City Developments Ltd has teamed up with fellow Singaporean investor HThree City to acquire an 18-storey building in downtown Melbourne for A$236 million ($162.2 million), marking an expansion by property giant CDL into the Australian office sector.
The Grade A commercial tower at 330 Collins Street features 18,000 square metres (193,750 square feet) of net lettable area spread over 17 floors of tenanted office space and retail space at the ground floor and basement, along with 43 basement car bays.
The seller of the property is a separate account of Sydney-based AMP Capital, according to a release issued Thursday by HThree, a fund manager backed by CDL and Singapore-based developer Low Keng Huat.
“We are pleased to acquire 330 Collins Street, an iconic asset on a prime Collins Street corner,” said HThree City CEO Kevin Kang. “We believe that Melbourne’s CBD will continue to bounce back strongly, and that 330 Collins Street is well placed to benefit from the increasing demand for well-located, quality office space.”
Flying Start in Oz
330 Collins Street is HThree’s second-ever investment, following the firm’s acquisition last September of 446 Collins Street just four minutes’ walk away. HThree bought the nearby office tower, with 5,500 square metres of net lettable area, for A$72.6 million from a client of Vantage Property Investments, the Australian Financial Review reported.
For their latest prize, CDL and HThree are paying A$13,111 ($9,030) per square metre of NLA, roughly in line with the rate of A$13,200 paid for 446 Collins Street.
330 Collins Street has a committed occupancy of 90 percent and boasts a 4.5-star NABERS energy rating and a 5-star NABERS water certification. The property enjoys 93 metres (102 yards) of street frontage at the corner of Collins and Elizabeth streets and is within a five-minute walk of Flinders Street railway station.
“The joint acquisition of such a rare trophy asset at the heart of the Melbourne CBD marks our expansion into the Australian office sector and complements our focus on strengthening our recurring income,” said CDL group CEO Sherman Kwek. “On the back of strong economic fundamentals, Australia’s office market is poised for recovery and 330 Collins Street presents a significant opportunity to unlock value. We are grateful to HThree for their sourcing capability and strong execution.”
After completing the acquisition, HThree will manage the asset with a focus on active leasing and asset enhancement initiatives.
SGX-listed CDL is testing the waters of the office market as it continues to develop residential projects across key Australian cities, including the A$130 million master-planned Brickworks Park community in Brisbane.
In February, CDL sold a rental residential project at 36-58 Macaulay Road in central Melbourne for a reported A$30 million ($21.6 million) to US developer Hines, part of a series of development and hospitality disposals by the Singapore firm amid struggles at its Millennium & Copthorne Hotels division.
For its part, Hines had acquired a commercial development site at 600 Collins Street for A$200 million in late 2020. Another busy investor, Hong Kong’s Link REIT, picked up an interest in 567 Collins Street earlier this year as part of A$596 million deal for a 49.9 percent stake in Oxford Properties’ portfolio of office assets in Sydney and Melbourne.