Singapore Exchange (SGX) Mainboard-listed Suntec REIT announced that it is acquiring 100 per cent interest in an office property in Sydney for A$297.00 million ($207.99 million).
The price tag includes the purchase price of A$119.00 million ($83.33 million) and expected fees for development services of around A$178.00 million ($124.65 million).
Suntec REIT conducted the deal to acquire the freehold Grade A office building on 21, Harris Street, Pyrmont through its wholly-owned unit Suntec REIT 21 Trust.
The seller of the property, 21 Harris Street Developments Pty Ltd (HSD), will develop the office building which is slated for completion in the first quarter of 2020 (1Q2020).
The latest acquisition comes approximately two months after Suntec REIT announced plans to raise around S$150.00 million ($110.86 million) through a placement issue.
The campus-style, Grade A nine-storeyed commercial office building is estimated to have a total net lettable area (NLA) of 203,400 square feet (sq ft) comprising 181,900 sq ft of office space and 21,500 sq ft retail space.
The property is pre-committed to anchor tenant, Publicis Groupe, a global communications and marketing company, which will use it as its Sydney headquarters.
The remaining space will be leased to Campfire, an international co-working space operator, along with a childcare centre and a gym operator.
The weighted average lease expiry (WALE) of the property (including rent guarantee) is approximately 10.2 years (NLA) with an annual rental escalation of between 3-4 per cent.
The Sydney property is accessible to many parts of the central business district areas and is next to a light rail station.
ARA Trust Management (Suntec) Limited, the manager for Suntec REIT, believes that the acquisition would deepen its footprint in existing markets like Australia and improve earnings and distributions to unitholders.
The acquisition is expected to be funded by a combination of Australian debt and equity.
Shares of Suntec REIT traded one Singapore cent lower, or minus 0.52 per cent at S$1.93 per unit on July 01, 2019 following the announcement.