GIC and Dexus have formed a 90-10 joint venture to buy a 50% stake in a 55-storey office tower in Australia from Kuwait’s St Martins Property for A$644m (€358m).

The partners now jointly own Rialto Towers in Collins Street in Melbourne, with Grollo Australia, the company which originally developed the complex in 1986 and substantially redeveloped it in 2017 in partnership with the UK-based St Martins Property.

Darren Steinberg, Dexus chief executive, said: “In the current environment, we are focussed on business continuity, and pleasingly were able to close this off-market transaction within our targetted timeframe.”

Steinberg said the group was pleased to continue to grow its relationship with GIC and to enable the Singapore sovereign wealth fund to extend its investments into the Australian office market.

Asked about the timing of undertaking an acquisition of this size in the current environment, Steinberg said: “Dexus and GIC have invested in this opportunity to leverage the long-term fundamentals of the Melbourne office market including the strong population growth trend (of around 1.8% per year).

“The asset is multi-let to circa 80 tenants and has some leasing to be undertaken – it is an asset that will involve leveraging Dexus’s leasing capabilities and extensive customer relationships to drive asset performance,” he told IPE Real Assets.

Rialto Towers is 91.7% occupied with a weighted average lease expiry of 4.6 years.

On dealing with the more immediate market dislocations and tenants facing financial difficulties, Steinberg said: “We are dealing with rental relief requests across our entire portfolio on a case by case basis, with a focus on our small business customers (tenants).”

With the latest commitment, the value of GIC partnerships with Dexus has reached about A$2.5bn.

Dexus, which manages a A$33.8bn portfolio, including A$17bn worth of properties for major pension funds, will fund its share of the Rialto Towers acquisition from existing debt facilities.