KKR, Vantage, sell St Kilda Road office after two years and a refurb

The joint venture which paid CEL Australia $68 million for an inner-Melbourne office in 2017 has flipped it for a speculated price of $98 million.

Local investor Vantage Property Investments with US-based private equity firm KKR are selling 420 St Kilda Road to an offshore buyer.

About three kilometres south of the Melbourne CBD – in an area also known as Melbourne, but with a 3004 postcode – 420 St Kilda Road includes 10,452 square metres of lettable area and parking for 131 cars.

It occupies a 2286 sqm plot with three street frontages – including to the busy Kings Way.

The view from an office at 420 St Kilda Road.

When Vantage and KKR acquired the building, it was 9 per cent vacant. The owners then renovated and leased up most of the vacant area, at a higher rent, before offering it for sale in March via CBRE’s Kiran Pillai and Mark Coster, with Cushman & Wakefield’s Luke Etherington and Josh Cullen.

Coincidentally in the same month, another major office, across the road at 424-426 St Kilda Road, was listed for sale by Woodlink, a Chinese-backed developer.

Illoura Plaza at 424-426 St Kilda Road was also listed for sale in March. Vendor Woodlink was proposing to replace the property with apartments and a 176-suite Marriott Hotel.

Woodlink had been seeking to build a hotel and apartment project at 424-426 St Kilda Road, replacing a building currently known as Illoura House.

Its proposed $360 million development would have included 176 suites managed by Marriot Hotels.

Woodlink paid $45 million for Illoura House five years ago. It is expected to sell for about $70 million this time around.

CEL Australia paid $45.3 million for 420 St Kilda Road in 2013.

Last November, Sydney businessman John Beville sold 509 St Kilda Road to China-based investor Michael Xie for $163 million – almost twice the price he paid in 2014.

A month later, German funds manager GLL Real Estate Partners teamed with Sydney’s Marprop to acquire 541 St Kilda Road for $65 million. Earlier this week we reported that Marprop was buying the Bendigo and Adelaide Bank office in Docklands for a speculated $80 million.

Vantage paid News Corp $30.2 million for 1 Chapel Street, Blackburn, last year.

However the strata-owners of a low-rise apartment complex and office at 545 St Kilda Road have not been so lucky – failing to sell for an asking price of about $30 million since September.

Six months ago, Vantage paid News Limited $30.2 million for the Blackburn headquarters of the Leader group.

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Marc Pallisco

A former property analyst and print journalist, Marc is the publisher of realestatesource.com.au.