Private heavyweights unite to offer $200m-plus infill site
Two local private developer heavyweights, Harry Stamoulis and Dug Pomeroy, have united to offer a super-sized industial investment with residential development upside at Mulgrave, abutting the former VFL Park.
The pair can expect over $200 million for the 23.23 hectare amalgamation which contains 76,193 square metres of improvements and returns annual rent of $6.15m.
Mr Stamoulis holds the larger component – the leasehold to the Woolworths distribution centre and head office on 19.1ha at 522-550 Wellington Road cost him $90.75m, reflecting a c5.2 per cent yield, in 2017 from Centuria.
Meanwhile Dug Pomeroy, via his Pomeroy Pacific, outlaid $30.5m – a low 3.15pc return – five years ago for its 4.1ha freehold piece, 508-520 Wellington Rd, which is occupied by Renold.
The southern boundary of both properties abuts the Monash Freeway – all up for 562 metres.
The western side of the Pomeroy site neighbours a 13.5ha laboratory owned and occupied by Ensign which paid Bayer $13.75m in 2006.
Though that holding is not for sale, Ensign may be persuaded – having since late last year divested other major infill assets including across town in Northcote – which traded to developer Citinova – and in Adelaide’s Dudley Park, offloaded with a 30 year leaseback.
Abutting the Mulgrave industrial sites, in every direction, is residential including Mirvac’s Waverley Park – which has in recent years been replacing the ex-stadium which shared the same name, but before that was known as VFL Park, then AFL Park.
Near to that, Ryman Healthcare was recently permitted to develop a multi-level aged care and independent living retirement living complex on the 4.7ha ex-St Mary’s Seminary, which it bought for $30.08m in 2021.
Development upside
Dawkins+Occhiuto Walter Occhiuto and Andrew Dawkins, who are marketing 508-520 and 522-550 Wellington Rd, said the location is near greater Melbourne’s geographic population centre (last reported to be Glen Iris but which is expected to spread south east as the Pakenham growth corridor is built out).
“The property represents an unprecedented opportunity to acquire an enormous 23.23ha infill site within one of Melbourne’s most tightly held and densely populated suburbs,” they added (story continues below).
“The future redevelopment and potential rezoning upside which this site offers ensures an offering not to be overlooked,” according to the agents”.
Investment upside
The Woolworths asset was built for the occupier in the 1970s; it contains 699 car parks and a 3.8a tract providing expansion space.
With (nine five year) options, reviewed to market rates, the supermarket giant can stay until 2071.
Its leasehold expires in 2306 – though there are mechanisms for the rental agreement to collapse should ownership revert to a freehold.
The Renold asset meanwhile, with 90 car parks, is tenanted until 2027.
That group has occupied since the 1970s too.
The property also includes an undeveloped tract, spreading 1.8ha, part of which Citizen Outdoor leases for an electronic display paying rent of $90,000 on a lease expiring in 2033.
“Underpinning this significant site are the strong tenant covenants,” the agents said.
“The property is 100pc leased to Woolworths Limited and Renold Australia [a subsidiary of London stock exchange listed Renold plc]…providing an impressive holding income whilst development options are explored,” they added.
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