The property market jury has considered their verdict – green buildings sell at a premium, a big premium! One of Sustainable Melbourne Fund’s investments, a $500,000 loan that helped fund a $1.27 million project in collaboration with Drapac Group on the EPA building at 200 Victoria Street has delivered Impact Investment Group (IIG) with a $10 million or 11.8% premium in six months.
In 2008 Sustainable Melbourne Fund invested into the building, helping to fund a $1.27 million dollar Environmental Sustainable Design (ESD) retrofit that included tenant lighting upgrades, rain water harvest, a co-generation plant and an underfloor air distribution network. Mostly though, the building is known for its eye-catching green façade facing Victoria Street.
According to fifthestate.com.au, when Impact Investment Group bought the building six months for $33.5 million they believed the then owners had misread the demand for sustainable buildings. At the time the building was 70% leased and Impact Investment Group worked hard to lease the remaining space, ultimately securing the University of Melbourne’s Trinity College as a 10 year tenant for the remaining vacant space. Having secured a long term, high quality tenant, the Australian Unity Diversified Property Fund, a fund mandated to provide solid income returns to their investors, saw excellent income returns from the building and offered IIG $42.3 million, or 11.8% premium to a recent valuation. Settlement is expected in October 2014.
This is a signature example of the increasing tenant demand and the financial validity of sustainable commercial buildings. If you’re considering upgrades to your building and are keen to the finance options of an environmental upgrade please contact Michael Lambden on 9658 8740 or michael.lambden@sustainableaustraliafund.com.au.
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