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Sullivan sells seven-level office block in East Melbourne

April 15, 2019

The Wellington Parade office is a short walk from the city. Photo: Supplied

Simon Johanson and Nicole Lindsay

Private developer Brendan Sullivan has sold a seven-level building in East Melbourne and syndicator Terraplex has swooped on a Kew asset as two city-fringe offices worth a combined $60 million change hands.

Sullivan Property’s office block at 122-130 Wellington Parade was on the market for $40 million and is understood to have transacted at close to that sum.

Title documents show the group purchased it for $7.4 million in 2005.

Mr Sullivan has a history of renewing and reworking city assets.

In 2010, he purchased a run-down Flinders Lane office from the Smorgan family for $17 million which he subsequently subdivided, refurbished and sold down as 41 boutique strata offices, kicking off a surge of interest in the sector.

The Wellington Parade office is a short walk from the city in one direction and Richmond’s Bridge Road in the other. It has 4000 square metres of office space and ground floor shops, all fully occupied by tenants.

The uppermost level has a three-bedroom residence with an expansive rooftop terrace that overlooks the Melbourne Cricket Ground and Jolimont Station.

CBRE’s Josh Rutman, Mark Wizel, Lewis Tong and Kiran Pillai handled the building’s sale.

Mr Rutman said, compared to last year’s stellar performance, there had been a relatively low volume of smaller office sales. “It’s not a factor of demand, it’s just that there isn’t much stock in the market,” he said.

Another office in the city’s east, a three-level strata building in Kew owned by a Rutherglen-based family, has changed hands for $19 million before a formal marketing campaign for the asset kicked off.

Handled by Anthony Kelly of Kelly & Kelly and Paul Burns of Fitzroys, the 19 strata lots at 79-83 High Street were sold in one line.

The Age understands the 3361 square metre building was purchased by Terraplex, a private funds manager led by Charlie Raymond.

Terraplex was a partner in a syndicate with ex-Savills director Anthony “Pod” Wilson’s Podco, which late last year sold $10 million worth of Victorian-era terrace shops in South Melbourne sold on yields below 4 per cent.

The funds manager will refurbish the offices and common areas and potentially add extra floor space.

On a fully let basis the building sold on a yield of 6.8 per cent, Mr Kelly said.

“The vendor has owned it since 1999, when it was built. He is getting on in age and wanted to divest,” he said.

The office is just metres from busy Kew Junction and close to the Eastern Freeway. It is also near to Hawthorn’s Glenferrie Road retail and hospitality strip.

Just a few doors down from Mr Sullivan’s building at 96 Wellington Parade another office, described by comedian Barry Humphries in 1995 as the “ugliest building in the city”, is also for sale.

Taking advantage of investor enthusiasm for city-fringe office, the owner and tenant, listed company, PSC Insurance, is offering the five-level building on a new seven-year leaseback deal that also covers the land tax.

The insurance company bought the building three years ago from the Roman Catholic Trusts Corp for the Diocese of Melbourne, paying $10.483 million.

The building covers 1395 square metres of space on a 512 square metre footprint and has 17 car spaces. Rent is $650,000 a year and the property should fetch somewhere in the realm of $15 million to $20 million.

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