Embattled travel agency Flight Centre has secured a much-needed windfall of $62 million from the sale of its St Kilda Road headquarters in Melbourne.
The 11-level building fronting 436 St Kilda Road was picked up by Melbourne-based Shakespeare Property Group, headed by private investor Yong Quek.
The glass-encased office building opposite Fawkner Park, sits on a 2,300sq m site, and holds a net lettable area of 7,506 square metres.
Five tenants occupy the fully-leased building, which Flight Centre purchased for $32 million in February 2008, including subsidiary Corporate Traveller, specialist travel agency Stage & Screen Travel and soccer’s state governing body Football Victoria.
Fitzroys director Paul Burn, who brokered the deal, said buyers taking a long-term view beyond the Covid-19 environment recognised St Kilda Road’s fundamentals.
"Investors and developers have been favouring office use along St Kilda Road after a period in which multiple properties were converted to residential, as tenants are seeking accessible city fringe locations with quality lifestyle amenity in greater numbers," Burn said.
"My understanding is that Shakespeare Property Group see this as an opportunity to buy a strategically located office property, in this case located a short distance from the future Anzac Metro station that will further enhance accessibility to St Kilda Road."
New owners Shakespeare Property Group, the commercial property arm of Prime Value, had been circling the St Kilda Road asset for a number of weeks.
Co-founded by Yong Quek in 1998, Prime Value manages a $1 billion portfolio comprising Australian equities, cash-like instruments, commercial property and agricultural assets.
Flight Centre, which has just completed a $700 million capital raising, has committed to lease back 75 per cent of the building.
Flight Centre is among companies, including peer Webjet, slashing costs and raising funds after the coronavirus triggered mass shutdowns of borders and economies.
The company was forced to stand down approximately 6,000 staff and close half of its stores internationally, which is expected to result in annualised savings of $1.9 billion.
Flight Centre is now planning to reduce costs from $227 million monthly to $65 million.
The Brisbane-based travel agency said the sale of the building to Shakespeare Property Group was expected to complete in July.