Lendlease and Keppel REIT have purchased an office development project in North Sydney from Australian developers Third-I and Phoenix Property Investors.

Singapore-listed Keppel REIT has agreed to buy the Blue & William building for A$327.7m (€207m).

Construction of the 10-storey building is currently underway. Lendlease will now see the development through to completion, scheduled for 2023.

Shirley Ng, deputy CEO and head of investment of the manager, Keppel REIT Management, said Keppel REIT would receive regular coupon payments (from Lendlease) throughout the development phase, providing “robust risk-adjusted returns”.

The acquisition was in line with the company’s active portfolio optimisation strategy, with the investment delivering an initial net property income yield of 4.5%, said Ng.

Scott Mosely, Lendlease managing director, investment management, said: “Our investment mandates have grown significantly over the last few years in the office sector as there continues to be strong demand from investors for high quality, sustainable and flexible office assets in desirable locations.”

Tom Mackellar, managing director, Lendlease Development: “This strategic acquisition supports the diversification of our commercial product offering and unlocks prime floor space for our customers in North Sydney.

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