Marprop makes move on Docklands’ Bendigo Bank HQ
Sydney-based funds manager Marprop Real Estate Partners is closing in on property transactions approaching $1 billion and has flagged further acquisitions after picking up the Bendigo and Adelaide Bank building in Melbourne’s Docklands.
The business has carved out a niche targeting buildings that sit above the private market, but are overlooked by many institutions as they may need repositioning to unlock their returns.
The group, which invests nationally, says it is beating benchmarks by identifying “market dislocation” and “mispricing opportunities” when it buys, and then pouring work into revitalising buildings, including the wave of 1990s-built towers in our cities.
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In the latest play for its institutional fund, Marprop picked up 120 Harbour Esplanade in Docklands from Singapore’s Wharf Street Investments. The purchase came after a series of acquisitions, including 541 St Kilda Rd, Melbourne, 157 Walker St, North Sydney, and 14 Moore St in Canberra.
The listed bank has another six years on its lease at the Docklands complex and the building is well positioned to benefit from the precinct’s performance as office construction is all but complete.
Marprop chief executive James Marshall says the building is attractive due to its secure initial yield, which will see an uplift given a rent review in August, and pending amenity improvements including the recently announced $225 million redevelopment of Marvel Stadium that serves as AFL headquarters, and the Harbour Esplanade precinct.
With headline pricing on office buildings soaring, Marshall says Marprop is differentiating its buildings by creating better workplace experiences than many peers, and boosting the amenity of buildings with concierge-style services.
There’s a huge amount of confidence in Docklands and more broadly the Melbourne market right now, with buyer demand significantly outweighing supply
He says the modern bank headquarters fitted the firm’s mandate and said plans for lobby enhancements and end-of-trip facilities were already in train.
“We believe this property will specifically perform strongly given these reasons, but we also have faith in the longer-term outlook for the broader Docklands precinct,” Marshall says.
He points to population growth running at 12% annually over the past decade in the Docklands, and resident employment levels almost doubling over the past five years. The area is now ringed by apartment towers and has become an affluent area, supporting the commercial precinct.
Marprop director of fund and asset management Juerg Erismann says he expects favourable movements in debt markets to provide investors with strong and predictable cash flows.
“On the global landscape this is a very attractive deal for our capital partners and we are actively seeking further assets, while our private mandates seek opportunities with a higher component of active management, similar to our purchase in Canberra,” he says.
The sale was brokered by CBRE’s Kiran Pillai, Neva Courts and Mark Coster and Colliers International’s Trent Preece, Anna Cavar, Daniel Wolman and Matt Stagg.
Pillai says the campaign was “well contested”, with strong bidding coming from local and international buyers across the private and institutional landscape.
“There’s a huge amount of confidence in Docklands and more broadly the Melbourne market right now, with buyer demand significantly outweighing supply,” he said.
Preece says the lack of genuine buying opportunities for prime office buildings in the Melbourne CBD resulted in strong competition for the asset.
“Buyer sentiment is expected to further increase on the back of declining interest rates and cheaper cost of debt,” he says.
This article originally appeared on www.theaustralian.com.au/property.
