This acquisition is Suntec REIT’s second in Sydney, and will increase the asset value of its portfolio from S$9.9 billion to S$10.2 billion (approximately A$10.4 billion to A$10.7 billion as of 5th July 2019), with the proportion of Australian assets increasing from 11% to 14%.

Chong Kee Hiong, the Chief Executive Officer of the Suntec REIT Manager, said, “We are pleased to deepen our presence in Australia, with the acquisition of 21 Harris Street. The property is a strategic fit with Suntec REIT’s portfolio of high-quality assets and further enhances the stability of the REIT’s income.”

The property has an initial net property income yield of 5.5% upon practical completion, which will improve earnings and distributions to Suntec REIT’s unitholders. Mr Chong said, “Unitholders will enjoy income stability with growth through the long lease terms and annual rental escalations.”

21 Harris Street is currently being developed by the vendor, Milligan Group. The project is designed to be a campus style 9 storey office building with an on-site café and restaurant, childcare, a 1580 sqm gymnasium, approximately 170 lots of basement car parking, as well as end-of-trip facilities such as locker rooms, bicycle stations, showering facilities, infrared sauna, and laundry stations. 

21 Harris Street Atrium.
Artist’s impression: 21 Harris street features a contemporary design, with open floors vertically connected by an 8-storey atrium. Image: Bates Smart

21 Harris Street has an NLA of approximately 18,900 sqm, consisting of 16,900 sqm of office and 2,000 sqm of retail. The building will offer flexible workspaces with large floor plates of 2,650 sqm.

The building aims for a 5-Star NABERS Energy Rating and a 6-Star Green Star Rating upon completion. 

Pyrmont is ideally located 2km West of Sydney’s CBD, with high accessibility to the CBD by light rail, car and active transport. The property is approximately a 10-minute drive to the CBD, or a 15-20 minute walk via Pyrmont bridge. The nearest station is John Street Light Rail Station, which connects to Central station via the Inner West Light Rail. Pyrmont is quickly becoming Sydney’s technology media and entertainment hub, with companies such as Google, Fairfax Media, The Star Entertainment Group, Thomson Reuters, Paramount Pictures and Village Roadshow opting for the area.

With demand for office spaces in Sydney’s CBD remaining high, coupled with limited supply, rents are expected to remain high. Suntec believes that Pyrmont is in a prime position to benefit from high rents and the limited office supply in the CBD, thus providing investors with a stable and reliable income with potential for rental income growth. 

21 Harris Street Pyrmont.
The property is situated in Pyrmont, which is 2km from the CBD. It is home to companies such as Google, Fairfax Media, The Star Entertainment Group, Thomson Reuters, Paramount Pictures and Village Roadshow. Image: Bates Smart

With 9 months to practical completion, the building is 91.2% pre-leased. It will be anchored by Publicis Groupe, a global communications and marketing company, who will use 21 Harris Street as their Sydney headquarters. The other companies who have signed leases are Campfire, an international co-working operator, as well as a childcare centre and a gym operator. The building has a WALE by NLA of 10.2 years.

Milligan Group has also offered a 3-year rent guarantee on unlet office space post practical completion.

The acquisition is expected to be completed in the 1st quarter of 2020, when 21 Harris Street achieves practical completion. The remaining amount of A$282.15 million will be paid after practical completion and settlement. The purchase of the building will be funded by a combination of equity and AUD borrowings to provide a natural currency hedge.

Cover Image: Artist’s Impression of 21 Harris Street Image: Bates Smart