APH Holdings Continues Sell-Down in Melbourne Property Market

The sell-down at Chinese-backed property investor and developer APH Holdings continues, with another site listed on the market and a deal completed in Hawthorn.

APH Holdings has several properties worth over $200 million on the market, including its notable Forest Hill development project, which is now under the control of private funder MaxCap.

Having been active in the Melbourne property sector for the past decade, APH has reached a critical point as the market suffers from high interest rates and increasing construction costs.

Upon relocating its headquarters to Forest Hill from its previous offices at 852-858 Glenferrie Road in Hawthorn, APH announced plans to construct a new Novotel hotel on the 2000 square metre site, which was demolished in 2020-2021.

The site was purchased in 2014 for $8.81 million and sold to a related company in 2021 for $8.65 million. Recently, the vacant undeveloped lot was sold off-market to residential developer Outline Projects for a price believed to be below $10 million.

Meanwhile, another property in APH’s extensive holdings in Box Hill is currently on the market. Adjacent to a tower under construction on Wellington Road, a 1486 sq m site has been earmarked for an 18-level apartment building, being quoted for sale at $13 million.

This property last changed hands in 2021 for $11.8 million, and its sale is managed by Gross Waddell ICR, alongside Buxton agents.

APH’s builder, Maxcon Constructions, holds a caveat over the property, as well as on the tower being built next door and another site previously planned for a Novotel hotel.

In response to inquiries about its relationship with APH, Maxcon did not provide comments. However, an APH spokesperson stated that the company is “pivoting from our traditional investment approach to an investment-focused business model.”

Additional properties available on the market include the former Hewlett Packard office campus located on a 5.8-hectare site at 353-383 Burwood Road, which could fetch around $90 million, and an office building on 2043 sq m at 440 Elizabeth Street in the CBD, projected to sell for between $80 million and $85 million.

Both a hotel in South Melbourne and the Box Hill hotel site are also listed for sale, with estimated values ranging from $13 million to $14 million.

Earlier this year, the company sold the Pakington Strand shopping center in Geelong at a slight loss of around $31 million, after purchasing it for $32 million in 2016.

APH’s debts are distributed across several financiers including MaxCap, Metrics, and Ark Capital Funds.

In addition to commercial properties, a cocktail bar and a pub in Richmond are both for sale; however, it is the properties that are listed, not the businesses themselves.

The partnership that sold the business to Australian Venue Co, the second-largest pub landlord in the country, owns the properties, which are both leased to AVC for ten years.

Located at 27-31 King Street, the State of Grace cocktail bar is situated in the historic Melbourne Steamship building, which is fully leased to various tenants.

On the nearby Flinders Street corner, the Sand Hill Road group is currently rebuilding the Waterside Hotel.

In Richmond, Fargo & Co operates within a historic building previously owned by the Commonwealth Bank, sold in 2014 at a price of $3.31 million.

Agents from Stonebridge are managing the inquiries about Fargo & Co, although no price has been quoted yet.

However, AVC pays an annual rent of approximately $500,000, giving insight into its probable value, with recent pub deal yields ranging between 3.2% and 6.5%.

A yield of 5% could suggest a price for Fargo & Co around $10 million.

The two-story building has a 1 am license and accommodates up to 450 patrons, while Swan Street has experienced revitalization in the past decade.

In a similar context, the Robbie Burns Hotel in Collingwood sold for $3.8 million on a yield of 4.63%.

Despite the challenges, numerous deals are still occurring throughout Melbourne’s market.

Recently, two Edwardian-style houses on Riversdale Road in Hawthorn changed hands between offshore developers for a total of $7.2 million.

Designated as a development site, the properties cover 1514 sq m of land and were sold for a land rate of $4755 per sq m, including a permit for an 18-unit apartment project.

The auction of Merri-bek Council’s old library in Glenroy garnered $4 million, surpassing its $3.2 million reserve due to interest from multiple bidders.

The building, designed in a Brutalist style by architect Harry Winbush in 1970, is located on an 1831 sq m plot at 737 Pascoe Vale Road.

Additionally, two strata-titled shops in Armadale sold for $5.15 million in an off-market transaction, originally owned by separate vendors for about 30 and 22 years respectively.

These transactions were facilitated by agents from Cushman & Wakefield, who noted that the price and yields are among the best recorded on the street.