Henkell Brothers Portfolio of Property to be Sold

The deal could be the second largest single line transaction in Melbourne, after the $605 million sale of the Myer retail properties earlier this year.

The properties are managed by Henkell Brothers Investment Management on behalf of seven separate European-based syndicates.

They will be purchased individually, with developer Becton understood to have put its had up for some already.

Henkell Brothers Investment Management managing director Hans Henkell declined to comment when contacted by The Age. Representatives from Colliers International, which is believed to have negotiated the deal, also declined to comment.

The most expensive property in the portfolio, according to sources, is the Centre Way arcade at 259 – 263 Collins Street. Constructed in 1917 and refurbished in 1988, Centre Way includes 4750 square metres of office and retail space.

Another major asset in the portfolio is the 45 William Street office building, on the corner of Flinders Lane. Formerly known as Wang House, tenants in the 9,059 square metre B-grade building include Gallagher Jeffs Consulting and valuation firm Landmark White.

Other major CBD assets include 446 Collins Street, an 11-storey 5,704 square metre office building near the corner of William Street, and 196 Flinders Street, a 5,511 square metre B-grade office building which overlooks St Paul’s Cathedral and Federation Square. Both buildings are fully let, sources say.

Outside of the CBD, the portfolio includes the former Fujitsu building at 20 Queens Road. The 4,180 square metre, 3-level office building at 20 Queens Road is tenanted to the Australian Government which operates its Austrade and Tradestart businesses from the premises.

The building will be the second office building to sell in the street this year, following the $26.25 million sale of 71 Queens Road to Macquarie Direct Property Fund.

In the suburbs, the deal also includes an office building in Prospect Street Box Hill, and another in Jamieson Street Cheltenham.

Agents say a lack of investment grade property assets in Melbourne this year, is resulting in some more aggressive bidding, largely by institutions. Though The Age could not obtain information about the amount of rent each building returned its owners, industry insiders say that at a purchase price of around $180 million, the portfolio could sell on a low yield of 5 per cent.

“Normally the one with the property approaches the ones with the money when trying to sell a property,” said one selling agent who wished to remain anonymous. “In these days however, the ones with the money are chasing property owners and luring them with wads and wads of cash.”

The biggest CBD office sale to occur this year was 222 Exhibition Street, which sold in June to AMP Wholesale Office Fund for $162.5 million. The purchase price, which was about 20 per cent more than what vendor Allco Wholesale Property Trust paid for the building two years earlier, surprised industry insiders. Despite a looming office vacancy by anchor tenant the Transport Accident Commission, the property sold on a low yield of 6 per cent.

Late last year, GE Real Estate paid $139 million for an office building at 90 Collins Street, on a yield of 5.8 per cent.

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Marc Pallisco

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

Marc Pallisco

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