Frasers REIT Nearing Sale of Melbourne Office Tower to Aussie Tycoon for $129M

Frasers Logistics and Commercial Trust is in late-stage talks to sell a central Melbourne office tower at a price close to A$200 ($129 million), according to market sources.

The prospective buyer of 357 Collins Street is in exclusive due diligence but won’t exchange contracts with Singapore-listed FLCT for at least another month, a source confirmed to Mingtiandi on Monday. The talks were first reported by Australia’s Financial Review, which identified the counterparty as soft drinks heir and property tycoon Harry Stamoulis.

Cushman & Wakefield’s Australia capital markets team, which sought a buyer for the 25-storey tower in a campaign concluded in March, had no comment on the AFR report. An FLCT representative couldn’t comment directly on the deal, citing a reporting blackout period.

“In relation to our portfolio, as part of our ordinary course of business, we do consider opportunities to optimise our portfolio, which include acquisitions and divestments and we make announcements as and when we enter into definitive agreements in compliance with regulatory requirements and for investors engagement,” the representative told Mingtiandi. “We remain committed to keeping all relevant stakeholders informed of material developments.”

Occupancy Declines

FLCT, then known as Frasers Commercial Trust before its merger with Frasers Logistics & Industrial Trust, acquired 357 Collins Street in 2015 for A$222.5 million.

The 1967-vintage tower provides 31,780 square metres (342,077 square feet) of lettable area, valuing the freehold asset at A$6,293 ($4,060) per square metre at the reported A$200 million price — a nominal premium to the building’s S$161.9 million (A$194.5 million) book value.

At the end of 2024 the property had an occupancy rate of 63 percent, down from 82.9 percent three months earlier, according to FLCT’s first-quarter business update. The trust’s manager said the drop was mainly due to a non-renewal by civil engineering group Service Stream, which vacated in December, leaving the building with a weighted average lease expiry of 1.5 years.

The building’s struggles mirrored market sluggishness in the Melbourne CBD, where office vacancy remained flat at 18 percent in the six months from July 2024 to January of this year, according to data tracked by Cushman & Wakefield.

The book value of 357 Collins Street represents 9 percent of FLCT’s S$1.9 billion commercial portfolio, comprising four properties in Australia, three in Britain and one in Singapore. The bulk of the trust’s overall portfolio consists of 106 industrial assets, mostly in Australia and Europe, valued at S$4.9 billion. FLCT reported a total occupancy rate of 94.3 percent at the end of 2024.

Refilling the Coffers

FLCT sponsor Frasers Property, the SGX-listed firm majority-owned by Thai alcohol tycoon Charoen Sirivadhanabhakdi, has sought to raise cash and pay down debt after its net gearing reached 86.4 percent at the end of 2024.

In April, Frasers Property announced its sale to Morgan Stanley of a half-stake in an eight-asset Australia industrial portfolio developed by the firm and valued at A$600 million ($380 million).

A month earlier, a vehicle jointly held by Frasers Property, Charoen and the estate of the Thai billionaire’s late wife agreed to sell its half-stake in a northern Singapore mall complex to the sponsored Frasers Centrepoint Trust for S$1.17 billion ($880 million).