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Australian Financial Review : October 17th 2006
FBA 056 The Australian Financial Review Tuesday 17 October 2006 www.afr.com 56 PROPERTY Multiplex still looking Mathew Dunckley Multiplex Group has denied reports that the Victorian government has committed to leasing a large chunk of the second tower of its Southern Cross development in the Melbourne CBD. Known as SX2, the development at 111 Bourke Street is one of a number of downtown Melbourne projects competing to secure the precommitment of a large tenant before starting construction. The neighbouring 75,900 square metre SX1 office building at 121 Exhibition Street was substantially leased by the state government and it had been suggested that it had agreed to take on another 20,000 sq m at SX2. But a Multiplex spokesman said nothing had been decided yet. ''We are in very early negotiations with different people looking for space but it is very early days. ''No precommitment has been made at this stage.'' The spokesman said the state government had been approached. Other developments seeking tenants in Melbourne include Cbus Property's 550 Bourke Street, APN Property's 565 Collins Street and Australand's second tower at Freshwater Place. The news of a possible deal at SX2 had raised concerns in property circles that the government would have committed to a substantial lease without a competitive process. Most of the government's major leases are managed by the Department of Treasury and Finance and a spokeswoman said the government had not entered into a lease for SX2. A public expression of interest process would be held to find sites and select space for government tenants, the spokeswoman said. Property sources suggested there was some possibility the government might need to start looking for new space to cover lease expiries, such as at 1 Spring Street, from about 2009 onwards. Villawood wins case against open-space levy Mathew Dunckley KEY POINTS Council wanted 5pc of the site value as an open-space charge. VCAT ruled that site subdivision will not create a need for more space. Villawood hopes to have the units on the market within three weeks. A Victorian developer will be spared thousands of dollars in costs after successfully fighting an open- space levy on a project across the road from the home of Geelong Football Club at Kardinia Park. Under the proposed develop- ment, Villawood Homes wanted to renovate the existing 22 dwellings at the 432-440 Latrobe Terrace site but subdivide them into separate titles. The City of Greater Geelong demanded 5 per cent of the site's value as an open-space charge as a condition of granting a planning permit. Villawood appealed to the Vic- torian Civil and Administrative Tri- bunal. In a judgement released yester- day, VCAT member Michael Read threw out the council's claim to open-space charges. He said the council could insist on a public open-space contribution only if a subdivision would cause a need for more open space. ''I concluded that council had not demonstrated this consequence and, by any measure, it appeared a most implausible effect of the sub- division,'' he said. ''The only significant change that the sub-division would bring about is that it would reduce the areas of common open space and instead create an area of secluded private open space for each dwelling. ''There was no suggestion . . . that this would lead to greater demand for or use of public open space in the site's vicinity.'' Mr Read said it was just as likely that the creation of the private open space might actually reduce the demand for public open areas. ''While there are many subdiv- isions that clearly create the need for public open space, this is not one of them,'' he said. ''Opposite the site across Latrobe Terrace is Kardinia Park, a large regional area of public open space containing several sports grounds, swimming complex, informal park- land and a range of other rec- reational facilities. There is also a small area of passive public open space to the site's south-west and extensive areas of parkland along the northern side of the Barwon River, a little distance to the south. '' Villawood Homes director Jim Angelovski said the levy impost could have cost him up to $70,000 on a project with an end value of about $3.4 million. ''It is a big relief,'' he said. ''What was also amusing is they were also negotiating, saying 'we will take 3 per cent' or 'we will take 2 per cent', like we are going to buy a used car.'' He said the development would provide affordable housing, at an expected asking price from about $165,000, and he could not under- stand the council's opposition. ''The mayor and some councillors get excited when a new project is up around town, then they hold up this which is going to provide affordable housing,'' he said. Mr Angelovski said he hoped to now have the refurbished units on the market within three weeks. Councillor Rod Macdonald said the city was taking advice on further action. Offices in southern California are Maguire's focus. Photo: BLOOMBERG Macquarie US offshoot in play Ben Wilmot '' A takeover price in the mid-$US40s was tipped.'' with wires The race for one of the $3.1 billion Macquarie Office Trust's key part- ners in the United States appears to be heating up. Last year, the Macquarie Bank- managed office trust formed a $US1.2 billion ($1.6 billion) joint venture with Maguire Properties. That deal gave it an 80 per cent stake in a portfolio of five office proper- ties in California and Colorado. Earlier this year, the US group's founder, Robert Maguire, was reportedly considering taking the $US2 billion listed real estate invest- ment trust (REIT) private. Industry sources said at the time that the Los Angeles developer wanted to keep some development assets but the group's passive office assets were on the market. Maguire Properties is the biggest owner and operator of class A office properties in the Los Angeles central business district and is mainly focused on owning and operating office buildings in the southern California market. Now the group's listed rivals and US private equity firms are con- sidering buying the group, accord- ing to people familiar with the situation. Informal property books have been sent out to select bidders who had expressed interest in the company. The private equity players interes- ted in the group include the Black- stone Group, while the public real estate investment trusts reportedly include Brookfield Properties and Boston Properties. A deal is probably ''weeks away, not days'', one person involved in the process said. Sources valued the company from as low as $US43 a share to as high as $US50, depending on how much value is placed on the company's development pipeline and its Cali- fornia focus. Credit Suisse analyst John Stewart tipped a takeover price in the mid-$US40s. He said he would be concerned for any public REIT that paid $US50 a share. RBC Capital Markets analyst Srikanth Nagarajan said he'db e surprised if the company sold at more than a 10 per cent premium to its current trading price of about $US46. 5 star office investment • Major CBD corner location • Cornerstone to Caversham's City Central $700m development • Prime A Grade office tower of 12,378m2 (under construction) • Designed to achieve 5 Star Green Star and 5 Star Energy Rating • Major Blue chip precommitment • Forecast Annual Net Income at Practical Completion $5.087m City Central Tower 2 corner King William & Waymouth Streets Adelaide Ben Yates 0412 843 388 firstname.lastname@example.org Tim Russell 0412 806 856 email@example.com Paul van Reesema 0412 806 994 firstname.lastname@example.org www.colliers.com/australia www.colliers.com.au/69151 ARTIST'S IMPRESSION For Sale by Informal Tender closing 3pm CST Thursday 16th November 2006. U70294