Case Study

600 Church St, Cremorne

600 Church Street, Cremorne occupies a high-profile location on the corner of Church Street and Balmain Street in Cremorne, one of Australia’s most desirable office precincts.

The newly constructed eight-level commercial office building comprises of ground floor retail space with double height ceilings and mezzanine, seven levels of office accommodation, and a large rooftop terrace for a total estimated NLA of 5,799m².

June 2018 Purchase Price

$50.0m

April 2020 Valuation (Practical Completion)

$70.0m

June 2018 Purchase Price

$50.0m

April 2020 Valuation (Practical Completion)

$70.0m

Project Strategy

Acquire this yet to be constructed asset with no tenant pre-commitment and generate an enhanced long-term income stream with strong capital growth by achieving leasing success during and post construction.

Target IRR

10.0% p.a.

IRR Achieved

43.6% p.a. (On appraised valuation of $70m at settlement over 22-month project timeframe)

Transaction Analysis from Acquisition to Practical Completion

Acquisition
Valuation (for Practical Completion)
Price
$50.0 million
$70.0 million
Sale/ Valuation Date
Jun-18
Apr-20
Net Income p.a.¹
$NIL
$3,673,969
NLA Rate²
$8,622/m²
$12,094/m²

Past performance is not a reliable indicator of future performance.

¹Net income based on fully leased property at market rates.

²NLA rate on acquisition based on forecast NLA of 5,799m², NLA of 5,788m² assumed in valuation.

Introduction

600 Church Street, Cremorne occupies a high-profile location on the corner of Church Street and Balmain Street in Cremorne, one of Australia’s most desirable office precincts.

The newly constructed eight-level commercial office building comprises of ground floor retail space with double height ceilings and mezzanine, seven levels of office accommodation, and a large rooftop terrace for a total estimated NLA of 5,799m².

Background and Opportunity

BSC acquired the yet to be constructed asset in June 2018 with no pre-commitment tenants and promptly began marketing it for lease.
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During construction secured six binding Agreement for Lease’s (AFL’s) to high-quality occupiers including the likes of Domain and The Hoyts Group.
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The asset was in excess of 75% leased prior to practical completion significantly exceeding model assumptions and all other speculatively developed offices in Melbourne’s fringe market during the same period.

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Rental terms achieved significantly outperformed model leasing assumptions and set new benchmarks for fringe leasing rates.
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Secured a premier retailer for the ground floor café, Axil Coffee Roasters to further enhance the amenity for office tenants.
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Settled the asset during the peak of the Covid-19 Pandemic in April of 2020.
This transaction demonstrated BSC’s ability to identify office assets that have the attributes required to attract quality tenants, and take on lease risk with a well-defined strategy, in doing so achieving outstanding results for investors.