Singapore-based Keppel REIT has agreed to buy Pinnacle Office Park, a freehold Grade A commercial property at Macquarie Park in Sydney, from Goodman Group for A$306 million (US$222.9 million).

Paul Tham, chief executive officer of Keppel REIT Management, says: “With an initial net property income yield of 5.25%, the acquisition of Pinnacle Office Park is in line with our active portfolio optimization strategy to improve Keppel REIT’s income resilience and portfolio yield. The expansion into the Grade A metropolitan office space strengthens our portfolio as it complements our prime CBD offering.

“In the wake of Covid-19, we believe demand in Australia for quality and well-networked metropolitan locations, such as Macquarie Park, will increase as more companies seek cost-effective solutions or adopt a hub-and-spoke business model for office locations. The acquisition of Pinnacle Office Park allows Keppel REIT to gain exposure to this key metropolitan office market.”

With a total net lettable area of 35,132 square metres (378,165 sq ft) across three office buildings, Pinnacle Office Park is strategically located within Macquarie Park, which is the second largest office market in New South Wales.

Sited near the metro station and a major bus interchange, Pinnacle Office Park is well served by public transportation and major arterial roads that provide direct links to the central business district. The expected completion of the City and Southwest metro rail in 2024 will also improve the commuting time between Macquarie Park and the CBD to just 20 minutes.

The acquisition, targeted to be completed in the fourth quarter of 2020, will be fully funded with Australian dollar-denominated debt for natural hedging, Keppel REIT said.