SINGAPORE (THE BUSINESS TIMES) – Mainboard-listed property developer Roxy-Pacific Holdings and the private family office of Teo Tong Lim have joined hands to potentially acquire a 21-storey Melbourne office building for A$145 million (S$140.5 million).
Roxy-Pacific on Tuesday (July 7) announced it had invested in a 40 per cent stake in Singapore master trust TE-Roxy Commercial Trust I at a committed capital of A$27 million, which will be financed by internal funds.
The other 60 per cent interest in TE-Roxy is held by Mr Teo's family office, TE2 Group. Mr Teo is the managing director of property developer and investment house Tong Eng Group, which is well known in the Melbourne market.
TE-Roxy will hold the entire interest in a Singapore company TECT I. In turn, TE-Roxy and TECT I will together wholly own Australian head trust TE Australian Trust I as well as Australian sub-trust TE Skyhigh Trust.
Roxy-Pacific's subsidiary, Roxy Australia Capital, will enter into an agreement with TE2 Group and other parties to govern the rights and obligations of each investor in relation to the units in the trusts.
The trusts were set up to establish an incorporated joint venture with the objective of acquiring the building at 350 Queen Street in Melbourne.
A sale and purchase agreement to buy the property for A$145 million, not including stamp duty and due diligence costs, has been signed, Roxy-Pacific said.
Under the agreement, TE Skyhigh Trust will be the acquiring entity. The proposed property acquisition is subject to conditions including TE Skyhigh Trust obtaining approval from the Foreign Investment Review Board in Australia.
Roxy-Pacific said the purchase price was arrived at after taking into account commercial factors such as the location of the property and the recent transacted prices for other properties in the vicinity.
The Australian Financial Review (AFR) reported on Tuesday morning that the acquisition was agreed on an initial yield of 4.8 per cent, which is considered a relatively tight yield for a B-grade building in a market with increased leasing risk amid the coronavirus pandemic.
The buyers plan to pursue a 12-month refurbishment programme for the tower, which was built in the 1980s, AFR added.
Situated in Melbourne's central business district, the building houses offices, retail offerings, and community amenities. It has a freehold tenure with a total sRead More – Source