HOTEL Grand Central (HGC) has reached an agreement to sell an office building in Melbourne for A$80.8 million (S$77.1 million), it said on Monday (Feb 7).

 

The property was purchased in 2013, with a 7-year lease to the then-vendor, Victoria University, for A$51.45 million (including stamp duty). Victoria University occupies the entire property as tenant and currently pays a rent of about A$5.36 million per year, plus outgoings. The tenancy, which was extended, expires in October 2022.

 

300 Flinders Street is a commercial building comprising a basement, ground level and another 19 levels across 3 subdivided lots - Lot S2 (a car park owned by third parties), Lot S3 and Lot C1 which is common property owned equally by Lots S2 and S3.

 

The lettable area within Lot S3 comprises 13,457.5 sq m of office space and 636 sq m of retail space, plus other related areas and common property.

 

The buyer, an unnamed third party, has paid a deposit of A$4.04 million.

 

In a filing to the Singapore Exchange, Hotel Grand Central said the proposed sale transaction allows it to realise its investment in the commercial building before the tenancy matures in October.

 

It added: " The net sale proceeds, after payment of related transaction costs, shall be placed into interest-bearing bank term deposits, pending a decision by the directors on future investment opportunities."

HOTEL Grand Central (HGC), through its wholly-owned unit, has sold Hotel Grand Chancellor in Australia for A$10.9 million (S$10.6 million) in cash to a third party, taking into account the challenging current and future hotel market outlook in the Palm Cove locality.

 

The property was last valued at A$9.30 million by Colliers International last Dec 31, based on the income method.

 

The sale transaction allows the group to realise its investment in this property which " had not been performing well and had a challenging outlook" , it said in a regulatory filing on Thursday.

 

The property contributed a net loss of A$814,000 to HGC' s audited net profits for the year ended Dec 31, 2020.

 

Upon conclusion of this sale and after deducting the sales commission of A$326,666, the group would make a net loss of A$93,645 over its book value as at Dec 31, 2020, which would be recorded in its income statement.

 

Further, the group would be transferring A$325,000 from its asset revaluation reserve to its retained earnings.

 

The net sale proceeds will be placed into interest-bearing bank term deposits to top up the group' s cash pool, pending future investment opportunities.

 

Hotel Grand said it is working with an architect to explore the development of an empty piece of land in Christchurch, which was purchased in 2019. The intention is to build a mixed development comprising hotel, carpark and retail/office space.