Fund manager Charter Hall has swooped on one of Melbourne's cultural institutions, Village Roadshow's Coburg drive-in in the city's inner north, in a $12.5 million deal.
The 8.2-hectare metre site on Newlands Road represents a prime redevelopment opportunity for Charter Hall although the show is not over quite yet for the movie buffs at the open-air cinema.
Under the deal, struck on a 4.8 per cent yield, Village Roadshow Theatres, a subsidiary of ASX-listed Village Roadshow, will lease back the site for an initial 10-year term.
Charter Hall managing director David Harrison described the drive-in site as a "mid-ring infill investment opportunity" that had 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," he said.
"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 cash flow while our platform unlocks potential higher and better use options in the longer term."
JLL's Tony Iuliano and Adrian Rowse brokered the deal on behalf of Charter Keck Cramer, which acted as property and transaction adviser to Village Roadshow.
Mr Iuliano said the opportunity garnered interest from private investors, land-bankers and developers, along with institutional investors.
The landmark site has been used as a drive-in cinema since November 1965 and is still popular today. It is among the last of its kind in the state.
It comprises three screens, each of them 33 metres wide - thought to be the largest in the southern hemisphere - and overlooking an asphalt viewing area of 36,000 square metres.
At 33 metres wide each, the three screens are thought to be the biggest in the southern hemisphere.
The Coburg transaction comes after Village Roadshow sold its Gold Coast theme park hub – home to Movie World and Wet'n'Wild – to super fund LGIAsuper for $100 million last year.
That acquisition, through private equity firm Altis Property Partners, was also in the form of a sale-and-leaseback deal. The initial lease term is 30 years with Village to pay annual starting rent of $6.2 million.
by Jessica Hammoud in Latest News
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