Case Study

606 St Kilda Rd, Melbourne

A high quality office building with terrific fundamentals and good scope for strong income returns and capital growth via a hands on management and leasing approach.

606 St Kilda Road, Melbourne was rebuilt and extended in 2003 to provide 10 levels of prime office accommodation, ground floor and basement parking and an on-site café, offering a total net lettable area of 8,647m² with 141 car spaces.

Project Strategy

Acquire on attractive metrics due to receivership sale, enhance income profile and re-position the asset as a unique and flexible offering with a multitude of uses.

Target IRR

12.0% p.a.

IRR Achieved

28.12% p.a.
(24-month project timeframe)

Transaction Analysis from Acquisition to Disposal

									
					Acquisition				

					Disposal				

				Price			

				$40.00 million			

				$57.50 million			

				Sale Date			

				Mar-16			

				Jan-18			

				Net Income p.a.			

				$2,812,000			

				$3,378,232			

				NLA Rate			

				$4,626/m²			

				$6,650/m²			

				Net Yield			

				7.03%			

				5.87%

Past performance is not a reliable indicator of future performance.

Background and Opportunity

We identified the asset as a quality St Kilda Road office building with sound fundamentals and ideal scope for rental appreciation and capital growth via a hands-on management and leasing approach. BSC acquired the asset in March 2016 and promptly repositioned the building by modernising the lobby and lifts. Key achievements in less than two years of ownership included:

Securing 22 leases.

Maintaining 100% occupancy throughout ownership period.

Increasing net income by more than 20%.

Generating strong cashflows with incentives well below market rates.

Significantly enhancing the asset’s brand and tenancy profile.

Once again BSC showcased its ability to identify a potentially lucrative asset within the commercial market, develop and implement a strategic approach, and achieve outstanding returns in a short timeframe.