Developer Sells Pyrmont Office to Suntec REIT for $297m

Singapore-based Suntec REIT has secured a 100 per cent interest of a freehold property in Sydney’s technology, media, and entertainment hub precinct of Pyrmont.

Suntec REIT entered into a put and call option deed to purchase 21 Harris Street, which sits on Sydney’s inner-city fringe two kilometres from the CBD, and is currently under development by Sydney developer Milligan Group.

When complete the Bates Smart-designed property will be an A-grade, nine-storey, campus style commercial office building with three basement levels.

Suntec REIT will pay $297 million for the Sydney project, which includes the purchase price for the property at $119 million and expected fees for development services of around $178 million.

While the property is 91.2 per cent pre-committed, the deal incorporates developer Milligan to provide rent guarantee on the unlet office space for three years following practical completion.

The weighted average lease expiry of the property, including rent guarantee, is approximately 10.2 years (by NLA) with an annual rental escalation of between 3-and-4 per cent.

The property will be anchored by Publicis Groupe, a global communications and marketing company, as their Sydney headquarters.

Suntech chief executive Chong Kee Hiong described the purchase as a “strategic fit” with Suntec REIT’s portfolio.

“We are pleased to deepen our presence in Australia with the acquisition.”

"Following the completion of this acquisition, approximately 14 per cent of Suntec REIT's assets under management will be in Australia.”

Suntec REIT holds a 100 per cent interest in a commercial building at 177 Pacific Highway Sydney, a 50 per cent interest in Southgate complex in Melbourne, and a 50 per cent interest, purchased from Mirvac, in landmark commercial building Olderfleet 477 Collins Street in Melbourne.

The Pyrmont purchase is expected to be completed in the first quarter of 2020, following practical completion.

Sydney’s Pyrmont has a strong record attracting major tenants such as Google, The Star Entertainment Group and Paramount Pictures.

The Harris Street asset will have an estimated total net leasable area of 18,888sq m, along with retail space and 170 car park lots.

Established in 2010, developer Milligan Group’s current Sydney projects include 20-22 William Street Beaconsfield, 10-14 Cooper Street Surry Hills, with completed projects including 820-838 Elizabeth Street Waterloo and 80-88 Regent Street Redfern.