Grollo family sells Footscray office building to Centuria for $224m
Bruno Grollo, the patriarch of the famed Melbourne development family, and two of his children, Adam and Leeanna, have sold a 14-level office in the inner-western Melbourne suburb of Footscray to Centuria Capital Group for $224 million.
The property was developed by the family’s construction business, Grocon, in partnership with the Victorian government and owned by Cappello (Footscray) Pty Ltd. Company filings show that Cappello, Italian for hat, is controlled by siblings Adam, Leeanna and their father Bruno.
In the carve-up of Bruno Grollo’s property empire in 2011, Bruno along with Adam and Leeanna held onto a number of existing assets – such as the QV Centre in the Melbourne CBD and the Footscray tower – while son Daniel took over the Grocon construction and development business.
Last month, Daniel Grollo narrowly avoided liquidation after Grocon collapsed.
Centuria said it would put the building into a single asset unlisted retail fund and raise $133 million to fund the acquisition, balancing it with 49 per cent debt.
It will be the largest capital raising undertaken by Centuria for a single asset fund and the biggest in the market for 15 years, according to the fund manager.
The building is 100 per cent leased, mostly to the Victorian government, with an average weighted average lease expiry of 11.8 years and was bought on a market capitalisation rate of 4.7 per cent.
Tenants in the 20,191sq m building, finished in 2014, include City West Water (32 per cent), State Trustees Limited (31 per cent) and the Victorian government’s Treasury and Finance Department (27 per cent).
Ross Lees, head of funds management at Centuria, said Footscray was a rapidly gentrifying area with immense growth opportunities.
“Footscray is absolutely up and coming,” Mr Lees said. “It’s a precinct we believe has a very strong infrastructure and future gentrification story.
“We really think this has got huge re-rating potential.”
Centuria co-chief executive Jason Huljich said there was a strong appetite among retail investors for property investments with reliable income.
“With rising white-collar employment and workforces increasingly returning to the office, we believe office asset investments will increasingly deliver strong results,” Mr Huljich said.
“Already within the past few months, we’ve witnessed several large office transactions in the domestic market.”
Mr Huljich said Centuria Government Income Property Fund’s capital raising is expected to open on July 1 and close four weeks later.
