Added to that, the real estate was attractive on its own merits, whether viewed through its existing use or, over the longer-term, for use as residential space, he said.
When the sum of these two parts are combined, the deal metrics looked quite compelling to us, Mr Picone said.
Journey Beyond has a strong track record of operating a successful business out of the property and providing a great experience to its visitors.
A glass cube at the Skydeck offers sweeping views over Melbourne.
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.
Under the deal, the new landlord collects about $3.3 million in commencing rent, with fixed annual rental increases built into the rental contract.
The tourism sector has been hit hard by the pandemic over the past 18 months, with the international border still closed and state borders intermittently shut and lockdowns imposed on the capitals. But the disruption has also fired up the appetite for domestic tourism from locals who have nowhere else to go.
Journey Beyond runs a stable of big-name brands in the tourism sector across the country including The Ghan, Indian Pacific, Outback Spirit Tours and Horizontal Falls Seaplane Adventures.
Its chief executive, Chris Tallent, said: 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 transaction was brokered by JLLs Josh Rutman, MingXuan Li and Peter Harper while Charter Keck Cramers Andrew Grant acted as Journey Beyonds transaction manager.
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, Mr Rutman said.
The deal represents one of the largest ownership strata titled sales in Melbourne and will set a record rate per square metre for the city’s commercial real estate.
