Dexus snares QIC’s Collins Street portfolio for c$1.4 billion

The new office towers over airspace at 74 Collins Street, a building for decades owner-occupied by exclusive boutique, Le Louvre – the retailer said to be the reason this pocket of the city is called the “Paris end”.

Dexus is paying Queensland Investment Corporation close to $1.4 billion for three neighbouring commercial properties at one of Melbourne’s most valuable city corners.

The Sydney-based REIT outmuscled Mirvac and a consortium comprising Charter Hall and Singapore’s GIC Real Estate for the assets, at the north-west intersection of Collins and Exhibition streets.

Included in the deal is:

• 80 Collins Street, an ageing 52-level office, once known as Nauru House;

• a Premium-grade 43,000 square metre commercial tower, under construction, next door to it; and

• a third holding, a land parcel earmarked for a shopping centre, and a 300-room hotel set to be managed by Singapore’s Silver Noodle, for its NEXT brand.

“Dexus, along with capital partners, is undertaking due diligence on 80 Collins Street,” a spokesperson for the company said, adding “the deal is not complete so we cannot comment on capital partners or funding sources”.

Coincidentally, just six months ago, we reported that Dexus paid $230 million for two adjoining offices across the road, at the north-east corner of this intersection.

In that unusual deal, Dexus paid the federal government $160 million for the tired 15-storey Reserve Bank of Australia building at 60 Collins Street, which was for public sale.

Dexus now controls the north-west and north-east corner of Collins and Exhibition streets. In September, we reported it paid $230 million for two adjoining properties at 52 and 60 Collins Street (outlined).

It also negotiated to buy the neighbouring office, 52 Collins Street, off-market, from private syndicate Marks Henderson, for $70 million.

JLL’s Rob Sewell, Simon Rooney, Nick Rathgeber and Leigh Melbourne, with Savills Ian Hetherington and Ben Azar, listed the QIC portfolio for sale five months ago. The assets are trading at a speculated low yield of about 5 per cent.

QIC was able to develop the airspace around 80 Collins Street, after securing the last piece of the corner it didn’t control, in 2009, from Georgina Weir, owner of exclusive fashion boutique Le Louvre, which relocated from 74 Collins Street, its home of some 80 years, to South Yarra.

It is often said that Le Louvre is the reason this pocket of Melbourne is known as the city’s “Paris end”.

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Marc Pallisco

A freelance property analyst and journalist, Marc is a co-founder of realestatesource.com.au.

Marc Pallisco