A JP Morgan Asset Management fund, backed by the California Public Employees’ Retirement System (CalPERS), has acquired its second prime asset in Melbourne for AUD247m (€173.3m).
The US investment manager bought St Collins Lane in Melbourne’s central business district from LaSalle Investment Management.
The deal follows this year’s purchase of an office tower in Melbourne for AUD286m.
Both acquisitions are thought to be designated for JP Morgan’s Asia-Pacific Property Fund, which received an investment of US$250m (€232.5m) from CalPERS in August.
JP Morgan had been in the running since August for the redeveloped mall, which is adjacent to a hotel.
LaSalle acquired the retail asset and the hotel, Novotel Melbourne on Collins, from Thakral Holdings Group for AUD204m in 2011 for its Asian Opportunity Fund III.
LaSalle refurbished the hotel and redeveloped the shopping arcade.
In September, LaSalle sold the hotel for AUD237m to Frasers Hospitality Trust, a Singapore-based company.
The two sales have yielded the LaSalle fund total proceeds of AUD484m.
Simon Howard, regional director of asset management for Australia at LaSalle, told IPE Real Estate: “The divestment of St Collins Lane is testament to LaSalle’s ability to identify opportunities, execute on strategy and generate attractive investment outcomes for our capital partners.
“We are especially pleased to have created such a prime CBD retail centre that has attracted leading international brands including Debenhams, Coach and TAG Heuer,” he said.
Simon Rooney, head of retail investments in Australasia at JLL, said the sale price set another record for Australian CBD retail assets.
The St Collins retail mall was sold at a 5% yield.
Rooney said: “St Collins Lane adds to a series of retail developments in the Melbourne CBD in the last few years, which, together, have created a powerful concentration of retail amenity.”
He spoke of the revitalisation of Melbourne’s CBD retail core, which has increased investor demand for high-quality assets.
“[This year] already reflects a record year for CBD retail transactions, with $1.6bn recorded to date, eclipsing the $1.2bn in 2015,” he said.