Keppel Reit will buy a 50 per cent stake in a premium office tower to be developed in central Melbourne, for A$347.8 million (S$368 million).

The stake will provide the real estate investment trust (Reit) with its second freehold office development in the city.

The remaining 50 per cent stake will be held by Cbus Property. The two companies are acquiring their stakes from the Australia Postal Corporation.

Cbus Property will also be the tower's developer.

Construction is due to start in the third quarter, with completion expected in 2019.

The 42-storey tower at 311, Spencer Street will be fully leased to the Victorian state government. The 30-year net lease will include fixed annual rental escalations and a market rent review at the start of year 16. The development will have about 717,000 sq ft of lettable area.

The Grade A office tower, which will be between the central business district and the new Docklands precinct, has been designed by architecture firm Woods Bagot.

Mr Tan Swee Yiow, who is chief executive of the Reit manager, said the block would provide unit holders with a stable average yield of 6.4 per cent per annum over the first 15 years starting from the lease commencement.

"The property will also enhance Keppel Reit's portfolio, extending its weighted average lease expiry to approximately nine years," added Mr Tan.

The acquisition will be funded partly by proceeds from the divestment of 77, King Street in Sydney in January last year, and partly by debt.