Singapore-listed Keppel REIT has bought a 50% stake in an office building on the east coast of Australia for A$363.8m (€220m) from Mirvac Wholesale Office Fund (MWOF) at a discount and with rental guarantee.

MWOF will maintain a 50% interest in the 29-level office building at 255 George Street in Sydney.

The office tower, sold at a discount of around 9% to book value, is expected to generate a first-year yield that exceeds 6%. The seller will be providing rent guarantee on existing vacancies and potential expiries.

Koh Wee Lih, CEO of the manager of Keppel REIT, said the property was “an iconic freehold” Grade A office building with excellent ESG credentials and located in the “core precinct” in Sydney central business district. 

“Looking ahead, we will continue to seek opportunities within Keppel REIT’s portfolio for optimisation and capital recycling, while remaining disciplined in capital management, to capture opportunities with attractive total returns over the long term.” 

This acquisition also marks Keppel REIT’s deepening partnership with Mirvac, as they already jointly own 8 Chifley Square in Sydney and David Malcolm Justice Centre in Perth.

Mirvac’s CEO, funds management, Scott Mosely, said: “The sale of a 50% interest in 255 George Street positions MWOF well to maintain its strong balance sheet, whilst retaining its weighting to the highestquality assets in the best Sydney and Melbourne locations. We continuously reassess our portfolio to ensure it is well positioned and delivering the best outcome for our unitholders.”

To read the latest IPE Real Assets magazine click here.