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Strong office market fundamentals has enticed property developer Mirvac to muscle in on a $122 million office building with plans to redevelop the Melbourne CBD site.
The seven-level B-grade building covers 10,200sq m, which Mirvac plans to redevelop into a new A-grade office tower spanning more than 40,000 square metres.
Vendor Sterling Global Property Group offloaded the 383 La Trobe Street asset where it had originally planned a $700 million luxury unit and hotel tower.
The tower, which is 100 per cent leased to the Australian Federal Police, was snapped up on a 5.7 per cent yield.
Melbourne’s solid office market performance combined with limited future supply beyond the current development cycle attracted the Group to the asset, explained Mirvac’s Campbell Hanan.
“The acquisition presents us with a rare opportunity to secure a significant development asset in a well-located part of Melbourne’s CBD, while providing the Group with secure income over the medium term,” Hanan said.
The acquisition also adds to asx-listed Mirvac’s $3.1 billion commercial development pipeline.
Related: QIC Lists Up to $2 Billion of Assets
In New South Wales, Mirvac has realised $125.2 million due to the sale of a 50 per cent interest in logistics estate Calibre to its Morgan Stanley-Mirvac fund, known as Mirvac Industrial Logistics Partnership (MILP).
MILP is a partnership between Mirvac and an investment vehicle sponsored by Morgan Stanley, founded last year.
The half share sale price for the completed development, located in Sydney’s Eastern Creek, reflects a passing yield of 5.14 per cent.
Hanan said the 50 per cent sell down of Calibre is in line with Mirvac’s capital partnering strategy, providing the Group with scope to grow its industrial logistics partnership.
The growing e-commerce sector has underpinned surging demand in the logistics real estate market.
“The transaction will also allow us to redeploy capital into our industrial business, where we are currently seeing very strong demand for Premium grade assets,” Hanan said.
The transaction also adds to MILP’s combined gross asset value now approximately $220 million.
Related: Sydney Still Among World's Most Expensive Industrial Markets
Hero image of Calibre, Eastern Creek Sydney
