Eureka Tower floors sell to Sydney investment group for sky high price


Eureka Tower floors sell to Sydney investment group for sky high price

MELBOURNE, 06 July 2021 – Levels 88 and 89 located in the Eureka Tower - one of Australia’s most recognisable skyscrapers have sold for circa $60 million to Sydney fund manager RF CorVal.

JLL’s Josh Rutman, MingXuan Li and Peter Harper sold level 88, known as Eureka Skydeck, and Level 89 which is occupied as a restaurant & event space known as ‘Eureka89’ at 7 Riverside Quay, Southbank. Charter Keck Cramer’s Andrew Grant acted as Journey Beyond’s transaction manager. 

The landmark transaction represents one of the largest single ownership strata titled sales in Melbourne and sets a record $/sqm rate for such product both in Eureka Tower and throughout the broader Melbourne marketplace.

Commenting on the sale Journey Beyond CEO Chris Tallent said, “Journey Beyond is delighted to complete the sale and leaseback of this iconic property to such a high-quality investor as RF CorVal. This new long-term lease arrangement underpins the future growth of this iconic experience in the heart of Melbourne and comes ahead of the launch of some exciting new initiatives under development for the Skydeck, due for completion later this year.”

The property will be placed into a new trust/syndicate by CorVal who are acting on behalf of several investors.

Head of Transaction at RF CorVal, Oliver Picone said, “RF CorVal was attracted to this opportunity due to the high amount of income on offer under the long term triple net lease, coupled with an underlying property component that makes up a significant portion of the purchase price, viewed from either an existing use, or longer term alternate use perspective for the likes of residential.  When the sum of these two parts are combined the deal metrics looked quite compelling to us.”

“Journey Beyond has a strong track record of operating a successful business out of the property and providing a great experience to its visitors.  We were also able to work with Journey Beyond to ensure rental coverage is provided from the Journey Beyond group, which ultimately provides for a strong tenant covenant given the large, diversified and profitable nature of the Journey Beyond business at this level,” he said. 

“We assess a lot of leaseback transactions and considered this one somewhat unique due to the vacant possession value of the property making up a large percentage of the purchase price, with the potential for multiple alternate uses in time.  This was a comforting factor, as at the end of the lease term, the property is forecast to retain significant value,” Mr Picone said. 

Journey Beyond will continue to occupy the ground floor retail and both upper levels on an initial 25-year lease. Journey Beyond is a leading Australian tourism and hospitality operator with numerous iconic brands including The Ghan, Indian Pacific, Outback Spirit Tours and Horizontal Falls Seaplane Adventures. 

Mr Rutman said, “The sale demonstrates the depth of appetite for high quality income-producing assets that are positioned to attract competitive interest from domestic and offshore investment groups.”

“We were pleased to observe the level of bidding from both traditional tourism and hotel investors as well as private individuals and more established diversified property trusts that saw value in securing the asset. This transaction is another clear vote of confidence for Melbourne’s tourism industry more broadly.”

“Leaseback transactions to reliable covenants are proving to be highly attractive in the current environment, where various capital sources are seeking a strong and reliable income stream and owner occupiers may be looking to release the funds to reinvest back into their business operations.”

“We are in discussions with a range of different property owners looking to implement similar strategies with a view of taking advantage of the record low cost of debt and severe shortage of quality alternative investment opportunities with reasonable returns.”

Mr Harper said, “We were pleased to observe the level of bidding from both traditional tourism and hotel investors as well as private individuals and more established diversified property trusts that saw value in securing the asset despite it being categorised as somewhat unorthodox. This transaction is another clear vote of confidence for Melbourne’s tourism industry more broadly.”

“The Victorian commercial property market has become increasingly buoyant as demonstrated by recent transaction volumes in the first half of 2021. In Q2 2021 JLL recorded a preliminary total office transactions figure of $985.9 million for Victoria, more than doubling the Q1 2021 figure of $412.5 million in a sign of increased investor confidence and activity in the Victorian market,” Mr Rutman said. 

According to JLL Research, the second quarter of 2021 has been the strongest quarter for Victorian commercial office sector transactions since the pandemic struck and since Q3 2019 ($1,043.4 million). 

Southbank’s other major strata sale was also transacted by JLL recently- Melbourne Square Shopping Centre located at 93-119 Kavanagh Street, approximately 450 metres from Eureka Tower, was sold for $70 million, on an initial yield of 4.37 percent and was acquired by Primewest.


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