AU lists Melbourne council office turned medical centre
Australian Unity is selling one of its most secure yet under-utilised assets – a former council office turned medical centre in Melbourne’s north east Greensborough.
More than $35 million is expected for 9-13 Flintoff Street, opposite the local train station, abutting a bus interchange and car park, nearing completion.
It paid the City of Banyule $7.26m in 2016; formerly the Banyule Customer Service Centre, it was at the time an investment.
The two level 3529 sqm building was then repurposed as a large format healthcare asset and leased to BGH Capital subsidiary ForHealth Group, which trades there as the Greensborough Medical & Dental Centre.
The initial rental agreement runs nine more years but with options, it can stay until 2057.
Based on the annual net income ($2.24m), AU would be settling for a 6.5 per cent yield – up, arguably, c100-200 basis points since a 2022 demand spike, when interest rates were are record lows.
Best days ahead
On 2447 sqm, zoned Activity Centre, 9-13 Flintoff St holds significant development upside, surrounded by taller structures (story continues below).
“Existing approvals and independent planning advice indicate a potential built form of up to seven levels,” CBRE’s Sandro Peluso, who is marketing the property with Marcello Caspani-Muto, Jimmy Tat and Kai Wang, said.
“Multiple high-density projects are planned in the vicinity…so by the time it finishes operating as a medical centre, anytime in the next nine to 33 years, the value of the land alone will have increased significantly,” he added.
AU held the office in the Healthcare Property Trust, which recently sold a Richmond asset, opposite the Epworth, for $24m, and the Manningham Medical Centre in Templestowe – reaping $45m.
The Greensborough listing comes 18 months since Angelo Property Group sold a 5790 sqm Savers anchored homemaker centre at 106-126 Main St, Greensborough, for $27m, to Blackstone, permit-ready for a 22-storey residential building.
Not long later that seller divested a neighbouring retail investment with three tenancies (96-104 Main St), for $7.4 – a 4.7pc yield.
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