A TWIST has been revealed regarding the purchaser of a prominent city office building that last month set a record price for an asset sold at auction when it was knocked down for $60 million.
The unusual sale of the former Ansett headquarters at 501 Swanston Street appeared to be won by an offshore investor who immediately after the auction revealed he was representing Vince Giuliano, director of PDG Corporation, and also one of the vendors.
Giuliano, with the other
co-vendor, private developer Mario Salvo, director of Salvo Group, listed the property for sale after mediation and a dispute that reportedly dragged on for many years.
Both builders were expected to bid for full control of the asset either individually or as part of a consortium. It was expected to sell for less than its $57 million valuation price.
It is now asserted that Giuliano purchased the property with entrepreneur Bobby Zagame, a luxury car dealer.
The Zagame Automotive Group, whose automotive arm sells new and used Ferraris and Lotuses among other brands, is believed to control the three-level, 3000-square-metre Audi dealership at the lower levels of 501 Swanston Street.
It's expected this space may be expanded and reconfigured to become a generalised luxury car showroom and cafe, but this could not be confirmed with PDG or Zagame. Other than to confirm the auction result, CBRE directors Mark Wizel, Mark Coster and Martin O'Sullivan declined to comment.
Including the Audi tenancy the asset at present returns annual rent of $5.2 million.
It is not unusual for a car dealership, as a retailer, to have an interest in a site's residential redevelopment.
About 10 years ago, interests associated with Audi Doncaster were involved in a proposed mixed-use development that would have included a car dealership beneath an apartment tower on Doncaster Road.
In the past year, Woolworths, Coles and stablemate Bunnings have proposed major residential towers in North Melbourne, Richmond and Doncaster, respectively, which would include lower-level retail space exclusively occupied by them.
Auto workshop auction
MEANWHILE, south of the CBD interests associated with Melbourne automotive family the Worrells have sold a Prahran workshop owner-occupied for about 40 years.
The Prahran site, at 694-696 High Street, sold to another automotive group at auction this week for $2.39 million.
The new owner-occupier outmuscled developers to buy the site for a high land rate of more than $4000 per square metre. The sale of the 571-square-metre property near the corner of Orrong Road and Toorak Park was contested by five bidders. It is not far from a contentious 500-plus unit complex earmarked by Sydney-based developer Lend Lease to replace rundown offices at 590 Orrong Road, Armadale. Beller TBM Commercial selling agent Fred Nucara marketed the Prahran workshop.
Set your cap for gain
ENTREPRENEURS who want to own and occupy a strata office may be tempted by the bragging rights of a Collins Street space that hit the market this week for $2 million.
The 300-square-metre office occupying all of level 22, 15 Collins Street, in the "Paris End", is, according to the selling agents, the highest commercial strata floor developed in the Melbourne CBD.
The penthouse office, with protected views, two car parks and two balconies, is being marketed by Frank Vinci and Joseph Carbone, directors of private advisory Vinci Carbone. It is next door to the landmark Collins Place twin office towers.
"In the current interest rate climate it makes a great deal of sense for businesses to own their premises," Vinci said. "With a property such as this, the funding costs on the whole purchase amount would be less than the cost to rent the premises from a third-party landlord, while also enjoying all the capital gain that the property will enjoy over the life of the investment."
Rosebud memories
ANOTHER caravan park in coastal Victoria is set to be replaced with higher-density dwellings.
At Rosebud, 75 kilometres south of Melbourne on the Mornington Peninsula, developers are proposing a three-level apartment building to replace the Sunrise Caravan Park at 23-25 Rosebud Parade.
The approximately 5000-square-metre site needs to be rezoned for the 65-unit retirement village to go ahead. A height limit of 10 metres affecting the sleepy town will also need to be waived for the application. The site, a short walk to Rosebud town centre, last sold for $1.76 million in mid-2005.
Rosebud is one of five townships within the Mornington Peninsula Shire that have been nominated as major activity centres. It has been identified for growth by way of medium and high-density dwellings.
The suburb is set to benefit from the opening of the $849 million Peninsula Link early next year. The motorway will connect Mount Martha, a few suburbs north of Rosebud, to Carrum Downs and the EastLink tollway.
Catherine Cashmore, a senior analyst at National Property Buyers, says while Rosebud's drive-time to the city will fall dramatically from the current 90-minute trek, the new freeway is unlikely to result in a swath of Melburnians setting up home in the suburb.
