Sentinel Property Group add first Melbourne asset with $20 million purchase
Sentinel Property Group has added its first Melbourne asset to a growing national portfolio with a $20 million acquisition.
The 138 Bourke Street building has 4,816 square metres of retail space fully leased to the Virgin Active health club until July 2024.
The property was acquired by the Sentinel Bourke Street Retail Trust which has a forecast Year 1 distribution of 9.75% per annum increasing to 10.25% per annum in Year 2 and 10.75% per annum Year 3. Investor distributions are paid monthly.
Warren Ebert, Sentinel’s managing director, said the company was pleased to have secured such a high-profile property to mark its entry into the Melbourne market. He said Virgin Active operated 270 health clubs in seven countries and its showcase Australian outlet in the building is the largest in the southern hemisphere.
The building, which had a $14 million refurbishment in 2009, also has potential for future development, subject to council approval, and is adjacent to a proposed 90-level residential tower.
“Demand for prime Melbourne CBD retail properties continues to intensify from both Australian and Asian buyers, as evidenced by the recent surge of record sales in the city,” Ebert said.
“The fundamentals of Melbourne CBD retail will only keep improving with consistently low vacancy rates, a low interest rate environment and record buyer inquiry.
“Our new asset is in an outstanding location, with high-profile exposure and a strong demographic profile, underpinned by a long-term lease to a prominent international retail tenant.”
Virgin Active health clubs have gyms, swimming pools, spas, saunas, rock climbing walls and sleeping pods. The Bourke Street club has around 5,000 members.
The acquisition follows the Brisbane-based group’s purchase of three properties in New South Wales this year, as well as 13 properties in Queensland since its inception in 2010. The portfolio covers the commercial office, industrial and retail bulky goods sectors and is valued at more than $350 million.
Ebert said Sentinel held its first Melbourne investor function this week.
The company’s senior management team includes Michael Bowers, former CEO of the Brisbane Lions AFL club, and Michael Sherlock, former CEO of the national Brumby’s bakery chain.
He said Sentinel consistently topped the Property Council of Australia/Investment Property Databank index of the country’s best performing unlisted retail property funds based on total return performance.
It has claimed the No.1 position in 20 out of the 25 months since the index began, highlighting the strength of the company’s buying strategy and ability to deliver positive returns.