Singaporean group buys into Old Treasury redevelopment

Singapore’s K-REIT Asia has snapped up a 50 per cent stake in Mirvac’s Old Treasury Building development for $165 million.

Mirvac today announced it had entered a conditional contract to sell the interest in the office tower component of the redevelopment to K-REIT, with settlement expected to take place by March next yaer.

Under the contract, K-REIT will fund 50 per cent of the development costs at an effective rate of 7 per cent, until sub-leasing commences.

Mirvac platform chief executive Bevan Towning said the company was very pleased to further its strategic relationship with K-REIT.

“The transaction represents Mirvac’s second co-investment with K-REIT, following the slae of a 50 per cent interest in our latest premium grade Sydney office tower, 8 Chifley Square, and we are delighted to work with K-REIT to deliver one of Perth’s flagship projects.”

Mirvac’s $580 million Old Treasury Building precinct will comprise a 33-level office tower and boutique hotel in the existing heritage buildings on site.

The office building has been pre-committed by the state government under a sub-lease arrangement for 25 years.

"This 50 per cent sale is consistent with Mirvac's commitment to drive development returns from commercial activities whule taking a prudent approach to managing development risk and the group's capital position," Mirvac development chief executive Brett Draffen said.

Mirvac announced last week that it would build the office tower itself, after taking expressions of interest from construction giants Broad, Doric, Probuild, Multiplex and BGC.

Mirvac originally had joint ownership of the development with superannuation fund subsidiary Cbus Property, but the developer formally acquired the site in July this year and now has full ownership of site.

The 48-room hotel is expected to be complete by 2014, while the office tower will be finished by early 2015.