Suntec REIT acquires 50% interest in 477 Collins Street

The interest in the Australian property costs $448.9m.

Suntec Real Estate Investment Trust (Suntec REIT) acquired a 50% interest in Olderfleet at 477 Collins Street, Australia for $448.9m (A$414.17m).

According to DBS, the 40-storey freehold property will have a total NLA of 58,000 sqm. upon completion in 2020. It will have 56,000 sqm. of office space and 2,000 sqm. of retail space.

Suntec REIT will co-own the property with developer Mirvac Group.

Olderfleet is within Melbourne's business street, near the Southern Cross Station.

Deloitte has reserved 39.1% of the building for its headquarters. The company has signed a 12-year lease that will take up 22,000 sqm. of space and 12 floors.

"The building also provides exposure to a market where rents are projected to increase, given favourable demand and supply outlook," DBS said.

Mirvac will provide a rental guarantee on any unlet space for the first five years.

DBS said the initial yield is 4.8%, with annual rental escalation within 3.5% to 3.8%.

"This appears fair in comparison to recent transactions in Melbourne of around the high 4% to 5% yield level," DBS said.