Singapore-listed CapitaLand Integrated Commercial Trust (CICT) has entered the Australian market with the purchase of two grade-A office buildings in Sydney for $330.7 million.
The deal comprises the 24-storey building at 66 Goulburn Street, Sydney and the 23-level property at 100 Arthur Street, North Sydney.
CICT acquired the properties from CLA Real Estate Holdings through a unit sale agreement via two trusts that held the assets.
“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 trust’s manager.
“In particular, Sydney is witnessing major development and rejuvenation initiatives in line with its government-backed ambition to become a leading innovation and technology hub in the region.”
Completed in 2004, the Goulburn Street building has 22,887 sqm of net lettable area and was acquired on a net property income yield of 5.4%.
The property has 25 tenants and a 95.3% committed occupancy rate, reflecting a weighted average lease expiry of 2.7 years.
The Arthur Street property has 27,082 sqm of NLA and recently underwent a major $17 million refurbishment of the lobby, entrance foyer and other areas. It was purchased on a NPI yield of 5.1%.
The building has 16 tenants and a 62.3% committed occupancy rate, with a WALE of 4 years.
Both assets have achieved sustainability ratings under the National Australian Built Environment Rating System (NABERS), with 66 Goulburn Street rated 5.5-Star NABERS Energy, and 100 Arthur Street rated 4-Star NABERS Energy.
“We are also pleased to be investing in Sydney, which is striving to become a climate leader under its Sustainable Sydney 2030 community plan,” Teo said.
“The addition of the NABERS-rated properties complements CICT’s 100% green rated portfolio and supports the Trust’s sustainability commitment.”
The deal comes just weeks after the trust sold a half stake in the Singapore office at One George Street for S$640.7 million.
Tony Tan, CEO of the trust’s manager, said the Australian deal enhanced their portfolio resilience with further geographical and income diversification.
“It enables the recycling of capital from the divestment of our 50% interest in One George Street, at an exit yield of 3.17% per annum, into two higher-yielding office assets in Australia, at a combined implied net property income yield of 5.2% per annum,” he said.
“Riding on the post-lockdown recovery of Australia’s economy, we expect to ramp up occupancy and drive rental growth of the two assets through proactive lease management.”
The latest deal takes CICT’s total portfolio to S$22.4 billion and increases its overseas exposure to 7% from 4%.
CICT plans to increase its portfolio’s overseas exposure up to as much as 20%, while remaining predominantly focused on the Singaporean market.
Recent office deals include Keppel REIT’s purchase of a grade-A office development in North Sydney for $327.7 million and Dexus’ sale of a Sydney CBD office to Charter Hall’s prime office fund for $385 million.
Last month, ISPT bought the headquarters of Victoria’s Country Fire Authority in Melbourne’s eastern suburbs for $35.8 million, while Cromwell Property Group bought a 24-storey office building in Brisbane’s CBD for $184.7 million.
