Sydney pub baron buying another Melbourne site: sources
Billionaire pub baron Justin Hemmes is speculated to be buying another east end Melbourne CBD property with longer term plans to develop as a hotel and occupy.
The Sydney based hotelier’s Merivale is understood to be paying the City of Melbourne about $55 million for the eight level, 940 bay car park – which hit the market in September. Some sources have put the price at over $80m. Expectations were for nine figures when it was listed.
With five road frontages, known as 34-60 Little Collins Street, the investment is leased to Dexus for 13 more years.
Zoned Capital 1, it holds significant development upside after that.
JLL’s Josh Rutman, Paul Kempton and Piper Dedrick were the agents.
Any deal would come 15 months since Merivale bought the Art Deco Kantay House – across the road from 34-60 Little Collins St.
Penned by Harry Norris, that was subject to leases, one with Argentinian steakhouse San Telmo.
Unused asset: CoM
Developed in 1965, Dexus has leased 34-60 Little Collins St since 1984.
“The sale of the land would not terminate the existing lease – meaning that unless a mutual agreement is reached to terminate the lease, the car park would continue to operate until 2037,” a City of Melbourne spokesperson said in a statement earlier this year announcing plans to divest the asset (story continues below).
“Proceeds will be reinvested into City of Melbourne’s city-shaping infrastructure projects to provide vital community services,” they added.
Dexus, Merivale in dealing moods
Majority leased to Red Spot Car Rentals, Dexus valued the leasehold in June at $11.3m assuming 13.25pc capitalisation rate and 15.6pc rolling yield – both very high.
The weighted average lease expiry by income is just over a year.
Any surrender of the CoM rental agreement could be a possibility, Dexus being a major vendor in recent years including last week with the disposal of two offices, in Sydney and Brisbane, for a total $443.2m.
In early 2021, Merivale acquired Flinders Lane’s historic Tomasetti House with plans to occupy; the group’s first Victorian purchase, it cost $43m.
Also three years ago, Merivale bought the Lorne Hotel – the base for the 1.2 kilometre Pier to Pub race – from the Upham family for $38m.
In Sydney, Mr Hemmes in 2022 bought a collection of historic, mid-rise CBD offices, with plans for a tourist hotel flanked by lower level hospitality.
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