Colliers International sells Camberwell Junction office building following competitive EOI campaign
Commercial property investment group Peak Equities is the new owner of the Australian Pharmaceutical Industries (API) headquarters, acquiring the Camberwell Junction property for $27.5million earlier this month.
The five-level, 5,420sqm office building at 250 Camberwell Road generates more than $2million per annum in net passing income from API and ground-floor café operator Camberwell Food Group, with leasehold interest from Melbourne Anglican Trust Corporation, resulting in a passing yield of 7.5 per cent.
Colliers International’s Peter Bremner, Rob Joyes and Rachael Clohesy brokered the deal on behalf of Sydney-based investor and syndicator Bricktop Group, following a competitive expressions-of-interest campaign that generated 95 enquiries and multiple offers.
Mr Bremner said the long ground lease to Melbourne Anglican Trust Corporation, which expires on September 30, 2075, did not deter interested parties, particularly those seeking a prime inner-east office building that promised an attractive yield.
“The purchaser recognised the quality of the asset in the prime Camberwell location and was seeking a higher-yielding investment so, while acknowledging the leasehold structure, they will enjoy an attractive 7.5 per cent yield based on the six-year WALE,” he said.
“If the property was sold with a freehold title, it would most likely have resulted in a sub-six per cent yield.”
Peak Equities managing director Tom Borsky said the location of the property, in a tight office market where demand was expected to grow far more quickly than supply, was the principal driver of the purchase.
“Furthermore, our company sees the ground lease structure as an opportunity, rather than an encumbrance,” he said.
“Following global trends, this form of property ownership is likely to become more commonplace.”
Bricktop Group purchased 250 Camberwell Road through Colliers International in 2013, with Bricktop’s managing director Michael Balkin saying now was a suitable time for the syndicate to realise its investment.
“We identified the inherent value in the leasehold interest when we acquired the property, something that we believed many parties did not understand at the time of the original sale,” he said.
“Accordingly, we were able to secure the purchase at an attractive price for our investors.”
Mr Joyes said API had invested heavily into its fitout and had a long lease remaining, which proved to be a winning factor in sealing Peak Equities’ purchase.
“The office vacancy rate for the inner-eastern suburbs is at 4.95 per cent and tenants have very few options above 4,000sqm in this market, which points to strong rental growth for Camberwell office owners in the years ahead,” he said.