Grollos exit suburban office trophy in $165m deal
Melbourne’s Grollo family has sold off one of its trophy assets, an eight-level office building at Dandenong in Melbourne’s south-east, to listed landlord Growthpoint Properties Australia in a $165 million deal.
Owned by Grocon co-founder Bruno Grollo and two of his children, Adam and Leeanna, the 15,000 square metre building is the second substantial commercial property the trio have sold in the past year. Last June, the Grollos sold a 14-level office in the inner-western Melbourne suburb of Footscray to Centuria Capital Group for $224 million.
As part of the carve-up of Mr Grollo’s property holdings a decade ago, Bruno, Adam and Leeanna held on to a number of assets including the QV Centre in the Melbourne CBD along with the suburban office towers, while son Daniel took over the Grocon construction and development business.
Grocon narrowly avoided liquidation last year after many of its separate entities went into administration. Daniel Grollo has since sued the NSW government over the $2 billion Central Barangaroo project in Sydney, which he blames for the collapse of the high-profile construction business.
Constructed in 2011, the Dandenong building has high energy efficiency ratings and is almost fully leased to the state government. The Grollo family appointed Knight Frank’s Paul Kempton and Trent Preece to broker the property in February.
The average lease expiry in the building, known as the Government Service Office, which includes ground-floor retail is 9.5 years. The deal was struck on a 5.3 per cent initial income yield.
For Growthpoint, the building on Dandenong’s Thomas Street, will add to its growing portfolio of suburban-focused assets.
“The acquisition further increases Growthpoint’s exposure to government covenants in strategic urban locations and is a great addition to our portfolio, supporting our strategy to maintain a portfolio of modern, high-quality resilient assets which meet our tenants’ needs now and into the future,” managing director Timothy Collyer said.
Dandenong has already absorbed the benefit of $700 million in urban renewal investment, Mr Collyer noted.
Another $1 billion more in private sector investment is expected to follow state government initiatives to boost the suburban hub, while federal spending on infrastructure in the city’s south-east will further improve transport connections, he said.
