Singaporean HThree swoops on 330 Collins

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FUND manager HThree City has confirmed its $236 million acquisition of 330 Collins Street in another Melbourne CBD office tower purchase by a Singaporean interest.

The deal follows Singapore-listed CapitaLand buying the 120 Spencer Street tower opposite Southern Cross station for over $320 million on a capitalisation rate of about 5%, and  reports of Charter Hall, with backing from Singaporean sovereign wealth fund GIC, agreeing to buy the dual tower Southern Cross complex on the city’s Bourke Street for $2.1 billion, on a yield of about 4.5%

For HThree, it is its second backing of the pandemic-struck Melbourne CBD after it made its first purchase in Australia last year with the $73 million acquisition of 446 Collins Street. That building was partly vacant and the sale represented a fully leased yield of 4.3%.

Its newest asset, 330 Collins Street, bought alongside co-investor City Developments Limited, is an 18-storey, A-grade commercial tower located in the heart of the CBD, at the intersection of Collins Street and Elizabeth Street. About 90% leased, it has over 18,000 sqm of net lettable are spread over 17 floors of tenanted office space, retail space on the ground floor and basement, as well as 43 basement car bays. It has a 4.5-Star NABERS energy rating and 5-star NABERS water certification.

The property has a significant 93-metre frontage and is close to the busy Flinders Street station and has a super tram stop at its doorstep.

“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,” HThree CEO Kevin Kang said.

“Following the completion of the acquisition, HThree will manage the asset with a focus on driving value appreciation through active leasing and asset enhancement initiatives.”

HThree is completing the transaction within a short nine-week window.

“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,” Sherman Kwek, CDL Group CEO said.

“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.”

Workers are gradually making their way back to the office. Property Council data showed Melbourne CBD office occupancy lifted from 36% at the end of April to 48% a few weeks ago. Melbourne recorded net positive absorption of 38,600 sqm over the 12 months to March, while the headline vacancy rate compressed by 0.2% to 14.8% in the quarter, according to JLL.

The 330 Collins Street deal was brokered by Cushman & Wakefield’s Mark Hansen, Leigh Melbourne, Nick Rathgeber and Josh Cullen and CBRE’s Mark Coster, Kiran Pillai, and Scott McGlone on behalf of Sunsuper, which acquired the property through AMP Capital Investors in 2011 for $107 million.

Legal advisors to HThree on the property acquisition were David Sinn, Julia Orbach and Tom O’Sullivan from Herbert Smith Freehills. Advising on the property financing were Ken Nguyen and Sophie Ng from Ashurst.

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