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.