A Swiss investment group have acquired Invitca House on Flinders Lane for $40m as Swinburne University is forced to bolster funds amid a loss of overseas students.
The University acquired the building for $44m just prior to the pandemic with ambitious plans to transform the building into a vertical CBD campus, specifically for a growing international student base.
The COVID pandemic put a stop to those plans and Invicta House was quickly put back to the market with vacant possession in mid 2020 with an EOI process finalised through Colliers by November.
The University were also forced to scale back its courses, with cuts to degrees in science, engineering, economics and business where enrolments (from mostly international students) had collapsed since Australia’s borders were closed.
The value add nature of the opportunity appealed to Fidinam who had previously considered the asset in 2019 for its Swiss based client, ST Australia Real Estate.
Fidinam Australia managing director Matthew Burrows said, ‘‘This was our second value-add purchase for our client in Melbourne in the last 14 months and our 9th investment to date.”
Having purchased Swann House at 22 William Street for $52 million in late 2019, ST Australia Real Estate were familiar with the market and able to move quickly, securing the asset unconditionally in late February.
The property sits on a small 741sqm site and provides 4,501 sqm of office accommodation over seven levels and a basement. The building was previously occupied by the Victorian Police and a Backpackers Hostel.
Positioned close to the proposed Town Hall Train Station and with a direct link to the existing Flinders Street Train Station, the property is ideally suited to a re-positioning strategy.
The site has a flexible Capital City 2 Zoning and could accommodate alternative uses, however Fidinam will complete a full building upgrade to meet an A Grade standard, potentially adding additional space, which will come at a cost of $12m.
Matthew Burrows said, “the Re-Develop to Own investment strategy suits our clients who are investing long term for the stable, secure income which the Australian market offers.”
The Group are continuing to look for opportunities to invest in the Australian office market which meet their value add criteria.
ST Australia Real Estate are long term investors in the market and have slowly acquired a portfolio of 9 properties including;
- 533 Little Lonsdale Street Melbourne acquired for $35m
- 223 Liverpool Street Sydney acquired for $33m
- 22 William Street Melbourne acquired for $52m
- 10 Bridge Street Sydney acquired for c$60m
Fidinam were the under bidders in the EOI process but provided a cleaner and more certain offer which the vendors ultimately accepted.
Fidinam expect to invest a further c$12m to fully refurbish the asset to bring it up to an equivalent A Grade standard.
Market rents for A Grade office suites in that location are at circa $650/sqm nett, which would likely provide a cash yield on cost to Fidinam of in excess of 6% pa.
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