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Keppel REIT, through Keppel REIT (Australia) Trust, is acquiring from Cerberos the three remaining prime retail street-fronting units at 8 Exhibition Street in Melbourne for A$8.6 million (S$8.6 million).
Keppel REIT currently owns a 50 percent stake in the 8 Exhibition Street office development and two retail units. The acquisition of the three remaining retail units will enable Keppel REIT to gain strategic control over the 35-storey freehold office building as well as all five retail units within 8 Exhibition Street.
At approximately 5,500 sq ft, the three units enjoy prominent frontages along the main thoroughfares of Exhibition Street and Flinders Street, and are part of the historic Herald and Weekly Times building, which also includes the 8 Exhibition Street office development.
The retail units are presently 100 percent leased to two popular F&B outlets for 10 years, with options for another 30 years.
Meanwhile, tenants of the office building include multinational firms such as National Australia Bank, UBS and Ernst &Young.
“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, Chief Executive Officer of Keppel REIT Management Limited.
“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,” she added.
Notably, the distribution per unit accretive acquisition is set to be completed in Q4 2015. It will be financed with a combination of Australian dollar debt and working capital to provide natural hedging, with at least 90 percent of the distributable income hedged.
Image source: Keppel REIT
Nikki De Guzman, Editor at CommercialGuru, edited this story. To contact her about this or other stories email nikki@propertyguru.com.sg
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