SINGAPORE (THE BUSINESS TIMES) – CapitaLand Integrated Commercial Trust’s (CICT) indirectly wholly-owned subsidiary has agreed to acquire two Grade A office buildings in Sydney, Australia, for A$330.7 million ($320.2 million).
This would mark CICT’s first inroad into Australia, its second overseas developed market after Germany, the real estate investment trust’s (Reit) manager said in a bourse filing on Friday (Dec 3).
CICT’s total acquisition outlay is about A$381 million, subject to completion adjustments.
The acquisition is expected to be completed in the first quarter of 2022. It would then raise CICT’s overall portfolio property value to $22.4 billion and its overseas portfolio exposure would rise to 7 per cent, from 4 per cent (by portfolio property value).
Assuming the transaction was completed on Jan 1, the distribution per unit after the acquisition would be 10.54 cents, from 10.23 cents, according to pro forma estimates.
The two buildings are located in Sydney’s central business district within easy access of public transport and amenities.
Tony Tan, the chief executive officer of the manager, said the acquisition enables CICT to recycle capital from the divestment of its 50 per cent interest in One George Street, at an exit yield of 3.17 per cent per annum, into two higher-yielding office assets at a combined implied net property income yield of 5.2 per cent per annum.
Teo Swee Lian, chairman of the manager, said it is an opportune time for CICT to enter Australia given its “attractive office market underpinned by healthy economic fundamentals in the medium to long term, and expected recovery as the country emerges from Covid-19 restrictions”.
She noted that Sydney is witnessing major development and rejuvenation initiatives in line with its government-backed ambition to become a leading innovation and technology hub in the region.
“The acquisition will allow CICT to gain a foothold in Australia, one of Asia Pacific’s largest developed markets, and opens CICT to more opportunities to drive growth.”
The first property, 66 Goulburn Street, is a 24-storey Grade A office building with ancillary retail space and a basement car park.
It is a leasehold property with approximately 95 years remaining until Aug 16, 2116, and has a total net lettable area of 22,887 square metres (sqm) – comprising 22,630 sqm of office space and 257 sqm of retail space.
The property has a committed occupancy rate of 95.3 per cent and a weighted average lease expiry (WALE) of 2.7 years as at Sept 30.
The second property, 100 Arthur Street, is a 23-storey freehold Grade A office tower with ancillary retail space. It has a total net lettable area of 27,082 sq m.
The property has a committed occupancy rate of 62.3 per cent and WALE of four years as at Sept 30.
The vendor, Acacia Commercial Investment Trust, will provide a rental guarantee of A$7 million for 100 Arthur Street as leasing efforts for the property are being ramped up.
Units of CICT were down three cents, or 1.45 per cent, at $2.04 at midday on Friday.