Frasers Logistics & Commercial Trust Buys Victoria Office Bldg

Frasers Logistics & Commercial Trust Buys Victoria Office Bldg For A$60.25mil

AUSTRALIA – Frasers Logistics & Commercial Trust (FLCT) intends to purchase a fully-occupied freehold suburban office tower in the south-eastern region of Victoria, Australia for A$60.25 million (approx. S$58.4 million), according to a Singapore Exchange (SGX) filing published on Thursday evening (20 May, SGT).

The subject commercial property is a five-storey Grade A office building with an overall net leasable area (NLA) of 7,297 sq m (78,544 sq ft). It has four upper levels of office space and two retail tenancies on the ground floor. It is fully leased to nine tenants and has a weighted average lease expiry (WALE) of about 5.0 years as of 31 March 2022.

Aside from that, the office tower is certified 4.5 stars under the National Australian Built Environment Rating System (NABERS).

The office building is strategically situated at 545 Blackburn Road in Mount Waverley within the
heart of the City of Monash, one of Victoria’s most populated municipalities. In fact, the City of Monash has the highest concentration of employment outside Melbourne’s central business district (CBD) and the area continues to see growth and demand from businesses and investors thanks to its diverse industry, infrastructure investment and long-established residential markets within its vicinity.

Based on data from Jones Lang LaSalle (JLL), Melbourne’s south-eastern office market saw a positive net absorption of 14,221 sq m (153,074 sq ft) in 2021, and this trend continued into the first three months of the year, with a positive net absorption of 1,684 sq m (18,126 sq ft), supported by by positive relocation activity from big office tenants.

Given that office occupier demand is expected to be positive post-COVID in the said submarket, the manager of FLCT thinks that assets such as the subject property continue to be sought-after products in this market as flight-to-quality opportunities emerge.

“The acquisition is aligned with our strategy to pursue strategic opportunities, which provide attractive yields and enable us to leverage our management expertise in Australia,” said Robert Wallace, CEO of FLCT’s manager, Frasers Logistics & Commercial Asset Management Pte. Ltd.

“With the Property being 100 percent leased to reputable tenants in diverse industries, the acquisition is expected to further enhance FLCT’s quality tenant mix and portfolio metrics, while providing unitholders with a stable income stream,” he added.

In total, FLCT is forking out A$65.0 million (approx. S$63.1 million) for the transaction. This includes the purchase consideration, acquisition fee, and stamp duty, as well as professional expenses and other fees related to the deal. The purchase will be financed with proceeds from the sale of the Cross Street Exchange mall in Singapore for S$810.8 million (US$603 million) in January 2022.

The acquisition of the office building is expected to be completed on 20 May 2022.

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