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Its company name might sound like a 1980s pop band, but Kyko Group is a force to be reckoned with in the commercial property private-investor game.
The Sydney-based investor and developer is believed to be making its first foray into the Melbourne market, spending about $120 million for the office building at 330 Collins Street, in what is the biggest CBD office sale so far this year.
The sale price translates to a yield of about 6.6%, supporting research by analysts that CBD office average yields have risen about 5 basis points since the last quarter of last year.
The building includes about 16,400 square metres of office space, much of which is leased to National Australia Bank, and up to 2000 sq m of ground and basement-level retail and storage space, most of which is taken by high-end men's clothes retailer Henry Bucks, which uses it as its flagship store.
At a speculated price of $120 million, the 20-level, renovated building sold on a rate per square metre of about $6520.
Kyko Group's national office portfolio includes five Sydney CBD commercial office buildings, among them the City Mutual building in Hunter Street, which it occupies.
Outside the Sydney CBD, Kyko Group also owns commercial property in Chatswood, in NSW, Adelaide and Brisbane.
Its development portfolio includes largely boutique residential projects, mostly around Sydney but also in Adelaide and Brisbane.
A spokeswoman for the group refused to confirm or deny speculation it was in the running to buy the site when contacted by BusinessDay, as did the building's selling agents, Clinton Baxter and Paul Burns from Knight Frank, and John Marasco from Colliers International.
The sale of 330 Collins Street was always going to be a litmus test of the strength of the investment market, and follows sharp increases in the cost of the debt that many institutions would ordinarily have used to have made a bid before this year.
Challenger Premier Hybrid Property Fund acquired the office building from the HSBC Australia Property Trust, which bought 330 Collins Street and several surrounding buildings for a total of $68.7 million in March 2001.
During refurbishment, HSBC had to find an extra $30 million to remediate the property, after asbestos was found in ductwork and behind brickwork.
News of a sale is sure to bring a smile to the face of CBD building owners and vendors who, for the first quarter of this year saw more major properties withdrawn from sale due to lack of interest than occurred in the whole of last year.
Other major investment-grade quality assets on the market include nearby 90 Collins Street, which is for sale by GE Real Estate and is expected to reap about $140 million; a half-share in 1 Spring Street, being sold by Record Realty and worth about $90 million; and a half-share in the as yet unbuilt 567 Collins Street office, being sold by private developer APN Development Fund, which is believed to be asking about $200 million.
The recent sale of 505 Little Collins Street for $83 million, reflecting a yield of 6%, signals that the second quarter of this year will be a lot better for vendors than was the first half when it comes to CBD office investment sales.
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