Singapore-listed ARA Asset Management has partnered with Canadian group QuadReal Property to acquire an East Melbourne commercial development for $330 million.
The deal is the latest in a string of fund-through arrangements in recent years as the commercial office market supply tightens.
The East Melbourne site, located at 200 Victoria Parade, was assembled and listed by Melbourne-based developer Time & Place alongside joint venture partner Golden Age Group.
The developer purchased the two-building site from National Australia Bank for around $60 million in 2015 and gained approval for new commercial scheme in late 2018.
Time & Place will oversee the delivery of “build-to-core” project with ARA to fund-through, manage and own the asset.
Time & Place director Tim Price said the development represented a significant trend outbound from the CBD by both tenants and investors as the evolution of fringe office markets draws in institutional money.
The FJMT-designed development will comprise 26,000sq m of commercial space across 11-storeys.
The building will offer large 2,500sq m floor plates, designed for A-grade government and corporate tenants with large space requirements.
Located in the government precinct, the project is anticipated to attract strong tenant interest with direct tram access into the CBD along Victoria Parade and close proximity to Parliament Station, highly sought after commodities.
The building will target a 5.5 Star NABERS Rating and a 5 Green Star rating and is set to complete in 2022.
ARA Australia chief executive David Blight said the acquisition aimed to capitalise on the scarcity of well-located sites and building premium-grade commercial assets on the CBD’s doorstep,
Canada’s largest pension fund-owned property groups, QuadReal, already has exposure to Australia through investments in student housing and a joint venture with ARA Asset Management.
“Melbourne is a key focal point of our global cities strategy,” QuadReal managing director Peter Kim said.
“Our Victoria Parade investment represents a lot of what we like about this market—from the asset’s uniquely large floor plates to the best in class environmental sustainability initiatives that we have planned for the building.”
QuadReal, Charter Hall and Abacus Property Group last year partnered to acquire a Sydney office tower overlooking Hyde Park for $630 million.
The A-Grade tower, located at 201 Elizabeth Street, comprises 36,983sq m over a lower ground food court with 12 tenancies and two levels of basement parking for 169 cars.