The Straits Trading Company pays ESR $24 million for Mulgrave business park

Singapore’s listed The Straits Trading Company is paying Hong Kong based global logistics giant ESR $24 million for a Mulgrave business park.

The 2.25 hectare L-shaped holding at 677 Springvale Road hit the market in July.

It includes seven contemporary buildings with a total lettable area of 12,157 square metres, configured as office warehouses and office showrooms, some of which are vacant.

In recent years the space has been designed for, and marketed to, last-mile logistics occupiers.

HRL Technology is the biggest tenant, contributing about 35 per cent of the asset’s $1.29 million annual revenue.

The Mulgrave property is trading on a 5.4 per cent passing yield.

Based on the potential annual rental return ($1.73 million), the deal reflects a 7.2 per cent return.

Knight Frank’s Gab Pascuzzi and Scott Braithwaite, with CBRE’s Rory Hilton and Ben Hegerty, sold 677 Springvale Road, which is about 21 kilometres south east of the Melbourne CBD.

The Mulgrave investment (outlined), on a 2.25 hectare site, contains seven buildings.

Busy quarter for Mulgrave commercial deals

The ESR sale comes a fortnight after Centuria Diversified Property Fund spent $27.8 million for twin offices in the suburb, at 13-15 Compark Circuit.

Prior to that, ESR and Singapore’s listed Frasers Property Australia sold Ascendas REIT a Mulgrave office, on a funds-through basis, for $110.9 million.

In August, Fife Capital paid $26 million for a 4.9 hectare industrial investment with development upside at 649-655 Springvale Road, Mulgrave.

Perhaps the region’s most newsworthy commercial property sale happened last September, when Pomeroy Pacific outlaid $30.5 million for a 4.1 hectare investment at 508-520 Wellington Road, which traded 18 month earlier for $15.5 million.

Rationale for proposed Mulgrave acquisition: The Straits Trading Company

The Straits Trading Company said its Mulgrave acquisition marks “the continuing expansion” of its portfolio.

It hired Jones Lang LaSalle to value the asset in September factoring in the income capitalisation and discounted cash flow approaches.

JLL priced it at $24 million – which was close to the guide price upon listing.

“The company had previously announced the acquisition of five industrial properties across Australia, as well as a 37,970 square metre parcel of land for a mixed-use office and warehouse facility in South Australia,” The Straits Trading Company statement said in a statement.

The purchaser will pay for the Mulgrave investment via internal funds and bank borrowing.

ESR picked up the asset following a $723 million acquisition of Propertylink assets earlier this year.

One of the modern offices within the 677 Springvale Road, Mulgrave, business park.

About The Straits Trading Company Limited

As well as real estate, The Straits Company has stakes in hospitality businesses and resources.

It owns 89.5 per cent in Straits Real Estate, a co-investment vehicle which seeks out global property related investments and opportunities.

It also controls 20.95 per cent of ARA Asset Management Limited and 30 per cent in Far East Hospitality Holdings.

Last September, The Straits Trading Company unveiled a joint venture partnership with Commercial and General, worth $130 million, which saw it acquire in Melbourne, the enormous Siemens office and warehouse at 855 Mountain Highway, Bayswater, as well as in Adelaide’s Salisbury, investments including a 46,000 distribution centre and a 15.2 hectare development site, next door to it.

The 2.25 hectare L-shaped holding relative to Monash Freeway.
One of the warehouses at 677 Springvale Road, Mulgrave.
Another modern office area.

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Marc Pallisco

A former property analyst and journalist, Marc is the publisher of

Marc Pallisco