This was published 3 months ago
Court orders sale of Carlton property portfolio after family feud
Generational change comes upon all investors at some point, but in the case of the Pistorino family – which once owned Australia’s biggest travel agency, the Concorde Group – it was mandated by the court.
Last September, the Supreme Court ordered the Pistorino Group of companies to be wound up after a breakdown in family relations following the death of parents Agostino and Aurelia Pistorino.
238 Lygon Street, Carlton.
Agostino Pistorino, who died in 1999, established Concorde International in 1949. In 1987, British Airways took a half stake in the company. It was turning over $1.7 billion a year before it was sold in 2003.
The family’s companies owned a portfolio of six properties, mostly purchased by Pistorino in the 1980s and 1990s, which include shops and offices in Carlton and Moonee Ponds.
Stonebridge Property Group’s Nic Hage, Rorey James, and Kevin Tong are handling the disposal, along with Wilson Commercial’s Adam Guest and Alan Watson.
To date, 280 Lygon Street has sold at auction for $2.12 million on a 3.9 per cent yield; 211 Lygon Street fetched $1.28 million on a 4 per cent yield and 99 Puckle Street sold for $1.45 million on a 3.9 per cent yield.
Next up is an office building at 221 Drummond Street, which returns $507,500 a year in income and the freehold of La Spaghettata restaurant at 238 Lygon Street.
Hage said the auctions attracted 16 bidders, only two of whom were first time buyers.
“They’re experienced investors who have lived through property cycles and have the ability to look past the current headwinds,” he said.
Generational change
Other families are divesting their assets as part of estate planning. Back in 1975, one local family bought their first property on the blue-chip retail strip of Church Street in Brighton. They paid just $70,000 for 60 Church Street, which is now rented to men’s retailer Gazman.
Records show buying a piece of Church Street went up quickly. By 1980, it cost them $210,000 to buy the brand new 5/50 Church Street, which is now leased by Bendigo Bank. They are both going to auction on June 28.
60 Church Street, Brighton.
In 1987, the family bought 81 Kingsway in Glen Waverley for $575,000. The Kingsway shopping precinct has been completely transformed since the 1980s. It goes to auction on June 28.
Yields on both strips are running at the sharp end of around 3 per cent which puts the prices at more than $5 million for the Brighton properties and north of $3.5 million for Kingsway.
Stonebridge’s Hage said rents on these strips are getting towards $2000 a square metre.
“We’re seeing potential buyers coming through already pricing rental growth into the values. There’s a lot of interest, even from international retailers,” he said.
Scape’s office
Fresh office space is up for grabs in a corner of the CBD opposite RMIT University and the State Library despite Melbourne’s glut of empty towers.
Student accommodation developer and operator Scape is looking for tenants for 10,000 square-metres of new office space in the podium of the 56-storey tower it is building on top of the new State Library underground railway station.
Render of the projected Scape tower, State Library Exchange, at 393 Swanston Street.
High building costs and 17 per cent office vacancy rates has put the kybosh on most new office projects in the CBD, but Scape’s 1000 student accommodation units in the mixed-use tower underpins the project.
A new report from property valuation group Herron Todd White shows there is little new office supply coming up, as high vacancy rates and building costs have stalled development. Just 68,000 square metres of new supply are due in 2024, with 81,500 square metres expected in 2025 and 117,000 square metres scheduled for 2026 and beyond.
ETC, a new agency set up by Edward Knowles and Tony Landrigan, are running the leasing campaign for the State Library Exchange tower. It’s next door to a 38-storey student accommodation tower Scape has already built on the corner of Franklin Street.
Construction starts this year, with completion expected in 2027. While the foreign student and private college market has taken a hit from the federal government’s cuts to immigration, the major universities are still potential tenants.
Knowles said there are plenty of other potential occupiers in the market looking for about 10,000 square metres in well-located buildings. The REA group, long based in Cremorne’s “Silicon Yarra” is looking for 8-10,000 square metres and the City of Melbourne is also looking for a similar size space.
Meanwhile, law firm Slater & Gordon, which had been scouting new locations last year, has made a move out of the CBD’s west end, moving into the top floors of GPT’s 530 Collins Street.
17 bidders
A local private investor has snatched the Coles Bentleigh supermarket from a strong field of 17 bidders which also included the retailer.
The $25 million-plus deal indicates strong competition for the 40-year-old freestanding building which is ready for a revamp and comes with room for further development.
Coles Bentleigh, 2-6 Bent Street.
It’s understood second round offers for the 2331-square-metre supermarket came in at more than $25 million and a yield under 4 per cent. In the hands of one family for more than 40 years, the 2-6 Bent Street supermarket was sold with a lease which has Coles paying both land tax and maintenance costs.
It’s in the heart of the Centre Road shopping strip, on a 3388-square-metre site opposite Bentleigh railway station, and returns $984,619 a year in rent. Gross Waddell ICR agents Alex Ham, Danny Clark, Michael Gross and Glenn Ye did the deal but declined to comment.
Keen to develop new supermarket properties, with leases more to their liking, major retailers Coles and Woolworths have been active buyers of their existing freeholds. Last year, Coles paid $17.2 million for a supermarket in Hampton on a 2.7 per cent yield.
In other recent deals, Fitzroys sold three small suburban supermarkets for a total of $15 million and yields ranging between 5 and 6 per cent.
Agents Chris Kombi and Ervin Niyaz sold the strata-title Aldi supermarket at Gladstone Park shopping centre sold on a 6 per cent deal while colleagues Chris James and Tom Fisher sold Albert Park’s independent supermarket Gum Tree Good Food at 87-89 Dundas Place for $4.9 million. Another Gum Tree supermarket at 422 New Street, Brighton sold on a 5.2 per cent yield.
“Investors are seeking surety and turning to defensive bricks-and-mortar assets. Supermarket assets have retained their status as ‘recession-proof’ and are among the most sought-after in the market,” Kombi said.
Meanwhile, the next supermarket property up for sale is the Woolworths Craigieburn which also comes with an older style lease structure.
The 3881-square-metre, full-line supermarket is nearly 30 years old and part of Craigieburn Plaza on Craigieburn Road. It returns about $975,000 a year in rent.
Stonebridge’s Justin Dowers and Kevin Tong are handling enquiries and expect more than $17 million.
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