Collins Street heritage office listing seeks to shed Gothic gloom
The historic Olderfleet building in Collins Street has been listed for sale by the Australian Unity Property managed office trust.
Offers for the intricate neo-Gothic facade building at 477 Collins Street close August 11. CB Richard Ellis institutional investment properties division agents Martin O’Sullivan and Mark Coster are handling the sale.
Its most recent valuation was $65.4 million as at November 2010. As at December 2009 there was a $63 million book value for the building – a decrease of $3.75 million from its 2008 book value.
Olderfleet is 100% leased, and the car park is leased and operated by S&K Car Park Management. Its office tenants include Accenture, CapGemini, Ernst and Young, Melbourne Conference & Training Centre and Allens Arthur Robinson law firm.
There are price expectations of $72 million.
The complex consists of an eight-storey office building behind a series of classified historic facades dating back to 1884 – and protected from demolition during the 1970s building boom by public lobbying – a well as a large car park.
With a dual frontage site of 3,899 square metres, it has more than 40 metres of prime retail frontage on Collins Street.
The office investment has 11,986 square metres of net lettable area and a commercial car park of 598 bays off Flinders Lane.
Located between William and King streets in the CBD's popular western core, the property is currently substantially under-rented.
It has a net passing income of $5.7 million per year.
The office complex was built by Becton in 1985 behind the row of three historic terraces.
It was sold in 1994 by Becton Corporation for $40 million to Singaporean interests at a yield of 14.75% on its then net income of $5.9 million a year.
The sale occurred about the same time that Michael Buxton retired from Becton, thereby ending his two-decade long partnership with Max Beck.
It was later sold to the Acumen Office Trust established by Multiplex Capital in 2002 for $56 million.
Multiplex Capital achieved strong returns for investors, delivering an income yield of 9% per annum for the two years to 2007 which represented a total return of 11.3% over the five-year period. By 2007 Multiplex Capital had renewed leases for more than 11,000 square metres of space.
In 2007, after sounding out investors, there was a transfer of management rights to Australian Unity Property Limited.
“No one is celebrating wildly just yet, but there is strong evidence to suggest that the commercial property market is on the way to recovery and that the GFC is behind us,” Martin Hession, the head of property at Australian Unity Investments, told investors in his autumn 2011 review.
“During the December 2010 quarter, the commercial property market continued to improve, as valuations, sales activity and underlying economic fundamentals gained momentum.
Investors were told while commercial property values still remained relatively subdued, compared to pre-GFC valuations, there were indications of a broad correction across the market as assets came back towards fair value.
