Singapore Exchange (SGX)-listed Keppel REIT is acquiring an effective 50% interest in a Sydney office tower known as 255 George Street.

The stake in the freehold Grade A office building is being acquired for AUD363.8 million, the REIT disclosed in a statement on 1 April.

A remaining 50% interest in the property will continue to be held by the seller, Mirvac Funds Management Australia Limited, as trustee of Mirvac Wholesale Office Fund I.

For the transaction, JLL and Cushman & Wakefield acted as advisors to Mirvac Funds Management Australia Limited.

The building has a total net lettable area (NLA) of 38,996.8 square metres comprising 38,805 square metres of office space and 191.8 square metres of retail space, as well as 188 car park lots.

It is located along the prime end of George Street, within Sydney CBD's Core Precinct, said the REIT.

The asset’s committed occupancy rate is at 93% with a WALE of 6.8 years and no significant lease expiries from 2024 to 2028.

255 George Street has been described as a property with a diversified tenant base from various industries, including the government, financial institutions, healthcare and information technology.

The key tenants include the Australian Taxation Office and the Bank of Queensland.

255 George Street is expected to generate a first-year yield that exceeds 6.0% and DPU accretion of 1.4% on a pro forma basis, said Keppel REIT.

The seller will be providing rent guarantee on existing vacancies and potential expiries.

Post-acquisition, Keppel REIT’s portfolio will be worth approximately SGD9.6 billion across 13 properties in Singapore (76.5% of AUM), Australia (19.3% of AUM), South Korea (3.3% of AUM) and Japan (0.9% of AUM).

The proportion of freehold assets in its portfolio will increase from 33.2% to 36.4% (by NLA).

Keppel REIT was last done on the SGX at SGD0.87, which presently implies a distribution yield of 6.67% 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.