Kinkora doubles down in Cremorne
Kinkora Investments has bought two neighbouring offices in Melbourne’s trendy inner-east Cremorne.
Buildings 1 and 2 at 658 Church Street cost $94.5 million or $90.18m after settlement adjustments.
The result reflects an eight per cent net passing yield.
The vendor was Anthony Wilson’s Terraplex which bought the properties from Australand in November 2010 (Australand was acquired by Singapore-listed Frasers Property in 2014 and subsequently rebranded Frasers Property Australia).
The properties form part of the Church Street Business Park, also known as the Cremorne Business Park.
They were also known as being in Richmond.
In October 2019 realestatesource.com.au reported Sussan Group chief executive officer Naomi Milgrom bought Building 10 in the estate, for about $95m.
Two years earlier the executive snapped up the neighbouring Building 8, paying c$44m to Perth-based Property Bank.
Kinkora reweighs portfolio
Developed in 1997, the Cremorne offices have a combined 13,243 square metres of A-grade area and 257 car parks.
Building 2 is the largest – with 7213 sqm (Building 1 contains 6030 sqm).
Tenants across the two assets include 7-Eleven, Access4, Crocs, Mattel and Pact, with some small suites for lease.
The offices maintained average occupancy of 95pc for 15 years, Cushman & Wakefield’s Leigh Melbourne, Nick Rathgeber, Daniel Wolman and Oliver Hay, said (continues below).
Kinkora will hold them in a fund already subscribed.
Earlier this week we reported it sold a Tasmanian office/industrial investment leased to the state government for $28.05m.
The asset manager, until recently known as KM Property Funds or KordaMentha Property Funds, held that property since 2019.
Key Cremorne tenant renewed
Kinkora CEO Tom Davis said the Cremorne deal reflects a counter-cyclical investment strategy.
“658 Church Street is a high-quality asset located in one of Melbourne’s strongest city fringe office precincts,” he added.
“We believe the pricing, tenant profile and location provide an attractive balance of income security, downside protection and long-term growth potential for our investors,” according to the executive.
A lease was renewed with 7-Eleven during due diligence.
“The new long-term lease…materially improved the risk-adjusted return outlook from day one,” according to Mr Papaleo.
“The transaction demonstrates how current dislocation in the office sector can create opportunities to acquire high-quality assets at pricing that is attractive relative to replacement cost and long-term value,” he added.
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