Listed financial services firm IOOF Investment Management has sold an office building at Hawthorn East in Melbourne for $24.65 million to a syndicate of private investors.
The two-storey building at 785-789 Toorak Road was sold on a passing yield of 5.5 per cent. It has a net lettable area of 4006 square metres and is 94 per cent leased to seven tenants.
“After 17 years of ownership and a recent refurbishment, the timing was right to take advantage of a strong office market in Hawthorn and divest while the building was close to 100 per cent leased,” said Simon Gross, senior portfolio manager at IOOF.
The sale was brokered by Colliers International in conjunction with JLL.
“We received significant interest from local private investors and syndicates, culminating in eight strong offers,” said Colliers’ Peter Bremner.
The sale price equates to a capital rate of $6150 per square metre. The purchaser is a local syndicate with property interests in the surrounding area.
“The building has enjoyed a long history of near-100 per cent occupancy and tenants are attracted to the location due to the accessibility of the Monash Freeway only 300 metres away, together with the amenity provided by the nearby Stockland Tooronga Shopping Centre,” said JLL’s Josh Tebb.
Another element to the property is its development potential, in an area that is zoned mixed use and can allow up to six levels of residential accommodation, according to JLL’s Marcus Quinn.
Melbourne’s suburban market has been humming along steadily this year.
In July Singaporean fund manager ZACD snapped up the Cheltenham head office of ASX-listed iSelect for $27.33 million on an 8.4 per cent yield.
In June United Asset Management sold an office building in Melbourne’s south-east for $20.5 million to a local private investor on a yield just below 7 per cent.