Stake in Melbourne’s Rialto could be sold

The tower is co-owned by the private Grollo Group controlled by Rino Grollo, of the famed construction family.

His son, Lorenz, who runs the company, is a cousin of Daniel Grollo, who runs the Grocon development empire.

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Dexus is moving quickly after snapping up the near $1.5 billion 80 Collins St complex from QIC Global Real Estate this month. But the latest play will not require an equity raising, as the move is thought to be supported by powerful Asian sovereign fund GIC, although Dexus has several other deep pocketed partners.

Industry sources insist the deal is yet to be done at this early juncture, and Dexus refused to comment.

But the two moves indicate both the rising attraction of Melbourne commercial towers, as the city gains momentum as an alternative to the traditional gateway market of Sydney, and expectations that once the current wave of new towers is built there will be a shortage of new sites as the Docklands precinct is built out.

There has already been a hefty $2.5 billion of buildings traded in Melbourne this year and the buying also shows that both local and international players are willing to pay premiums to unlock the best property assets, partly as they bet that interest rates will remain low for an extended period and rents will jump.

The deal also shows that Melbourne is firmly on the international property map for sovereign funds as they look to buy up premium towers in global cities.

The Rialto Towers is a skyscraper at 525 Collins St, in the western side of the central business district of Melbourne, and was the tallest office building in the southern hemisphere when it was built in the early 1980s.

Grollo Australia picked up the site in 1981 in a joint venture with St Martin’s Properties and then developed the landmark site on the corner of Collins and King Streets.

The Rialto complex consists of two interconnected towers, North and South, with rooftop floors at Level 41 and Level 58 respectively.

Grollo Group was set up in the 1940 by patriarch Luigi Grollo who left Treviso, Italy to start a new life in Melbourne and then helped grow the business grew into one of Australia’s largest and construction groups.

In 2000, Luigi’s sons Bruno and Rino divided the company to pursue their own pursuits. Rino Grollo took control of Grollo Australia and the Grollo share in the Rialto.

The joint venture of Grollo Group and St Martins Properties in 2017 poured $100 million in a world-class design and regeneration of the famous precinct.

The Rialto regeneration project was completed mid-2017 and the pair have since expanded the site’s footprint.

Last year, Grollo Group and St Martins took control of the notorious King St nightclub strip adjacent to the Rialto complex by acquiring the premises of late-night venue Inflation Nightclub.

The pair now own all the King St properties running from Collins St to Flinders Lane, Potentially allowing for further expansion of the Rialto precinct, that is anchored by the iconic 251-metre high skyscraper.

The Singaporean sovereign wealth group is a long-term investor in Australian offices and shopping centres and has been shaking up its local property holdings.

The Australian reported in February that Charter Hall was negotiating with GIC about a play that could see the Australian group’s wholesale funds take a half-stake in the leasehold of the $1.8 billion Chifley Tower and Plaza.

A Charter Hall fund secured the freehold title of the prestigious tower for $98.5 million last December, giving it an advantage in the race for the leasehold.

GIC already has a tie up with Dexus, where it is backing a $2 billion industrial property trust.

This article originally appeared on www.theaustralian.com.au/property.