Singapore-listed Suntec REIT has snapped up an office development in Pyrmont, a tech and media hub near Sydney’s CBD, for A$297m (US$206.9m), marking its second deal in the city.
Suntec REIT, which is managed by real assets fund manager ARA Asset Management, has agreed to buy the 21 Harris Street development from developer Milligan Group at an initial net property income yield of 5.5% upon completed, the buyer announced.
The project is scheduled for completion in the first quarter of 2020 and will offer 203,400 sq.ft. of net lettable area, made up 181,900 sq.ft. of grade A office and 21,500 sq.ft. of retail.
“The property is a strategic fit with Suntec REIT’s portfolio of high-quality assets and further enhances the stability of the REIT’s income,” said Chong Kee Hiong, CEO of the REIT’s manager, ARA Trust Management.
“Following the completion of this acquisition, approximately 14% of Suntec REIT’s assets under management will be in Australia.”
The campus-style project features a nine-storey office building with an ancillary café, childcare and gymnasium.
The complex is already 91.2% pre-let and will be anchored by communications and marketing firm Publicis Groupe, which will use the property as its Sydney headquarters.
The other tenants include co-working operator Campfire, a childcare centre and a gym operator.
Pyrmont is 2km west of Sydney’s CBD and is home to major technology media and entertainment businesses such as Google, Fairfax Media, The Star Entertainment Group, Thomson Reuters, Paramount Pictures and Village Roadshow.
The property is within walking distance to Sydney’s core CBD and is adjacent to the John Street Light Rail Station, which is a direct ride to the central train station.
The buyer noted Pyrmont was sure to benefit from the high rents and lack of suitable office space in Sydney’s CBD market.
Suntec’s other Australian assets include a commercial building at 177 Pacific Highway in Sydney, a half-stake in Melbourne’s Southgate Complex and a 50% interest in the 477 Collins Street commercial development in Melbourne.
The deal follows Blackstone’s purchase of Scentre Group’s Sydney CBD office complex for A$1.52bn (US$1.06bn) last week.
Headquartered in Singapore, ARA Asset Management has more than S$80bn of assets under management across 23 countries.