Grocon scores backers for CUB site

8/03/13 10:05 AM

Grocon scores backers for CUB site

PUBLISHED: 08 Mar 2013 PRINT EDITION: 08 Mar 2013 Gift Article: 100

Gretchen Friemann, Nick!Lenaghan and Ben Wilmot Global funds giants CLSA Capital Partners and Invesco have emerged as backers of Grocons $290 million residential building on the old brewery site in central Melbourne. The private developers plans to set up an innovative funding vehicle for the tower were revealed by The Australian Financial Review. Grocon has been looking to capitalise on the demand from a host of offshore players for exposure to residential projects. Convincing the two groups which are better known for their commercial investments to pour about $75 million in equity into the project is a coup for Grocon. The investment is a radical departure for the CLSA unit, which owns office towers in both Melbourne and Sydney. It is its first residential play in Australia and it may allocate more capital to the area as returns range between 15 per cent and 20 per cent. CLSA is not pursuing commercial development as the returns are far lower. Artists impression of Grocons portrait tower for the CUB site in Melbourne.

Invesco is taking its first steps into Australias direct property market. It is also finalising the purchase, for about $120!million, of a half-stake in Cbus Propertys development of a police complex in Melbournes Docklands precinct. Grocon, which will retain equity in the fund, declined to comment on the transaction. Jones Lang LaSalle agents James Kaufman and Simon Storry ran the campaign for the developer. Grocon has used similar structures to raise about $2 billion for the development of major office towers, including 161 Castlereagh Street in Sydney. It is hunting for partners on its Brisbane tower. Grocon is in talks with a third-party builder, understood to be Contexx, to take on the project as its own workbook in Victoria is hitting capacity. The Swanston Square building is the centrepiece of the urban regeneration project at the Carlton & United Brewery site on the northern edge of the CBD. The entire project may ultimately hold more than $1 billion worth of developed real estate. The distinctive 32-storey building has a portrait of 19th-century indigenous leader William Barak etched into its facade. Invesco and CLSA were not immediately available for comment. The Australian Financial Review

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