Former Trans Australia Airlines house flies for $90.15 million

Former Trans Australia Airlines house flies for $90.15 million
Former Trans Australia Airlines house flies for $90.15 million

The former home of Trans Australia Airlines, and more recently Qantas, has sold to an offshore buyer for $90.15million.

The property at at 50 Franklin Street in Melbourne sold with a new long-term lease in place to the Victorian government.

The deal comes just more than a year after Singapore-based property developer Lian Beng picked up the 18-level office tower in the heart of the city’s education precinct for $51.5million, and six months after the state government signed a 10-year lease to occupy the entire building.

It was sold by a band of 12 private investors and was sold by vacant possession after the departure of Salmat.

Savills Australia’s Ben Parkinson, Paul Craig and Ben Azar managed the international expressions-of-interest campaign in conjunction with Colliers International’s Trent Hobart.

Parkinson said the buyer recognised the potential of the property’s solid passive income stream, which spiked 116 enquiries and ultimately 14 offers, six domestic and eight offshore, from a combination of private and listed groups.

“The Victorian state government has signed on for 10 years, with various departments to occupy the space and undertake a multi-million-dollar major building upgrade during the tenancy,” he said.

“There’s a focus on increasing the NABERS Energy rating from 1.5 stars to three-plus stars.”

Ben Azar said the property’s ultimate income security under the strong AAA-rated government lease covenant was the deciding factor in the deal.

“This is an extraordinarily rare opportunity to acquire a whole building occupied by a government tenant,” he said.

Former Trans Australia Airlines house flies for .15 million

“50 Franklin Street is one of only two buildings with a net lettable area under 20,000 sqm, 100 per cent occupied by a government tenant in the Melbourne CBD.”

Paul Craig said the Melbourne CBD continued to be a core Asia Pacific investment destination and Australia’s most diversified office market.

“The forecast office supply from 2017 to 2026 is indicating only half the stock of the previous decade will come to market against a backdrop of sustained high demand,” he said

“This is anticipated to translate to effective rent growth and the ongoing generation of Melbourne’s sought-after high-return profile.”

Mr Parkinson said the buyer planned to capitalise on the tower’s future development upside, with hotel, studentand residential accommodation among the possible opportunities.

“The flexible floorplate configuration allows for easy conversion,” he said.

“With the prominent total site area of 2,213 sqm, there is potential to increase the building area to 40,000 sqm, subject to council approval.”

50 Franklin Street is in one of the Melbourne CBD’s most rapidly evolving precincts, with major state government and City of Melbourne infrastructure works being undertaken in the immediate vicinity, including the $10.9billion Metro Rail Project and the revitalisation of the Queen Victoria Market.

“Anticipated to become one of the most densely populated precincts in the world, this will be the epicentre for office and education use,” Azar said.

“During this time of growing demand in the international education sector and falling yields for commercial offices, we expect significant domestic an off-shore enquiry for this asset.”

Extensively refurbished about eight years ago, the building includes four passenger lifts, 36 basement car parks, an entrance lobby and flexible ground-floor commercial space.

Tags: 
Melbourne Savills

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