K-REIT – BT

K-Reit eyes space in Sydney office tower

K-REIT Asia is set to increase its Australian footprint. The Singapore-listed real estate investment trust is in talks to buy the bulk of the space in a high-profile office tower in Sydney’s CBD area, the Australian Financial Review reported earlier this week.

The tower, 77 King Street, is in on the corner of George Street and houses the landmark glass-box Apple Store. However, the Apple Store is not part of the deal; rather, the office tower and remaining retail space is being sold as a single stratum, Australian Financial Review reported.

Interest in the tower is likely to change hands for more than A$110 million (S$130 million) on an expected city-wide rise in rental and capital values. The total area in the stratum on offer is about 13,500 sq metres. CB Richard Ellis and Savills are brokering the deal.

The tower has been reworked by private investor Victor Comino, who has invested about A$60 million over the past decade in the asset.

AFR reported that a host of offshore bidders expressed interest in the Sydney tower including the Government of Singapore Investment Corporation, Swiss-based AFIAA Foundation for International Real Estate Investments, Hong Kong-based CLSA Asia Pacific Markets unit and German pension fund giant Deka Immobilien Investment.

When contacted, a spokesman for K-Reit Asia Management said: ‘K-Reit Asia is actively on the lookout for suitable pan-Asian acquisition targets, and will make the appropriate announcements if and when such deals materialise.’

The icing on the cake for Singaporean investors looking at the Australian real estate market now is the slide in the Australian dollar, said market watchers.

Earlier this year, K-Reit Asia made its first overseas purchase when it bought a 50 per cent stake in a Grade A commercial building in Brisbane. It paid A$166 million (S$210.4 million at the time) for the stake in 275 George Street from a wholesale fund managed by Charter Hall Group.

That building, which was nearly fully let at the time, comprises nearly 434,000 sq ft of office space over 30 levels and about 15,400 sq ft of retail space.