St Martins Property Group looks to offload $1 billion half share of Melbourne’s Rialto

One of Australia’s most famous and long-standing property partnerships could soon dissolve.

Kuwait-backed St Martins Property Group is seeking to offload its 50 per cent stake in the Melbourne CBD’s landmark Rialto office and retail complex.

Worth a speculated $1 billion, the interest is being closely eyed by Sydney-based developer Dexus, according to reports.

Grollo Group, headed by Lorenz Grollo, owns the other half of Rialto which includes two commercial skyscrapers, one of 55-storeys which was for a period the tallest office in the southern hemisphere.

The Rialto as seen from the Yarra River.

It is understood prospective purchasers are trying to negotiate directly to buy St Martins half-share. Other suitors might be in talks with Grollo for an alternative partnership arrangement, it is being speculated.

After striking a joint venture agreement in 1981, St Martins Properties and Grollo Group developed Rialto at 525 Collins Street between 1982 and 1986.

In recent years the owners have been expanding the Rialto complex’s footprint by acquiring small King Street sites including most recently the Inflation nightclub.

In 2017, the owners developed a five-level, 8000 square metre retail and office space on what was formerly part of a large outdoor entrance foyer.

Germany-based car giant Mercedes leased part of the new complex for its seventh global Mercedes Me outlet.

Last month, Dexus confirmed it paid QIC $1.476 billion for a portfolio of properties known as the 80 Collins Street precinct, including two offices, a hotel, and low-rise shopping centre.

Dexus also paid the Reserve Bank of Australia $160 million for its rundown office at 60 Collins Street. In an off-market deal negotiated at the same time, Dexus acquired the neighbouring 52 Collins Street office from syndicate MarksHenderson for $70 million.

An image recently used to market office space on the 33rd level of the Rialto South tower.

St Martins was established in 1924. Owned by Kuwait sovereign wealth fund Future Generations Fund, the company is headquartered in London. Its portfolio includes several sizeable assets in Europe – including the Cevahir Hall in Instanbul. It also holds property in Japan.

Marc Pallisco

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

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