"Home buyers value easy access to public transport (rail) over most other considerations. Without direct, fast public-transport facilities to the CBD, prices will always fall short of their potential," she said.
"The only long-term solution to viably increasing Melbourne's borders and decentralising jobs from inner CBD localities is to get infrastructure first and foremost rail lines into the outer suburban localities."
Rosebud does not have a noteworthy apartment market, but, according to reliable Valuer-General data released this week, the median house price as at December 2011 (the most recent statistic available) was $370,000, down $5000 from the same period in 2010.
Increasingly in recent years caravan parks in regional Victoria have been replaced with residential and commercial projects.
EnergyWatch vacates
CITY office space only recently leased by EnergyWatch, once led by controversial director Ben Polis and now in the hands of administrators, is up for lease again.
Four levels totalling 973 square metres, being almost all the space EnergyWatch occupied at the historic Melbourne Steamship Building at 27 King Street, is up for grabs. A 200 sq m rooftop level and naming rights care of a billboard are also available.
The asking price in the lease is about $360 per square metre per year net.
EnergyWatch's high-quality offices include work stations, staff amenity and cabling that any new tenant can take advantage of immediately. EnergyWatch is believed to have vacated the premises over the past two weeks.
Another section of the building formerly occupied by EnergyWatch has been leased to another tenant for five years.
Former Colliers director Pat Burke, who now heads MP Burke Commercial Real Estate, with CBRE's Adam Jones, are the marketing agents.
Frequently Asked Questions about this Article…
What happened in the auction sale of the former Ansett headquarters at 501 Swanston Street?
The 501 Swanston Street site, the former Ansett headquarters, was knocked down at auction for $60 million. Initially the winning bidder appeared to be an offshore investor who said he was representing Vince Giuliano (a director of PDG Corporation and one of the vendors). It was later reported Giuliano purchased the property together with entrepreneur Bobby Zagame.
Who are the key parties involved in the 501 Swanston Street transaction?
Vince Giuliano (director of PDG Corporation) and co-vendor Mario Salvo (director of Salvo Group) listed the property. Reports say Giuliano bought the asset with Bobby Zagame of Zagame Automotive Group. CBRE directors who marketed the asset declined to comment on the details of the sale.
What rental income does the 501 Swanston Street asset currently generate?
Including the Audi tenancy, the property presently returns about $5.2 million a year in rent, according to the article.
Will the Audi dealership space at 501 Swanston Street be redeveloped or expanded?
The article says the three-level, roughly 3,000-square-metre Audi dealership at the building’s lower levels is believed to be controlled by Zagame Automotive Group and there are expectations the space may be expanded or reconfigured into a general luxury car showroom and café. Those plans had not been confirmed by PDG or Zagame at the time of reporting.
What did agents say about owning versus renting commercial offices in the current interest rate environment?
Vinci Carbone directors marketing a Collins Street strata office told investors that, in the current interest-rate climate, it can make sense for businesses to own their premises. They argued funding costs on a purchase could be less than renting while allowing the owner to capture long-term capital gains.
What other recent automotive-related property sales were highlighted for investors?
The article noted a Prahran workshop at 694–696 High Street, owner-occupied for about 40 years by interests associated with the Worrells, sold at auction for about $2.39 million to another automotive group. The 571-square-metre site fetched a high land rate of more than $4,000 per square metre after contest from five bidders.
What office leasing opportunity arose after EnergyWatch vacated space in the CBD?
EnergyWatch vacated four levels (about 973 square metres) at the historic Melbourne Steamship Building, 27 King Street. That space — including a 200 m² rooftop level and billboard naming rights — was put back on the market with an asking lease of about $360 per square metre per year net; another section of the building previously occupied by EnergyWatch had already been leased for five years.
Are there nearby residential redevelopment trends that everyday investors should know about?
Yes. The article outlines several trends: a Rosebud caravan park on the Mornington Peninsula has been proposed for a 65-unit retirement village (rezoning and a height-limit waiver would be required); major retailers such as Woolworths, Coles and Bunnings have proposed mixed-use residential towers with retail levels for exclusive occupation; and the new $849 million Peninsula Link motorway is expected to reduce drive times to Melbourne — although analysts warn that without direct rail access property prices may not reach full potential.
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