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Six weeks after reporting a $248million financial-year loss, the Valad Property Group is purchasing a prominent Port Melbourne development site for its fifth development fund.
Sources say the Sydney-based fund manager is proposing a major mixed-use project, after shelling out some $10 million for the 95-101 Bay Street development site at the southern end of the retail strip, about 300 metres from Port Phillip Bay.
The property, now a collection of industrial warehouses, was put to the market in March by high-rise apartment developer Central Equity.
At the time of listing, Central Equity managing director Eddie Kutner said it wanted to focus on bigger projects within or close to the central business district.
Central Equity obtained a permit for the Bay Street site that included a nine-level office and apartment building with ground-floor shops.
This project would have been relatively smaller than Central Equity's other projects in Melbourne, which have been closer to 40 levels.
Sources believe Valad, which repositions and value-adds to properties in its portfolio, will formulate a proposal for the Bay Street site. This may include retail, offices and apartments, some serviced apartments or hotel space.
A Valad spokeswoman confirmed it was acquiring the site for one of its development funds, but declined to elaborate on plans until after settlement, which is expected later this year.
Developer First State Group is building the eight-level, 37-unit luxury Bianca apartment project on the former Teac site, across the road from the Valad site. Bianca will also include ground-floor shops.
Next door to Valad's Bay Street site, towards the beach, the now extinct developer Westpoint built high-rise apartment towers of up to 11 levels.
Representatives from Central Equity failed to return BusinessDay calls. Jones Lang LaSalle directors and selling agents Dominic Gibson and Steve Messina declined to comment.
In Melbourne, Valad's other properties include industrial facilities in Boronia, Dandenong, Derrimut and Sunshine. It also owns self-storage facilities in Abbotsford, Maribyrnong, and Preston, as part of a joint-venture arrangement with Kennards Self Storage.
Most of Valad's commercial office and retail assets are in NSW and Queensland. Despite being affected by the credit crunch and slashing its earnings forecasts, Valad's debt gearing was about 32% in June, considered low. It was reported at the time that the company had available funds of $800 million to invest.
Since listing the Port Melbourne property for sale, Central Equity has proceeded with construction of its 37-level SouthbankOne and 35-level VueGrand apartment buildings in Southbank.
Central Equity has also increased marketing of its City Tempo apartment project, on a site at 361 Queen Street, opposite its CBD headquarters.
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