Suntec REIT buys Australian freehold Grade A office for $141.51m

The 12-storey property has an NLA of 282,000 sqft and a committed occupancy of 91.6%.

Suntec Real Estate Investment Trust (Suntec REIT), through its sub trust Suntec REIT 55 Trust, is set to acquire a 100% interest in the freehold Grade A office building in Adelaide, South Australia for $141.51m (A$148.3m), an announcement revealed.

The 12-storey property at 55 Currie Street has an approximate net lettable area (NLA) of 282,000 sqft and had undergone refurbishment, which includes major mechanical and electrical plant and equipment upgrades to its lift system, chillers and building management systems in 2018. Solar panels were also installed, whilst end-of-trip facilities were installed together with the upgrading of the central atrium, lift lobbies and toilets.

The property has a committed occupancy of 91.6%, with the Commonwealth Government, South Australian Government, Allianz and Data Action as the key tenants. In addition, the vendor will provide a 27-month rent guarantee for the vacant spaces. The property has a weighted average lease expiry (WALE) of 4.4 years.

According to Suntec REIT, the acquisition of 55 Currie Street will further enhance the stability of the REIT’s income. “Together with the completion of the existing projects under development and the recent acquisition of 21 Harris Street in Pyrmont, Sydney, approximately 17% of Suntec REIT’s assets under management (AUM) and approximately 23% of the income contribution will be from Australia,” the firm highlighted.

An initial net property income (NPI) yield of approximately 8%, including rent guarantee, is expected to provide immediate accretion upon completion of the acquisition. It is also forecasted to provide income growth through rent escalation between 3.5 and 3.75%.

The acquisition will be funded by proceeds from the firm’s private placement in April 2019.