CapitaLand Integrated Commercial Trust's first asset in Australia. (Photo: CapitaLand Integrated Commercial Trust)

CapitaLand Integrated Commercial Trust (CICT) has announced its first-ever acquisitions in Australia.

The REIT is acquiring 66 Goulburn Street and 100 Arthur Street, two Grade A office buildings in the central business districts (CBD) of Sydney, Australia.

66 Goulburn Street is a 24-storey Grade A office building with ancillary retail space and a basement car park, while 100 Arthur Street is a 23-storey Grade A office building with ancillary retail space sited in North Sydney CBD.

It is the REIT’s entry into its second overseas developed market after Germany.

The estimated aggregate purchase consideration is AUD330.7 million (SGD330.7 million).

“Despite the evolving pandemic situation, this 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”, said Teo Swee Lian, Chairman of the REIT’s manager.

“The acquisition will allow CICT to gain a foothold in Australia, one of Asia Pacific’s largest developed markets, and open CICT to more opportunities to drive growth”, she added.

On a pro forma annualised 1H 2021 distribution per unit (DPU) basis, assuming that CICT owns the two Sydney assets since 1 January 2021, the pro forma DPU accretion is expected to be 3.1%.

CICT’s pro forma adjusted net asset value per unit would be uplifted by 2.6% to SGD2.07.

The acquisition is expected to be partially funded with Australian-dollar-denominated bank loans to achieve natural hedging.

The net distributions from the two trusts holding the assets are also expected to be hedged.

Post-acquisition, CICT’s pro forma aggregate leverage is expected to be approximately 41%.

CICT was last done on the SGX at SGD2.07, which presently implies a distribution yield of 5.0% according to data on the Singapore REITs table.

By Shariffa Al-Habshee

Shariffa joined REITsWeek in 2017, and monitors Asia-Pacific REITs for the publication.