Straits Real Estate, the wholly-owned subsidiary of Straits Trading Company has acquired two freehold office buildings in Australia for an approximate consideration of A$150.0 million ($143.9 million).
On Feb 11, the group announced that CH Holdings Unit Trust, indirect subsidiary of Straits Real Estate, has entered into sale and purchase agreements (SPA) with Digital Harbour Holdings to acquire 1010 La Trobe Street (1010 La Trobe) and 192 Harbour Esplanade (Innovation Building) together with 163 parking bays at Docklands, Victoria.
1010 La Trobe is a nine-storey freehold Grade A office building with a net lettable area (NLA) of 15,354 sqm. It is currently 100% occupied. The Department of Home Affairs and Victoria Rail Track are the office’s key tenants. The property offers uninterrupted views towards nearby Marvel Stadium and the Docklands marina.
Innovation Building is a five-storey freehold Grade A office building with a NLA of 5,779 sqm. It is located adjacent to 1010 La Trobe and is majority occupied by the National Broadband Network Company, Australia’s wholesale broadband network provider.
The 163 parking bays are located in a newly building property at 1000 La Trobe Street, adjacent to both properties.
The properties themselves are adjacent to the Melbourne central business district (CBD) and are supported by strong transport nodes including a tram station at their doorstep.
According to Straits Real Estate, the acquisition is in line with the group’s business expansion plans.
“It is reflective of Straits Real Estate’s confidence in [the] post-Covid recovery of Melbourne commercial real estate. In addition to strong recurring income, the properties present value-add opportunities including a planned upgrading at 1010 La Trobe that will include a new end-of-trip facility, redesigned ground floor lobby and refurbishment of communal facilities on each floor,” reads the statement by the group on Feb 11.
The acquisition will have no material impact on the company’s earnings for the current FY ending Dec 31.
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The consideration will be funded by internal resources and bank borrowings.
In the 4QFY2021, Straits Real Estate had also expanded its footprint in the UK through a GBP60 million ($108.6 million) commitment to invest in warehouse retail parks across the country.
“Straits Real Estate’s interest in the warehouse retail sector is underlined by resilient consumer behaviour, particularly in respect of discount neighbourhood retail centres that have successfully weathered the pandemic and have demonstrated defensive characteristics to remain viable in the age of e-commerce,” says the group.
Desmond Tang, CEO of Straits Real Estate, says, “Emphasis on capital efficiency remains fundamental to our success. Diversification in a matrix of geographical markets and asset classes will offer us flexibility in how we realise investment gains in the foreseeable future as business activities in different economies recover at varying pace. We are confident of growing Straits Real Estate’s assets under management (AUM) in a robust but disciplined manner.”
“The strength of our real estate portfolio with attractive recurring income and healthy operating yields will ensure that the group comes out of the pandemic stronger than before. To that end, we will continue to seek opportunities for enhanced returns in key markets,” Tang adds.
Shares in Straits Trading closed 3 cents lower or 0.91% down at $3.27 on Feb 11.
