Victoria University offloads vacant Melbourne campus for $40m
Victoria University has strengthened its balance sheet after selling its redundant King Street campus building in the Melbourne CBD to Singapore-listed developer SLB Development for about $40 million.
The 12-storey office building near the corner of King and Lonsdale Streets was put up for sale in April as VU prepared to move into its new 29-level vertical campus at 370 Little Lonsdale Street. The $385 million tower was developed by ISPT and leased to VU on a 30-year term.
It’s the second major Melbourne CBD asset sale by VU in just over six months. In late November, VU sold its city campus at 300 Flinders Street for $80.8 million to fund managers Marprop Real Estate Investors and Futuro Capital.
These sales are part of a wider trend of universities selling down their real estate as they navigate their way through the pandemic.
In 2020, RMIT University sold a 14-storey strata property on Bourke Street to Futoro Capital for $133 million.
The sale of 225 King Street is another shot in the arm for the Melbourne CBD office market, particularly since the building sold with vacant possession.
The incoming buyer, SLB Development, is a subsidiary of another listed Singaporean real estate player, Lian Beng, a well-known trader of Melbourne commercial real estate.
In 2017, Lian Beng offloaded Newspaper House on Collins Street, a landmark historical retail and office building for $35 million, which was purchased in 2015 for $22.7 million and subsequently refurbished and leased up.
Matthew Ong, CEO of SLB Developments, said the timing was right for the company’s re-entry into the Melbourne CBD market, given the office recovery was well under way across the globe.
“We are still very confident in the medium to long-term prospects of the Melbourne market, and we are looking to continue to acquire more assets to build our exposure to Australian office buildings,” Mr Ong said.
JLL’s Josh Rutman, Nick Peden, Mark Stafford and Mingxuan Li handled the sale of 225 King Street on behalf of Victoria University. Eu Ming Lim of Thomson Geer represented SLB Developments.
Mr Rutman said a vacant building sale was the purest test of investor sentiment.
“This sale is a demonstration of the confidence from the investor market in the future prospects for Melbourne CBD offices,” Mr Rutman said.
“Investors and landlords have recognised that tenants are gravitating to buildings that offer quality amenity and strong sustainability features, which will present significant opportunity to reposition older stock for the next evolution of office accommodation.”
