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Suntec Reit forms joint venture to acquire stake in Melbourne property
SUNTEC Real Estate Investment Trust (Suntec Reit) has agreed to purchase a 50 per cent interest in Southgate Complex for A$289 million (S$296.2 million), said its manager ARA Trust Management (Suntec) Limited.
The agreement was inked through Southgate Trust, in which Suntec Reit holds a 50 per cent indirect interest. Suntec Reit is acquiring the property from Dexus Southgate Trust.
Located alongside the Yarra River in the Southbank arts and leisure precinct of Melbourne, Australia, Southgate Complex is a freehold waterfront integrated development comprising two Grade A office towers, a three-storey retail podium and a car park with 1,026 lots. The office and retail components form about 87 per cent and 13 per cent of the total net lettable area (NLA) respectively.
The property is directly opposite Flinders Street train station and within close proximity to Melbourne's city rail loop. It has a total NLA of 820,324 square feet and is leased to well-established tenants such as IBM, The Herald and Weekly Times, Commonwealth of Australia, APT, Dairy Australia, City Road Melbourne and LinkedIn. The committed occupancy was 88 per cent as at Aug 5 with a weighted lease expiry of about 4.6 years. The annual rental escalations for the office leases are predominantly 3-4 per cent.
Separately, put and call option agreements have been entered into with Dexus where the remaining 50 per cent interest in Southgate Complex will be acquired for the same purchase consideration of A$289 million.