UPDATE: Suntec REIT enters deal to acquire Sydney office building for A$297 million

Suntec City mall in SingaporeSuntec City mall in Singapore

This article was originally published Monday, 1 July 2019 at 7:59 A.M. SGT; it has since been updated.

Suntec REIT has entered a deal to acquire a Grade A office building under development in Sydney for A$297 million (S$281.93 million or US$208.58 million), ARA Trust Management (Suntec), the REIT’s manager, said in a filing to SGX before the market open Monday.

The nine-storey building, located at 21 Harris Street, Pymont, has a pre-committed occupancy of 91.2 percent while still nine months from practical completion, the filing said.

“The property is a strategic fit with Suntec REIT’s portfolio of high quality assets and further enhances the stability of the REIT’s income,” Chong Kee Hiong, CEO of the REIT manager, said in the statement. “Following the completion of this acquisition, approximately 14 percent of Suntec REIT’s assets under management will be in Australia [up from 11 percent].”

The deal will be funded with Australian dollar bank borrowings, which offer a natural currency hedge, and with equity, Suntec REIT’s manager said.

The acquisition is expected to be completed in the first quarter of 2020, when the project is expected to reach completion.

The project is designed “campus style,” and includes an ancillary cafe, childcare, gym and basement carpark, the filing said. Of the 203,400 square feet of net lettable area, around 181,900 square feet is office space, with the remainder retail space.

Publicis Group, a global communications and marketing company, will be an anchor tenant, with other tenants including co-working operator Campfire, the filing said. The lease terms are long, with an average lease of 10.2 years and include annual rental increases of 3 percent to 4 percent.

The Pyrmont area is located two kilometers west of Sydney’s central business district, and has become a technology and media hub, Suntec REIT’s manager said. The offices of Google, Fairfax Media, Thomson Reuters and Paramount Pictures are located within 500 meters of the building, the filing said.

 

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