Collective Capital has spent c$20 million on a low-rise office on a big block in central Frankston – a bayside activity centre 41 kilometres south east of Melbourne.
The quoted net annual income for 454-472 Nepean Highway is $1.24m. Factoring in its 22 per cent vacant, the passing yield is approximately 6.2pc.
The off-market deal was negotiated by CBRE.
Over five levels, the commercial complex occupies a 6254 sqm parcel with 142 car parks and three street frontages.
It is at the south west corner of Wells Street, next to South East Water’s five year old headquarters, which neighbours Kananook Creek and Frankston Beach.
Collective Capital director Nicholas Thompson, who co-founded the development and investment house with Dale O’Dwyer, said he is confident the deal would provide “strong returns” for shareholders.
“The asset was strategically targeted due to its very strong government and funded tenancy profile which, during these uncertain times, will provide our investors with a high level of income security,” the executive added.
CBRE head of Suburban Office Leasing, Gianni Macdonald, said the highway location, walking distance to the suburb’s train station and Bayside Shopping Centre, was a major factor in attracting the occupiers it had: Brotherhood of St Lawrence, Matchworks, National Disability Insurance Scheme and Wise Employment.
Colleague Josh Rutman, one of the 454-472 Nepean Highway sale brokers, said investors are also responding to the growing trend of a decentralised workforce “where office workers preferred to work either at or closer to home to reduce travel time without compromising productivity”.
Co-selling agent Mark Wizel added the sale result “reflected the property’s quintessentially defensive tenancy profile, a characteristic which has become highly sought after as…challenges around the office tenant market continue to gain momentum”.
Collective Capital chases commercial return
Three months ago, Collective Capital’s Malvern Investment Fund signed two lease deals for part of the former Dennis Family Homes headquarters in south east Melbourne which it had renovated – for an average 35pc uplift on the prior rental return.
It bought the Malvern East asset at 203-207 Waverley Road, for $13m in 2018 with a permit for a four-storey residential complex with 44 dwellings – but instead retained the commercial structure as an investment.
Via its Collective Capital Collingwood Investment Fund, launched this month, it also controls 33 Peel Street, Collingwood, in the city’s inner north east – a site last publicly transacted for $2.3m nine months ago.
On the south east corner of Cambridge Street, opposite Two Birds Cafe, this 1142 sqm parcel was recently permitted to make way for a seven-level office.
Last year, Collective Capital Qld Unit Trust was established – seeded with a contemporary Cairns office tenanted to the state government and with a long (10 year) weighted average lease expiry.
Collective Capital is based in Melbourne’s Armadale.