CapitaLand Integrated Commercial Trust (CICT ) has finalised an acquisition from related company CLA Real Estate Holdings for 66 Goulburn Street and 100 Arthur Street based on a total value of $672m.
This marks CICT’s first inroad into Australia, its second overseas developed market after Germany. The acquisition will be completed by way of a Transfer of Units in the current landholding entities with settlement expected in Q1, 2022.
66 Goulburn Street is a 24-storey Grade A office building with ancillary retail space, and a basement car park which the Ascendas REIT acquired in 2017 for $252m.
100 Arthur Street is a 23-storey Grade A office building with ancillary retail space sited in North Sydney CBD. The property was acquired by the Ascendas REIT in 2016 for $315m and underwent a major refurbishment at a total cost of approximately A$17 million from 2019 to 2021 to enhance its lobby, entrance foyer, vacant floors and equipment upgrades. To improve the well-being of occupants, the building’s end-of-trip facilities that encourage green mobility were also revamped.
Both properties are located within easy access of public transport and amenities. They have achieved sustainability ratings under the National Australian Built Environment Rating System (NABERS), with 66 Goulburn Street rated 5.5-Star NABERS Energy and 4.5-Star NABERS Water, and 100 Arthur Street rated 4-Star NABERS Energy and 4.5-Star NABERS Water.
Ms Teo Swee Lian, Chairman of CICTML, said, “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. 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. 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. We are also pleased to be investing in Sydney, which is striving to become a climate leader under its Sustainable Sydney 2030 community plan. The addition of the NABERS-rated properties complements CICT’s 100% green rated portfolio and supports the Trust’s sustainability commitment.”
Mr Tony Tan, CEO of CICTML, said: “The acquisition is part of our continual efforts to reconstitute and optimise CICT’s portfolio for sustainable returns and growth. It enables the recycling of capital from the divestment of our 50.0% 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. The two assets are complementary to CICT’s portfolio, and will enhance our portfolio resilience with further geographical and income diversification. 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.”
“Post-acquisition, CICT’s overall portfolio property value will increase to S$22.4 billion by approximately 3% and our overseas portfolio exposure will increase to about 7% from 4% by portfolio property value. This is in line with our strategy to remain predominantly focused in Singapore, with up to 20% of portfolio property value in overseas developed markets. We will continue to leverage our sponsor’s overseas investment and asset management platform and network to build scale in the developed markets where CICT has established footprint. At the same time, we will continue to pursue organic growth and inorganic opportunities from our sponsor and third parties in Singapore.”
CICT would be able to leverage on its sponsor, CapitaLand Investment Limited (CLI), for its investment and portfolio management capabilities. CLI has been in the Australian market since 2015. Through its sponsored business space and industrial real estate investment trust Ascendas Reit, CLI currently owns and manages 37 logistics and suburban office assets with around 790,000 square metres of area located in the key cities of Sydney, Melbourne, Brisbane and Perth. CLI also has a strong network of more than 12,700 units across over 140 serviced residences and hotels in Australia through its wholly owned lodging business unit The Ascott Limited and its hospitality trust Ascott Residence Trust.
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