Suntec REIT buys Australian Grade A office for $281.54m

The property has a net lettable area (NLA) of approximately 203,400 sqft.

Suntec Real Estate investment trust’s (Suntec REIT) wholly-owned sub trust, Suntec REIT 21 Trust, has entered into agreements to acquire a 100% interest in the freehold Grade A office building located at Pyrmont, Sydney for $281.54m (A$297m), an announcement revealed.

The buy, said to be Suntec REIT’s second acquisition in Sydney, will result in approximately 14% of the REIT’s assets under management (AUM) being located in Australia.

Also read: Suntec REIT acquires 50% interest in 477 Collins Street

Located at 21 Harris Street, the site is being developed into acampus style, nine-storey Grade A office building with ancillary café, childcare, gymnasium, basement carpark and end-of-trip facilities. The property has a net lettable area (NLA) of approximately 203,400 sqft comprising 181,900 sqft of office space and 21,500 sq ft of retail space.

21 Harris Street has achieved a pre-committed occupancy of 91.2% nine months ahead of practical completion. The property will be anchored by Publicis Groupe, a global communications and marketing company, as their Sydney headquarters. The remaining precommitted spaces has been leased to Campfire, an international co-working operator, as well as a childcare centre and a gym operator.

“The development will continue to be undertaken by the vendor, Milligan Group, a residential and commercial space developer,” Suntec REIT noted. In addition, the developer will provide a rent guarantee on the unlet office space for three years post practical completion.

“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,” Chong Kee Hiong, CEO of ARA Trust Management, highlighted.

The acquisition is expected to be completed in Q1 2020 when the property achieves practical completion.