-rise apartment and hotel tower before slightly trimming these plans back.

The development, sitting to the immediate east of 101 Collins St, was designed by architects Bates Smart and will span almost 30,000 sqm of gross floor area.

Salta tapped JLL’s Josh Rutman, Nick Peden, Jesse Radisich and MingXuan Li to sell the property, but they declined to comment.

Mr Rutman said earlier this year the planned building was in the “platinum quarter” of the CBD, bordered by Russell, Spring, Flinders and Collins streets amid the city’s high-end hotels and retailers.

While Lendlease has declined to comment it would likely rework the plans to put its own touches on the project, and full-floor apartments at the top of the proposed building will feature sweeping views across the Yarra River, Botanic Gardens, and the CBD, and the city’s inner suburbs.

The property is on the part of Exhibition St bookended by Collins St and the eclectic Flinders Lane, and sits adjacent to the Hermes flagship store in Melbourne.

Building a new tower will require the developer to keep another powerful investor, the Commonwealth Superannuation Fund which owns 101 Collins St, on its side. The super fund has previously bought up properties to protect its views.

In February, it reportedly spent about $7m on two floors of a neighbouring office block at 55 Exhibition St, adding to its holdings, as it sought to control views from its trophy 57-storey office block.

Salta also has holdings in that building.

Lendlease has been rocked by corporate instability, with another superannuation heavyweight, Aware Super, this week calling for the chairman Michael Ullmer to swiftly depart the board and urged it to seek an external replacement.

The ASX-listed company is facing upheaval ahead of a strategy update on May 27 as major shareholders, including John Wylie’s Tanarra Capital and investment house Allan Gray, press for radical changes.

Lendlease announced on Wednesday morning that Mr Ullmer would leave the group in November.

But HMC Capital has backed the strategy of selling down non-core assets, although it has urged the company to move faster.

The insurgent shareholders are backing Lendlease’s local operations and believe they will be critical to unlocking value in the company.