Barwon Investment Partners has snapped up 607 St Kilda Road for its Healthcare Property Fund (HPF).
The price – c$75 million – comes in at about 10 per cent over expectation, valuing every square metre of building area at over $10,100.
It also reflects a yield of just over four pc – which is particularly impressive given the asset is not in what is considered the most prime part of the street (the upper east side between Toorak Rd West and Commercial Rd).
The private vendor, represented by Thomson Geer’s Eu Ming Lim, outlaid $28.54m for the office in April, 2012.
JLL’s Josh Rutman, MingXuan Li and Simon Quinn with Cushman & Wakefield’s Leigh Melbourne were the agents.
Elsewhere in the street, Anthony Wilson’s Terraplex recently listed 570 St Kilda Rd – which, like #607, carried a c$65m guide.
Boulevard back in fashion
Over 12 floors, 607 St Kilda Rd contains 7207 sqm of area and 128 car parks.
Alfred Health occupies a major space as its St Kilda Road Clinic which offers support for families, carers and mental health and allied health services.
A large chunk of the ground floor is retail and occupied by a café/restaurant with alfresco dining (pictured, top).
“Its little wonder why assets are seeing such a depth of interest as the office investment market in Melbourne has been starved of opportunities in 2021,” Mr Rutman said.
Only one commercial building in the street has traded for over $50m over the past 24 months, he added – #436, which Flight Centre sold for $62.15m last May.
Coincidentally that buyer, Shakespeare Group, recently completed a multi-tower apartment complex at 601-605 St Kilda Rd, next door to Barwon’s investment.
Five months ago, Aware Super and Altis Property Group outlaid more than $70m for the ex-Bayview on the Park in Queens Rd, parallel to St Kilda Rd, with plans for a Build to Rent project.
Not long earlier Alfred Health acquired a low rise block of flats at 545 St Kilda Rd for $31m with plans for a six storey medical complex, the Victorian Melanoma and Clinical Trials Centre (story continues below).
It later then leased an entire office (541 St Kilda Rd) recently vacated by Seek.
“The activity from private and institutional capital in the office market further reinforces the contention that the office is here to stay, even if that means the nature of the workplace is evolving,” according to Mr Rutman.
“St Kilda Rd’s currency has evolved as tenants look to base themselves close to the CBD and within walking distance of green open spaces and future Anzac train station,” he added.
Barwon healthcare fund goes from strength to strength
Barwon has been busy populating its seven year old HPF portfolio since COVID.
Last month, we reported the manager acquired prominent suites within the Monash Specialist Centre, in Melbourne’s south east.
In October, it paid Forza Capital $34.7m for a South Brisbane medical centre.
The open-ended trust holds more than 40 assets – including, in Victoria, at Bendigo, Geelong (Belmont) and Phillip Island.
Metropolitan properties are in Bundoora, Croydon, Melton, Niddrie, Sydenham, Werribee, Woodend and Williams Landing.
The portfolio, worth c$481m prior to 607 St Kilda Rd, also retains assets in the ACT, New South Wales, Queensland, South Australia, Tasmania and Western Australia.
The fund has returned wholesale investors 10.62pc per annum since inception.
Over the 12 months to August, 2021, the comparable rate was an extraordinary 23.34pc.
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