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Suntec Reit acquires Adelaide office building
SUNTEC Reit has expanded its presence in Australia after acquiring the entire stake in a freehold Grade A office building in Adelaide, South Australia for A$148.3 million (S$141.4 million). This is its first foray into Adelaide.
ARA Trust Management (Suntec), manager of the real estate investment trust (Reit), said in a media statement issued on Monday that the 12-storey property has an approximate net lettable area of 282,000 square feet and had undergone several rounds of refurbishment.
In the recent asset enhancement exercise completed in 2018, major mechanical and electrical plant and equipment that were upgraded included the lift system, chillers and building management system. Solar panels were also installed to improve the sustainability of the building. A 4.5-star energy rating was obtained after the upgrading. In addition, 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 per cent 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 of 4.4 years.
Chong Kee Hiong, CEO of the manager, said:"We are pleased to expand our footprint in Australia with the acquisition of 55 Currie Street, a Grade A office building situated in the heart of Adelaide's central business district. Underpinned by a strong cash flow of high quality office tenants, the initial net property income yield of 8 per cent will provide immediate DPU (distribution per unit) accretion upon completion of the acquisition by end August 2019. Unitholders will also enjoy income stability with growth through the annual rental escalations of between 3.5 per cent to 3.75 per cent."
The building is located in the western core of Adelaide's central business district and is a five-minute walk to a railway station.
Following Suntec Reit's recent acquisition, together with the completion of the existing projects under development and the acquisition of a Grade A office building in Sydney announced a fortnight ago, approximately 17 per cent of Suntec Reit's assets under management and approximately 23 per cent of the income contribution will be from Australia.
Suntec Reit holds office and retail assets that include the Suntec City retail mall and convention centre. Its units closed flat at S$1.94 on Monday.