Suntec REIT has entered into a contract to acquire a 100% interest in the freehold Grade A office building at 55 Currie Street, Adelaide, South Australia for AUD148.3 million.

The twelve-storey property has an approximate net lettable area of 282,000 square feet and had undergone several rounds of refurbishment.

The property has a committed occupancy of 91.6% with the Commonwealth Government, South Australian Government, Allianz, and Data Action as the key tenants.

The property’s vendor will provide a 27-month rent guarantee for the vacant spaces.

The property has a weighted average lease expiry (WALE) of 4.4 years.

The acquisition will be funded by proceeds from the private placement in April 2019.

“Underpinned by a strong cashflow of high quality office tenants, the initial net property income yield of 8.0% will provide immediate DPU accretion upon completion of the acquisition by end August 2019”, said Chong Kee Hiong, CEO of the REIT’s manager.

“Unitholders will also enjoy income stability with growth through the annual rental escalations of between 3.50% to 3.75%”, he added.

The announcement of the acquisition of 55 Currie Street has come in the wake of another acquisition, 21 Harris Street in Pyrmont, Sydney, which was announced a few weeks prior.

Once these acquisitions complete, approximately 17% of Suntec REIT’s assets under management, and approximately 23% of the income contribution will be from Australia.

The acquisition will be funded by proceeds from the private placement in April 2019.