CapitaLand Integrated Commercial Trust to buy two Sydney office buildings for A$331M

CapitaLand Integrated Commercial Trust (CICT) entered a deal to acquire the 66 Goulburn Street property in Sydney, Australia, in December 2021. Credit: CapitaLandCapitaLand Integrated Commercial Trust (CICT) entered a deal to acquire the 66 Goulburn Street property in Sydney, Australia, in December 2021. Credit: CapitaLand

CapitaLand Integrated Commercial Trust (CICT) has entered a deal to acquire two Grade-A office buildings in Sydney, Australia, from CapitaLand Real Estate Holdings (CLA) for A$330.7 million (S$330.7 million), the trust said in a filing to SGX Friday.

The deal pricing considered the properties’ aggregate property value of A$672 million, taking into account adjustments and the liabilities associated with the properties, including external bank loans, the filing said. CICT said its total acquisition outlay is expected to be around A$381 million, including the consideration, other expenses and acquisition fees.

On a pro forma basis, assuming the properties had been acquired on 1 January 2021, the distribution per unit (DPU) accretion is expected to be 3.1 percent, CICT estimated.

The assets are estimated to have a combined implied net property income yield of 5.2 percent a year, the filing said.

The acquisitions mark CICT’s first foray into Australia, and only its second overseas developed market after Germany, the filing said. CICT is targeting having up to 20 percent of its property portfolio value in overseas developed markets, while keeping its main focus on Singapore, the filing said.

“Despite the evolving pandemic situation, this is an opportune time for CICT to enter Australia, given its attractive office market underpinned by healthy economic fundamentals in the medium to long term, and expected recovery as the country emerges from Covid-19 restrictions,” Teo Swee Lian, chairman of CICT’s manager, said in the statement.

“In particular, Sydney is witnessing major development and rejuvenation initiatives in line with its government-backed ambition to become a leading innovation and technology hub in the region. The acquisition will allow CICT to gain a foothold in Australia, one of Asia Pacific’s largest developed markets,” she added.

The property at 66 Goulburn Street, in Sydney’s central business district (CBD), is a 24-storey building with ancillary retail space and a basement car park, CICT said, noting the building has energy-saving features.

The property at 100 Arthur Street, located in North Sydney CBD, is a 23-storey building with ancillary retail space, CICT said, noting the building underwent a major A$17 million refurbishment over 2019-2021, CICT said.

The seller of 100 Arthur Street will include a A$7 million rental guarantee as leasing efforts on the property are being ramped up, the filing said.

Both properties are located within easy access of public transport, the fling said.

Tony Tan, CEO of CICT’s manager, said the acquisition allows the trust to recycle the capital from its divestment of its 50 percent interest in the One George Street property.

CLA is a controlling shareholder of CapitaLand Investment, which wholly owns CapitaLand Integrated Commercial Trust Management (CICTML), which is CICT’s manager, making the deal an interested-party transaction, the filing said.

The deal is expected to be completed in the first quarter of 2022, CICT said.

Read more details about the properties.