Mainboard-listed Metro Holdings and Sim Lian Group have jointly entered a sale and purchase agreement to acquire a freehold office building in Sydney, Australia. The property, 1 Castlereagh Street, was acquired for A$196.4 million ($172.3 million).

A 27-storey office building with retail on the ground level, 1 Castlereagh Street is next to the newly opened Martin Place railway station in the financial core of Sydney's CBD. The building was refurbished in 2021 and

has a NABERS (National Australian Built Environment Rating System) rating of 4 stars. It features regular and column-free floor plates that can be subdivided to cater to users of different sizes.

Looking to invest in overseas properties? Explore projects available for sale around the world

The property has a net lettable area (NLA) of 12,418 sqm (133,667 sq ft) and an occupancy rate of 85%. The weighted average lease expiry (WALE) by income is about three years.

"This is a rare opportunity to acquire a freehold prime office property within the highly sought-after core precinct of Sydney's CBD, which continues to benefit from flight-to-location and flight-to-quality trends," says Metro Group CEO Yip Hoong Mun.

The latest purchase marks the joint venture partners' 18th property acquisition and fifth office asset in Australia. Sim Lian holds a 70% stake in the joint venture, with Metro holding the remaining 30%. Metro’s capital commitment for the investment is, therefore, A$30.8 million, which will be financed mainly through internal cash reserves and external borrowings.

The existing portfolio of 17 freehold properties has an average occupancy rate of 94.1%, and WALE is about 5.6 years at March 31.

On completion of the latest acquisition, it will have 18 assets, comprising five office buildings and 13 retail centres spanning New South Wales, Victoria, Queensland and Western Australia. The total appraised value of the joint portfolio will be A$1.374 billion ($1.206 billion) with a total NLA of 176,227 sqm (about 1.9 million sq ft).