Singapore-headquartered Keppel REIT announced Sunday that it had bought the Pinnacle Office Park in Sydney from Australian developer, Goodman Group, for A$306 million.
Prior to the acquisition, the facility had been held by Goodman Australia Industrial Trust No. 3.
The property offers grade A office space in Macquarie Park, a key metropolitan office market in Sydney. With a total net lettable area of 35,132 square metres, the property consists of three office buildings on a commercial land parcel of approximately 2.2 hectares.
Under the contract for sale, Goodmans have offered a rental guarantee of 12 months post-completion. As of 30 June 2020, the property was 96.3% occupied with a WALE of 4.8 years. Key tenants include ASX-listed Aristocrat Technologies, Konica Minolta and Coles Supermarkets. The existing leases have fixed annual rental escalations of between 3% and 4%.
Mr Paul Tham, CEO of Keppel REIT, said, “With an initial net property income yield of 5.25%, the acquisition of Pinnacle Office Park is in line with our active portfolio optimisation strategy to improve Keppel REIT’s income resilience and portfolio yield. The expansion into the Grade A metropolitan office space strengthens our portfolio as it complements our prime CBD offering.”
Post-acquisition, Keppel REIT’s assets under management will grow to S$8.2 billion across 10 properties in Singapore (77.0%), Australia (19.4%) and South Korea (3.6%).
Mr Tham continued, “In the wake of COVID-19, we believe demand in Australia for quality and well-networked metropolitan locations, such as Macquarie Park, will increase as more companies seek cost-effective solutions or adopt a hub-and-spoke business model for office locations. The acquisition of Pinnacle Office Park allows Keppel REIT to gain exposure to this key metropolitan office market.”