RMIT inks $130m office deal as buyers close in on DJs
One of Australia’s largest universities will get a $130 million boost to its pandemic-hit finances after selling a multi-storey Melbourne office tower to Sydney-based investment group Futuro Capital.
Futuro is in exclusive due diligence to buy the upper levels of 235-251 Bourke Street, a 17-level strata building primarily owned by RMIT University.
In a canny side deal worth more than $80 million, Futuro also looks set to buy a clutch of shops on the ground-floor called Tivoli Arcade. The shops are not owned by RMIT and snaring both them and the offices above will give Futuro keys to a major city building and potential redevelopment play. The 6000 square metre Tivoli Arcade is owned by the Melbourne-based Chan family.
The sale of RMIT’s tower is one of the few major deals seen in Melbourne as the city languishes in a harsh two-month lockdown that has prompted another major vendor – South Africa’s Woolworths Group – to delay the sale of its trophy David Jones Bourke Street Mall department store.
Final bids for the sale and leaseback of two of David Jones’ major department stores in Sydney and Melbourne were submitted on Monday with Shaun Bonétt’s Precision Group said to be in pole position ahead of ASX-listed Charter Hall and boutique property fund Ashe Morgan.
It is understood DJs South African owners decided, at the last minute, to withdraw the Melbourne Bourke Street Mall flagship from sale until next year.
Precision is said to have offered about $450 million for the Elizabeth Street store in Sydney.
Mr Bonétt’s group is well established in the retail sector with a portfolio of six assets including the Adelaide Central Plaza – also anchored by David Jones – Pran Central in Melbourne and MacArthur Central in Queensland.
UBS is working on the sale process on behalf of Woolworths, which bought the assets and business off David Jones for about $2.1 billion in 2014. Both flagship stores have undergone significant upgrades over the past three years.
The loss of international students and financial pain inflicted on the education sector by the pandemic is forcing cash strapped universities to jettison their excess property holdings.
RMIT is selling the 14 floors with 23,014 sq m of office space it owns in the Bourke Street tower on a 5-year leaseback arrangement worth about $8,044,000 a year. The deal was negotiated by commercial agencies CBRE and Gross Waddell.
Futuro is run by Phillip George and Benjamin Hopkins. Mr George, who is also a director of property developer Potter George, was contacted for comment.
RMIT property director Chris Hewson said: “We are currently talking to parties but will not be commenting further on confidential commercial discussions.”
Commercial property sales have been flagging in Australia’s eastern states under the weight of the sluggish retail sector and work from home regulations caused by the global pandemic.
Woolworths reduced its property exposure with the 2016 sale of its Sydney menswear store at 77 Market Street to Westfield owner Scentre and Cbus Property for $360 million.
Scentre and Cbus submitted plans to create a $300 million four-floor luxury retail department store, along with six floors of prime office and 2 floors of high-end apartments.
Earlier this year, private fund manager Newmark Capital scooped up DJs menswear store in the Bourke Street Mall, opposite the main flagship store, for $121 million, prompting speculation it may also make a play for the sister store on the other side of the mall.
Simon Johanson is a business journalist at The Age and The Sydney Morning Herald.
Carolyn Cummins is Commercial Property Editor for The Sydney Morning Herald.
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