Renovation showcases ability and agility of private credit to support commercial development
The historic Invicta House in Melbourne’s Flinders Lane will officially open this month after a comprehensive renovation and expansion breathing new life into the 100-year-old building.
Located at 226 Flinders Lane, the commercial office building was purchased in 2021 for $37 million by ST Real Estate (STRE). The architecturally designed refurbishment of the heritage-listed building was completed by highly regarded builder, Dewcape, over the past 18 months, with real estate private credit specialist, Zagga, providing a flexible funding solution to enable the renovation through to completion.
The building retains its historic charm while creating a modern, functional commercial office space customised to attract premium tenants. It will be officially opened by the Lord Mayor of Melbourne, Nicholas Reece, on 28 May.
“This is an iconic redevelopment that creates a New York-style destination in the renowned precinct of Flinders Lane,” said Matthew Burrows, Managing Director of STRE Management.
“We wanted to both retain the historical attraction of this building while also offering A-grade-level amenities. To see this building through to completion is a major milestone and we are proud to showcase a modern look to a building that next year will be 100 years old.”
The renovation sees the addition of two more levels bringing the total net leasable area to over 5000 square metres. It also includes 2 restaurants in the basement and ground floor, a new terrace on level 7 and A-grade end of trip facilities integrated in the building.
The introduction of private credit provided additional flexibility, enabling STRE to evolve its original DA vision into a fully realised final development.
“This is a classic example of how private credit can provide flexible and agile funding – particularly for commercial projects that don’t always fit neatly within the frameworks of traditional funding,” said Tom Cranfield, Zagga Executive Director, Risk and Execution.
“Construction projects like this – a heritage-listed, B-grade building – always present challenges for traditional lenders as each development is unique. Our prior experience with STRE Management, and our ability to assess projects on their individual merits, allowed Zagga to provide funding terms that ultimately delivered positive outcomes for both the borrower and our investors.”
STRE Management turned to private credit as it planned to retain ownership of the building and preferred to wait until completion before commencing its leasing campaign, allowing the full impact of the refurbishment to be showcased.
“Working with Zagga offered us much greater flexibility when it came to funding our projects,” Mr Burrows said. “As a long-term investors, we are looking to retain Invicta House in our portfolio as we expect the demand for buildings like this to only strengthen over the medium term.”
“Zagga gave us the flexibility to fund the construction and hold back the leasing campaign until completion, giving us the opportunity to attract long term quality tenants by allowing them to experience the space firsthand.”
Enhancing Zagga’s track record of working with large developers across multiple deals, it is also currently funding the development of Swan House by STRE Management at the opposite end of Flinders Lane.
