Southern Cross West, Melbourne

Southern Cross West, Melbourne is an A Grade property completed in 2009 and comprises ground floor retail tenancies, lobby, 20 upper levels of office accommodation and basement parking. It is located at the eastern end of the Melbourne CBD, bordering Bourke and Little Collins Streets.

Investment Details

  • 50% ownership acquired in 2008 by an institutional client
  • A Grade Melbourne CBD Office in prime location
  • 23,684m2 + 800m2 retail
  • 100% leased to Government with WALE > 9 years
  • Sold in 2011 to co-owner

Investment Returns

  • Original 10 year forecast IRR at acquisition of 12% vs. market at around 10%
  • 200 basis point premium for entering the development at a substantially de risked stage, i.e. tenant pre-commitment and fixed price construction contract
  • Off market sale completed in 30 days to rebalance client portfolio at a premium to book value

Relationship Benefits

  • Off market deal sourced and managed by JGS
  • Distressed vendor known to JGS
  • Rapid decision making only possible because of trusted communication process between JGS and client during all phases of consideration, acquisition and divestment

Key Disciplines

  • Off market deal creation by JGS via a long term relationship
  • Debt competitively financed even in depths of GFC
  • Development manager representative during construction
  • Transition from acquisition to management led by JGS, and appointed asset manager

Learning Outcomes

  • Maintenance of long term relationships delivers opportunities
  • Open communication and trusted transparent advice process with client drives capacity for expeditious transaction assessment and progress
  • Strong legal and tax relationships provided capacity to make decisions