Grocon likely developer for Telstra’s suburban exchanges

Telstra, which on Wednesday said it was looking to sell $2 billion worth of assets, already has one likely taker for its suburban telephone exchanges – builder and developer Grocon.

Privately owned Grocon is already working with Telstra to develop residential projects over suburban exchanges in the Melbourne suburbs of Kew and Collingwood as well as in Sydney’s Manly, and has been in discussion with the telco about a wider role developing its exchange portfolio.

Telstra said in November it was considering selling real estate worth up to $1 billion as its accommodation requirements shrank due to technology, permitting an estimated 2500 telephone exchange sites – nearly half of the company’s total – to be closed or sold.

In June last year, the Victorian Civil and Administrative Tribunal gave the green light to Grocon’s planned 13-storey office development above a telephone exchange in the inner-city Melbourne suburb of Collingwood, overturning the local council’s efforts to reduce the scale of the project. The 15,000-square-metre project is due for completion in 2020.

A month later, the planning tribunal authorised the go-ahead for the company to build a residential tower on the site of the telephone exchange in Kew, in Melbourne’s eastern suburbs. Grocon took the local council on for failing to make a decision over its 11-level, $17.3 million development. While it did allow the project in its order, VCAT did reduce the permitted height by one level to 10 storeys. The 55-unit project has not yet started construction.

Grocon is also developing another exchange site in Manly with 24 apartments that is due for completion next year.

The two companies have a long and close relationship. Grocon, with partner UBS Global Asset Management, was one of two shortlisted candidates to develop and own an $800 million tower Telstra planned and then put on ice in March 2015. Dumping the project was one of the first decisions of newly appointed chief executive Andy Penn. The next year, Telstra sold the 308 Exhibition Street site to developer SP Setia for $101 million.

Source: AFR