Peak Equities buys API headquarters for $27.5m

Written by Larry Shlesinger and Published in the Financial Review

Melbourne property syndicator Peak Equities has acquired the suburban headquarters of ASX-listed health and beauty group Australian Pharmaceutical Industries for $27.5 million on a passing yield of 7.5 percent.

The 250 Camberwell Road building in Melbourne’s eastern suburbs was offloaded by another syndication firm, the Sydney-based Bricktop Group, led by former Babcock & Brown senior executive Michael Balkin, who bought it in 2013.

Peak Equities, led by accountant Tom Borsky, recently purchased a Robina office building at 69 Laver Drive on the Gold coast for $7.6 million.

Its investment in the Camberwell commercial building is part of a wave of investment capital heading into Melbourne’s suburban office markets as more office towers in city fringe office precincts like St Kilda Road and South Melbourne are acquired for residential conversion.

Mr Borsky said the location of the property, in a tight office market where demand was expected to grow far more quickly than supply, was the principal driver of the purchase.

The five-level, 5420-square-meter Camberwell Road office building generates more than $2 million a year in net passing income from API, operator of the Priceline pharmacy chain, and ground-floor cafe operator Camberwell Food Group with a weighted average lease expiry of six years.

It sold with a leasehold interest from the Melbourne Anglican Trust Corporation.
Colliers International’s Peter Bremner, Rob Joyes and Rachel Clohesy brokered the deal on behalf of Bricktop Group.

Mr Bremner said the long lease to Melbourne Anglican Trust Corporation, which expires on September 30, 2075, did not deter interested parties, particularly those seeking a prime inner-east office building that promised an attractive yield.
“If the property was sold with freehold title, it would most likely have resulted in a sub-6 percent yield,” Mr Bremner said.