Sale of Melbourne art deco gem leads $300m of Christmas deals
A Chinese syndicate has partnered with a local investor to acquire one of the Melbourne CBD’s famous commercial buildings, the classic art deco-styled Mitchell House, ending more than five decades of ownership by the Krongold family.
Contracts on Mitchell House and a neighbouring building known as Milledge House on the corner of Lonsdale and Elizabeth streets, across the road from Emporium Melbourne, exchanged just before Christmas for $56 million, the highest price for a commercial building in the Melbourne CBD last year.
The sale of the two buildings was part of almost $300 million of retail, office, industrial and accommodation assets that transacted over the Christmas period – most acquired by Asian-based investors – providing a boost for the Australian commercial property market heading into the new year.
Built in 1936 in the Streamline Moderne style (inspired by aerodynamic design), six-storey Mitchell House at 358 Lonsdale Street was designed by famed architect Harry Norris (designer of the David Jones building on Bourke Street Mall and the Burnham Beeches country house in the Dandenong Ranges) for brush manufacturer Thos. Mitchell & Co.
It was bought for just $1.5 million in 1970 by the late textile magnate Henry Krongold and his late friend and business partner Sidney Hack through a company called Inner Metropolis Holdings. Ownership transferred to their descendants after their deaths.
Offering 85 metres of retail frontage (tenants include Aussie Disposals, KT Mart and China Bar) and occupying an 1800-square-metre corner site, Mitchell and Milledge House sold on a tight yield of 4.2 per cent and in line with $55 million-plus expectations.
There were 200 buyer inquiries and 10 offers received for the two buildings, according to selling agents Oliver Hay, Daniel Wolman and Leon Ma of Cushman & Wakefield. Tom Byrnes and Scott Keck of Charter Keck Cramer acted as transaction advisers.
“In a period where the CBD market has been starved of sizeable transactions, this is a strong indicator that prime assets are very resilient and appealing not only to interstate investors but offshore private capital,” Mr Hay said.
On the opposite side of the country, Singapore-listed real estate developer Hiap Hoe has struck a deal to acquire the Great Eastern Motor Lodge in Rivervale in Perth’s inner eastern suburbs for $40 million from the Christie family.
The hotel sits on a 1.2-hectare freehold site at 81 Great Eastern Highway and offers 198 rooms and 180 parking spaces. The Great Eastern Highway is the main road linking the domestic and international terminals at Perth Airport to the Perth CBD.
Hiap Hoe will add the Great Eastern Motor Lodge to a hospitality portfolio that includes the Four Points by Sheraton Melbourne Docklands and the Aloft Perth by Marriott. The company also owns a Perth office building.
The company’s directors said the rationale for buying the hotel included it’s “array of transport connections”, prominent position in an inner-city suburb, “comprehensive regeneration” and high occupancy levels.
“The property also provides an opportunity for the company to increase its recurrent income streams,” the Hiap Hoe directors said.
Back in Melbourne, another listed Singaporean developer, Wing Tai Holdings, paid $28 million just before Christmas for a two-storey warehouse-style office building at 11-27 Tavistock Place opposite Flinders Street Station. The vendor was electricity provider Citipower.
Wing Tai did not say why it was buying the former electricity substation, but it stands on an 840 sq m site and has development potential. This year, Wing Tai will complete its first development in Australia, a serviced apartment tower at 502 Albert Street, East Melbourne, overlooking Parliament Gardens.
Another listed Singapore real estate player was also active over the Christmas period, but as a seller.
CapitaLand Ascendas REIT, Singapore’s largest business park and industrial property investor, struck a deal to sell three logistics properties near Springfield, about 30 kilometres south of Brisbane, to Sydney investment house AsheMorgan for $73 million. The deal is in the form of a put and call option agreement due to be exercised in the first quarter of 2024.
CapitaLand said it had struck the deal at a 6.2 per cent premium to the properties’ August 2023 market valuation, highlighting the continuing strength of the industrial property sector.
The three properties due to be acquired by AsheMorgan are a 14,000 sq m warehouse facility at 77 Logistics Place in Larapinta and two nearby properties at 62 and 92 Sandstone Place within the Southlink Business Park in Parkinson. These offer combined lettable space of about 23,000 sq m.
All three properties sold with leases in place on a combined initial yield of about 5.9 per cent.
AsheMorgan has about $4 billion of investments under management including The District Dockland retail precinct in Melbourne and office buildings in Sydney and Brisbane.
In Sydney, ASX-listed A2B Australia, the operator of 13cabs, Silver Service and Cabcharge, said just before Christmas it had received $78 million from the sale of its head office at 9-13 O’Riordan Street in the inner-city suburb of Alexandria.
The near-1-hecatre site next to Green Square was offered as a development opportunity with the potential to developer dual or triple towers. The buyer is local developer Doublespace, a joint venture between Chinese telecom Enice Technology and Hong Kong-based developer Bestplace Corporation.
A2B announced the completion of the sale at the same time as it said Singapore’s ComfortDelGro has made a $182 million buyout offer for the company.
