Singapore office landlord Keppel REIT.Singapore office landlord Keppel REIT.

Singapore-listed office REIT, Keppel REIT (SGX:K71U), announced on 6 September that is acquiring the three remaining retail street-fronting units at 8 Exhibition Street in Melbourne, Australia for AUD8.6 million (SGD8.6 million).

The REIT currently owns a 50% stake in the 8 Exhibition Street office development and two retail units. “The addition of the three remaining retail units will provide Keppel REIT strategic control over the 35-storey freehold office building and all five retail units at 8 Exhibition Street”, it said.

The units are currently 100% occupied and is being leased to two F&B outlets for 10 years with options for another 30 years. The outlets’ service area includes the office block that counts multinational corporations such as Ernst & Young, UBS and the National Australia Bank as some of its tenants.

"The acquisition presents a rare opportunity for Keppel REIT to gain strategic control of the office and retail components in a freehold landmark in the heart of Melbourne’s central business district”, said Ng Hsueh Ling, CEO of the REIT’s manager.

"The three commercial retail units have a 10-year lease with options for another 30 years. There are also fixed annual rental escalations which will provide unitholders with long-term income stability and resilience”, Ng added.

The acquisition is expected to be completed in the fourth quarter of 2015. It will be funded with a combination of working capital and Australian-dollar debt to provide natural hedging, and at least 90% of the distributable income will be hedged, said the REIT.

Units of Keppel REIT are currently listed on the Singapore Exchange at SGD0.945.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.