The Straits Trading Company acquires two freehold office buildings in Melbourne

THE Straits Trading Company is acquiring two freehold office buildings in Australia for about A$150 million (S$143.9 million) through its wholly-owned unit, Straits Real Estate (SRE).

The transaction involves 1010 La Trobe Street, 192 Harbour Esplanade, and 163 parking bays in Melbourne - all located in Docklands, which is next to the city's central business district.

1010 La Trobe is a 9-storey, freehold Grade-A office building with net lettable area (NLA) of 15,354 square metres (sq m). It is now fully occupied, with key tenants being the Department of Home Affairs and Victoria Rail Track, a state-owned enterprise that owns all rail and tram lines, land and rail infrastructure of the state of Victoria.

192 Harbour Esplanade is a freehold 5-storey Grade-A office building with NLA totalling 5,779 sq m. It is adjacent to 1010 La Trobe and majority-occupied by government-owned enterprise National Broadband Network Company, which manages Australia's national wholesale broadband network.

In a filing to the Singapore Exchange on Friday, Straits Trading said that both properties are supported by strong transport nodes, with a tram station providing quick access to the CBD. The properties are a short walk to the Southern Cross Station, Melbourne's hub for regional rail lines.

It added: "The transaction is in line with the group's business expansion plans and is reflective of SRE's confidence in post-Covid recovery of Melbourne commercial real estate.

"In addition to strong recurring income, the properties present value-add opportunities, including a planned upgrading at 1010 La Trobe, which will include a new end-of-trip facility, redesigned ground floor lobby and refurbishment of communal facilities on each floor."

The transaction will be funded by internal resources and bank borrowings.

The company had previously outlined to shareholders its strategy of redeploying capital from its existing property portfolio of high-quality, but low yielding investment properties into potentially higher-return, real estate opportunities through SRE.

SRE's assets under management (AUM) is expected to grow from about S$2.3 billion as at December last year to S$3.5 billion over the next few years, Straits Trading said.

Desmond Tang, chief executive of SRE, said that the business will continue to seek opportunities for enhanced returns in key markets.

The counter closed at S$3.27, down three cents or 0.91 per cent, on Friday.