Keppel Reit, through Keppel Reit (Australia) Trust, is acquiring the three prime retail street-fronting units from Cerberos at 8 Exhibition Street in Melbourne for A$8.6 million (S$8.46 million).
Keppel Reit currently owns a 50 per cent stake in the 8 Exhibition Street office development and two retail units. With the purchase of the remaining three retail units, Keppel Reit will gain strategic control over the 35-storey freehold office building and all five retail units at 8 Exhibition Street.
The acquisition is expected to be completed in the fourth quarter of this year. It will be funded with a combination of working capital and Australian-dollar debt to provide natural hedging. At least 90 per cent of the distributable income will be hedged.
The retail units are currently 100 per cent leased to two popular and established food and beverage outlets for ten years, with options for another 30 years. Tenants at the office development include multi-national corporations such as Ernst & Young, UBS and the National Australia Bank.
Ng Hsueh Ling, chief executive officer of manager Keppel Reit Management, said: "The acquisition presents a rare opportunity for Keppel Reit to gain strategic control of the office and retail components in a freehold landmark in the heart of Melbourne's central business district. There are also fixed annual rental escalations which will provide unitholders with long-term income stability and resilience."