Buying at the top: billionaire Andrew Roberts backs Eureka Tower purchase

A firm backed by Multiplex heir Andrew Roberts has bought the top two levels of Melbourne’s Eureka Tower, betting on a visitor recovery.

The Eureka Skydeck observation floor.

A property funds firm backed by billionaire Multiplex heir Andrew Roberts has swooped on one of the country’s highest tourist attractions – the top two levels of Melbourne’s iconic Eureka Tower – buying them from the private equity-owned hospitality company Journey Beyond for about $60m.

The sale of the Eureka Skydeck to RF CorVal will give it ownership of levels 88 and 89 of the high-profile skyscraper as it expands its operations in the wake of the coronavirus crisis.

RF CorVal is betting on a strong recovery in tourism and high end entertaining and earlier this year set up a fund to develop a new hotel in the Sydney Airport precinct that will operate under the Moxy brand under a management agreement with Marriott International.

RF CorVal is one of the most canny investors in the local market and its buying could prompt more activity by local players keen for an exposure to the tourism recovery once borders reopen.

“Covid is not going to be around forever,” RF CorVal chief executive Rob Rayner said.

The Quadrant-owned Journey Beyond, a luxury train operator, appointed JLL’s Josh Rutman, MingXuan Li and Peter Harper to sell level 88, known as Eureka Skydeck, one of the highest observation decks in the southern hemisphere, and level 89, which houses the Eureka 89 restaurant and event space.

RF CorVal also bought the ground floor retail situated in the Eureka Tower at 7 Riverside Quay, Southbank, Melbourne.

Journey Beyond will remain in the ground floor retail and both upper levels on an initial 20-year lease with a commencing rental of about $3.3m and fixed annual rental increases.

The sale is a fill-up for Journey Beyond, which is a top Australian tourism and hospitality operator with numerous iconic brands including The Ghan, Indian Pacific, Outback Spirit Tours and Horizontal Falls Seaplane Adventures.

The observation deck offers panoramic views of Melbourne and there is dedicated lift access from the ground floor allowing the site to operate despite COVID-19.

The buyers were drawn by the security of a long-term lease as Journey Beyond is Australia’s top experienced based tourism and hospitality operator.

Journey Beyond chief executive Chris Tallent pointed to property’s bright future. “This new long-term lease arrangement underpins the future growth of this iconic experience in the heart of Melbourne and comes ahead of the launch of some exciting new initiatives under development for the Skydeck, due for completion later this year,” he said.

Mr Rayner cited the long lease to Journey Beyond which he said was performing very well, partly as domestic tourism is active.

But he also pointed to the attractive property fundamentals saying that Journey Beyond planned to spend more on the ground floor.

The property‘s fixed rent increases would be important as he said inflation could be an issue over the medium to long term.

RF CorVal launched a trust to hold the asset for family offices and wealthy investors and it was well oversubscribed.

RF CorVal is still committed to acquiring core property sectors like offices but has the capacity to look at alternative areas.

He played down the impact of Covid-19 on the company‘s investing, saying it had been working on the Sydney hotel before the pandemic.

Over the past few years, RF CorVal has also sought to sell off a number of properties and sold them at a premium as the commercial property cycle has surged.

The private RF CorVal is owned by the senior management team and RF Capital, a vehicle associated with Andrew Roberts, the chief executive of the once-listed Multiplex Group, prior to the takeover of that company by Brookfield Asset Management.

JLL’s Mr Rutman said the sale showed “the depth of appetite for high quality income-producing assets that are positioned to attract competitive interest from domestic and offshore investment groups”.

Melbourne’s Eureka Tower