Coburg Drive-In sold for $12.5 million to Charter Hall

Big-ticket industrial opportunity in Melbourne’s inner north draws strong interest during JLL sale campaign

November 28, 2018

MELBOURNE – Melbourne’s Coburg Drive-In has been sold for $12.5 million. But the big screens at the 8.1ha Coburg North site are set to continue entertaining movie fans for years to come. 

As announced by selling agents JLL when the property was offered for sale in September 2018, vendor Village Roadshow Theatres Pty Ltd will lease back the site for an initial 10-year term on a triple-net basis.

JLL’s Tony Iuliano and Adrian Rowse negotiated the deal on behalf of Charter Keck Cramer, which acted as property and transaction adviser to Village Roadshow. The initial yield is 4.8 per cent.

Charter Hall is the purchaser of the site, which represents the last essentially undeveloped parcel of significant scale in Melbourne’s inner north, Mr Iuliano said. 

“Interest during the campaign was wide ranging and included private investors from around Australia, land-bankers and developers, and institutional investors,” he said.

“The secure income stream provided by Village and fixed annual 3 per cent rental reviews, together with the high underlying land value of the site, were the major drawcards.”

Charter Hall Managing Director and CEO David Harrison said: “This unique mid-ring infill investment opportunity has been acquired as one of the seed assets for a new wholesale partnership.

“It is rare in the real estate sector where the underlying land value has a higher value than the improved value. Clearly the long 10-year leaseback to Village with fixed reviews of 3 per cent provides attractive investment characteristics for our investors and provides resilient accretive cashflow while our platform unlocks potential higher and better use options in the longer term.”

Located at 155 Newlands Road, Coburg North, the drive-in has been operating since 1965 and has three screens, allowing different movies to be screened concurrently.

At 33m wide each and overlooking a viewing area of 36,000sqm, the screens are considered the biggest in the southern hemisphere. 

A single-level retro-style diner and children’s playground are located centrally and the drive-in's ticket booth — topped by a vintage car — is a local landmark.

Mr Rowse said the Industrial 1-zoned site had excellent connectivity to major road infrastructure. 

“The high underlying value of the site pushed the sale price beyond initial expectations,” he said.  “The property offers a range of future development options.”

JLL’s Director, Research – Australia Sass J-Baleh said the North industrial Precinct had experienced strong levels of take-up in the past few years – above 100,000sqm annually since 2015 and representing around 20 per cent of total floorspace demand in Melbourne.

“We have seen a huge interest for industrial land in Melbourne’s north over 2018, and land values for 2-5ha sites in this precinct have recorded a year-on-year growth of 32 per cent,” Ms J-Baleh said.

“As the availability of serviced industrial land in the south-east and west diminishes, we expect the north precinct to gain further development traction in the short to medium run – particularly since existing motorway connection and accessibility in this region is relatively strong.”

Coburg Drive-In is about 11km from the Melbourne CBD, 13km from Port of Melbourne and 17km from Melbourne Airport.

Public tenders for 155 Newlands Road, Coburg North, closed in October 2018. 

Want more? Talk to the team