ESR banks $24m from Mulgrave business park

Singapore listed The Straits Trading Company is paying Hong Kong based 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 them are vacant.

In recent years the industrial park has been marketed to last-mile logistics occupiers.

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

The parties have settled at a 5.4 per cent passing yield.

Based on the potential annual rental return ($1.73 million), the deal would reflect 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 Rd, 21 kilometres south east of Melbourne.

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 $27.8m on twin offices in the suburb at 13-15 Compark Circuit.

Prior to that, the Hong Kong company and Singapore’s listed Frasers Property Australia sold Ascendas REIT a Mulgrave office, on a funds-through basis, for $110.9m.

In August, Fife Capital paid $26m for a 4.9ha industrial investment with development upside at 649-655 Springvale Rd, Mulgrave.

Perhaps the region’s most newsworthy commercial deal happened last September, when Pomeroy Pacific outlaid $30.5m for a 4.1ha investment at 508-520 Wellington Rd, which traded 18 month earlier for $15.5m.

Rationale for proposed Mulgrave acquisition: buyer

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

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

It was priced at $24m.

“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,” a statement said.

ESR picked up the asset following a $723m buyout 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 Trading Company has stakes in hospitality businesses and resources.

It owns 89.5pc in Straits Real Estate, which seeks out global property related investments and opportunities.

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

Last year, the company unveiled a joint venture partnership with Commercial and General, worth $130m – a move which picked it up Melbourne’s Siemens office and warehouse at 855 Mountain Highway, Bayswater, and in Adelaide’s Salisbury, investments including a 46,000 sqm distribution centre and a 15.2ha development site.

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

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Marc Pallisco

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