Singapore-listed real estate investment trust Suntec REIT has agreed to acquire Grade A office building located at 21 Harris Street, Pyrmont, Sydney for A$297.0 million, according to an announcement to the stock exchange.
“We are pleased to deepen our presence in Australia, with the acquisition of 21 Harris Street. 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. Following the completion of this acquisition, approximately 14% of Suntec REIT’s assets under management will be in Australia,” said Chong Kee Hiong, Chief Executive Officer of the Manager.
“The accretive acquisition will improve earnings and distributions to unitholders with an initial net property income yield of 5.5% upon practical completion. Unitholders will enjoy income stability with growth through the long lease terms and annual rental escalations,” he added.
The Property is designed to be a campus style Grade A nine-storey commercial office building with three basement levels. The building incorporates a central atrium with interconnecting stairs on all levels. The Property is currently under construction and is expected to achieve Practical Completion in first quarter 2020. On completion, the Property is expected to have an estimated total net lettable area of 203,400 square feet (“sq ft”) which comprises 181,900 sq ft of office space and 21,500 sq ft of retail space as well as approximately 170 car park lots.
The Property is 91.2% pre-committed and will be anchored by Publicis Groupe (“Publicis”), 2 a global communications and marketing company as their Sydney headquarter. The remaining pre-committed spaces will be leased to Campfire, an international co-working operator, as well as a childcare centre and a gym operator. The Developer will provide a rent guarantee on the unlet office space for three years post practical completion. The weighted average lease expiry of the Property (including rent guarantee) is approximately 10.2 years (by NLA) with an annual rental escalation of between 3.0% to 4.0%.
Located at 21 Harris Street, Pyrmont, an inner-city fringe area 2 km west of Sydney’s Core Central Business District (“CBD”), the Property is within a 10-minute drive or 15 to 20-minute walk to Sydney CBD. The Property is next to John Street Square light rail station that links directly to Sydney Central train station within 15 minutes by light rail.