Pelligra secures mall in ‘Melbourne’s second city’
Pelligra has acquired another land-rich investment, this time at Dandenong – the town marketed as Melbourne’s second city.
Dandenong Plaza, on 7.7 hectares, is costing $145 million from MA Australia, formerly Moelis, which managed it for a trust part-backed by the Abu Dhabi Investment Authority.
The deal reflects a high near-10 per cent yield, made even more impressive for the buyer given the significant development upside.
Pelligra is set to capitalise on this, earmarking plans for residential, including Build to Rent and student accommodation, hospitality and commercial, in five stages over the next 15-20 years.
Essential services tenancies also form part of the centre’s overhaul, which should contain c125,000 square metres more lettable area, Pelligra director Ross Pelligra, told REALESTATESOURCE.
Public spaces will be designed as part of the development too.
Next chapter for tired centre
Via a different fund manager (Armada), the vendor paid $197m – reflecting a circa-eight per cent return – for Dandenong Plaza seven years ago.
That seller, GPT, held it since 1993.
With 53,768 sqm, the unrenovated complex forms the eastern part of the precinct affected by Places Victoria’s Revitalising Central Dandenong planning scheme, which was formulated 20 years ago.
Involving the amalgamation of several privately owned sites to create larger, developer-friendly ones, the government structure plan aimed to improve the pedestrian thoroughfare from Dandenong Plaza to the Dandenong train station, a kilometre away.
RCD also sought to pre-commit departments other than the Australian Taxation Office to the area, which it did, including in one major building – 165-169 Thomas St – which sold earlier this year to Growthpoint for $165m.
It also included refurbishing historic buildings and beautifying streets, which Places Victoria did, the overall investment contributing to residential values rising enough to justify apartment construction – all as hoped two decades ago.
In late 2020, Places Victoria appointed Capital Alliance to develop five central Dandenong blocks, all up covering 1.9ha, with apartments, an entertainment precinct, hotel and conference centre, offices, retail and a medical precinct.
Stage one of that development will see a new Little India, replacing one on Foster St.
Colliers’ Hamish Burgess, Robert Papaleo and Joe Kairouz were the agents (story continues below).
Pelligra expands in south east Melbourne
Developed in 1974, the four level Dandenong Plaza is leased to some 160 retailers, including Kmart, Myer and Readings Cinemas.
It also contains 3157 car parks.
The sale, brokered by CBRE’s Simon Rooney with JLL’s Nick Willis and Sam Hatcher, comes a year since Pelligra outlaid $10.5m for the ex-Ramada Encore Hotel in the suburb, at 50-52 McCrae St.
It also marks a shift for the company, which holds a significant industrial portfolio on the other side of town, including two ex-Ford factories, at Campbellfield and north of Geelong, controlled with Qualitas, and assets in Avalon and Ravenhall.
Last year Mr Pelligra co-purchased Docklands’ 1.8ha Subaru Interactive dealership, for $50.5m – likely to make way for a mixed-use project with high density residential elements containing Build to Rent.
Twelve weeks ago, the investor acquired 85 Spring St, in the CBD, and the air rights to the neighbouring Anzac House (4 Collins St), for c$130m, with plans for two towers.
Adelaide has recently been on the Pelligra’s radar too – amongst its many purchases there is the Adelaide Giants basketball team licence, the Titanium Arena (formerly the Powerhouse Stadium) and numerous CBD offices.
Pelligra also owns the ex-GMH manufacturing plant in that city, at Elizabeth North, now a business park.
Last May with the Mustaca family and fund managers Jason Meares of Option Group and Chakyl Camal of Panthera, it snapped up Byron Bay’s Mercato shopping centre and a neighbouring hotel site.
Mr Pelligra also controls a New South Wales and Queensland industrial portfolio.
“Dandenong Plaza’s existing main trade area population of 254,000 residents is forecast to grow by 0.9pc per annum to 292,000 by 2036, with retail spending in the area expected to increase from $3 billion to $4.8b through the same period,” Mr Rooney said.
The centre will play a central role in that revitalisation, he added.
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