Soilbuild REIT plans to acquire Adelaide property for around A$134 million

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Soilbuild Business Space REIT plans to acquire a property in Adelaide, Australia, from 25 Grenfell Street Adelaide Real Estate Netherlands for A$134.22 million, or around S$127.5 million, the REIT said in a filing to SGX Wednesday.

“We are delighted to expand our footprint in Australia with the acquisition of 25 Grenfell Street, an iconic Grade A freehold office building situated in the heart of Adelaide’s Central Business District,” Roy Teo, CEO of SB REIT Management, the REIT’s manager, said in the statement.

“Underpinned by a strong cashflow of high-quality office tenants, the acquisition will further enhance the quality of Soilbuild REIT’s portfolio and provide income and geographical diversification,” Teo said.

The deal is expected to be funded via a combination of loans drawn from debt facilities and the proceeds of a preferential offering of new units, Soilbuild REIT said. The book closing for the preferential offering is expected to be 29 August, the REIT said.

The REIT said South Australia, where Adelaide is located, is in the early stages of large infrastructure investments expected to generate significant long-term employment, the filing said, adding the city is the second-most liquid CBD office market in Australia and has vacancy rates of less than 5 percent.

The property at 25 Grenfell Street has a tenant base including government agencies, commercial service providers and co-working operators, the filing said, adding the committed occupancy was at 88.4 percent. The building has 22 levels of office floors, above two retail floors, 30 car park spaces and end-of-trip facilities, the REIT said.

The net property income yield of the property is expected to be around 7.67 percent, before including transaction costs, and 7.25 percent, after including them, the REIT said, estimating the acquisition would boost the portfolio net property income yield to 5.93 percent from 5.79 percent.

The deal is expected to be completed in the fourth quarter of this year, the filing said.

After the deal’s completion, Soilbuild REIT will own 11 properties in Singapore and three in Australia, the filing said.

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