Keppel REIT to snap up 50% stake in Melbourne office property

The aggregate consideration is around $362.4m.

Keppel REIT is said to acquire 50% stake in Melbourne office property.

According to RHB, it has signed an agreement with Australia Postal Corporation (APC) to snap up a premium office tower to be developed at 311 Spencer Street, Melbourne, Australia.

The aggregate consideration for the acquisition is around $362m.

The remaining 50% stake in the office tower will be held by Cbus Property Pty Ltd, one of Australia’s leading property investors and developers. The Grade-A office tower has an estimated NLA of 717,000 sq ft across 42 levels. Construction of the office building is to commence in 3Q17 and is expected to be completed by 4Q19.

"Post completion, the office building would be fully leased to the Assistant Treasurer for the State of Victoria on a 30-year net lease. This would then be one of the longest lease tenures under K-REIT’s portfolio, extending K-REIT’s weighted average lease to expiry (WALE) from the current ~6 years to ~9 years (assuming lease commencement from 1 Jan 2016). In addition, the property would provide stable income, with expected average rental yield of 6.4% pa over the first 15 years," RHB said.

After the acquisition, Australia would account for 15% of assets under management and 22.8% of Keppel REIT's income.