Keppel REIT Bids Farewell to Brisbane Office Tower With $206M Half-Stake Sale

Singapore’s Keppel REIT is parting ways with its earliest Australian asset, a 31-storey Brisbane office building in which it holds a 50 percent interest.

The trust on Thursday announced the divestment of its half-stake in 275 George Street for an aggregate sale consideration of A$275 million ($206 million). The buyer is Charter Hall Prime Office Fund, a wholesale pooled fund that owns the other 50 percent of the property.

The adjusted consideration of A$264 million is 7.8 percent above the last valuation of A$245 million and 59 percent above the original purchase price of A$166 million in 2010, Keppel REIT said in a release. Property consultancy JLL advised on the deal.

“The divestment of 275 George Street is part of our continuing portfolio optimisation strategy, and will provide us with greater financial flexibility as we seek strategic and higher yielding acquisitions to enhance the REIT’s income resilience and deliver sustainable total return to unitholders,” said Paul Tham, chief executive of the trust’s manager.

Then There Were Ten

Completed in 2009, 275 George Street is a freehold office building in Brisbane’s central business district with 41,720 square metres (449,070 square feet) of net lettable area, meaning the buyer is paying roughly A$13,183 ($9,863) per square metre of NLA.

Set between the city’s two largest railway stations, Roma Street Station and Central Railway Station, 275 George Street touts excellent connectivity and panoramic views of the cityscape.

The development had a committed occupancy of 90.6 percent as of March. Key tenants include telecom firm Telstra and Shell-operated Queensland Gas Co.

After the REIT’s exit from 275 George Street, the S$8.7 billion portfolio will comprise five commercial properties in cities across Australia, four assets in Singapore and the T Tower in Seoul. Committed occupancy will be 96.9 percent and weighted average lease expiry will be 6.3 years.

The REIT’s most recent Australian transaction was its A$306 million acquisition last September of a business park asset in Sydney’s Macquarie Park area from Goodman.

Six-Month Lull

With travel restrictions hampering cross-border transactions, Keppel REIT in late December announced the purchase of Keppel Bay Tower, which was the trust’s latest deal before the disposal announced Thursday. The REIT purchased the office building in Singapore’s HarbourFront area from its sponsor, Keppel Land Ltd, in a move aimed at capitalising on the buzz surrounding development of the Greater Southern Waterfront urban living project.

For Keppel Land, the sale of Keppel Bay Tower marked the second big divestment since Keppel Group announced a management reshuffle that took effect in February this year.

In early December, Keppel Land said it would divest of its remaining 30 percent interest in Dong Nai Waterfront City in Vietnam for S$115.9 million. The transaction followed the divestment of Keppel Land’s 70 percent stake in the newly developed township to Nam Long Investment Corporation in 2019.

Keppel REIT’s top-valued asset is an interest in Marina Bay Financial Centre, a mixed-use development comprising three office towers and an underground mall. Keppel REIT’s 33.3 percent stake in the asset is worth close to S$3 billion.