Investors reach for the sky with $60m Melbourne Skydeck buy
What are the top two levels of Eureka Tower occupied by the popular Skydeck tourist drawcard and formal dining restaurant Eureka89 worth? Nearly $60 million.
That’s according to a syndicate of buyers pulled together by Sydney fund manager CorVal, which has snapped up the topmost strata title levels, 88 and 89, in one of Melbourne’s tallest towers.
Described as an “unorthodox investment” by property observers because most top floor towers are devoted to residential penthouses, the deal will give CorVal a long-term, steady income stream at a time when low interest rates are putting an investor spotlight on money generating assets.
Tourism and hospitality operator Journey Beyond was the vendor of the two strata titles. The company operates the Eureka Skydeck and high-end restaurant and event space Eureka89 from the properties and will hold on to the business operations under an extended lease agreement.
“This new long-term lease arrangement underpins the future growth of this iconic experience in the heart of Melbourne and comes ahead of the launch of some exciting new initiatives under development for the Skydeck, due for completion later this year,” chief executive Chris Tallent said.
JLL’s Josh Rutman, MingXuan Li and Peter Harper negotiated the transaction of the 7 Riverside Quay property with Charter Keck Cramer’s Andrew Grant acting for Journey Beyond.
“The new owners are really buying an income stream which is proving to be highly attractive in a low interest rate environment,” Mr Rutman said.
Journey Beyond operates numerous other tourism ventures including The Ghan, Indian Pacific, Outback Spirit Tours and Horizontal Falls Seaplane Adventures.
Both properties have dedicated lift access from the ground floor and the 20-year lease to Journey Beyond will provide CorVal with annual rent of $3.3 million with fixed increases.
CorVal’s Oliver Picone said the triple net lease income, and the underlying property’s existing or potential alternate use like residential made it a worthy investment.
“When the sum of these two parts are combined the deal metrics looked quite compelling to us,” he said.
Mr Rutman said the transaction set a new benchmark square metre rate, above $30,000, for strata titled property in Melbourne.
