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31-January-2010 K-REIT Asia acquires 50% stake in prime commercial building in Brisbane, Australia
The freehold Grade A commercial development, located in the city’s Central Business District is 99.4% leased. K-REIT Asia Management Limited, as Manager of K-REIT Asia, is pleased to announce that RBC Dexia Trust Services Singapore Limited, in its capacity as the trustee of K-REIT Asia has, through K-REIT Asia (Australia) Trust, a wholly-owned subsidiary of K-REIT Asia, contracted with Charter Hall Opportunity Fund No.4 (CHOF4) (the “Vendor”), for the acquisition of a 50% interest in, 275 George Street, Brisbane, Australia (the “Property”).
The acquisition of 50% interest in the Property, a Grade A commercial building, was at a price of A$166.0 million or approximately S$208.6 million (the “Acquisition”).The appraised value of the 50% stake in the Property is the same as the purchase price of A$166.0 million.
K-REIT Asia (Australia) Trust will co-own the Property as a tenant-in-common with Charter Hall’s Core Plus Office Fund (CPOF), which will be retaining the other 50% interest in the Property. The Charter Hall Group is a property fund management and development company listed on the ASX, with A$3.2 billion funds under management. It was recently included in the S&P/ASX 200 Index.
Completed in April 2009, 275 George Street is located in the heart of Brisbane’s Central Business District (“CBD”). The freehold Property comprises 40,317 square metres (“sqm”) of Grade A commercial office space over 30 levels, 1,431 sqm of quality retail space and 244 basement carpark lots. The Weighted Average Lease Expiry (“WALE”) for this Property is approximately 9.4 years. The office tower is 100% leased and enjoys 10-year lease commitments by two leading Australian companies, Telstra Corporation and Queensland Gas Company.
The ecologically-designed 275 George Street has achieved the 5 Star Green Star – Office Design v2 rating by the Green Building Council Australia and is targeting a 5 Star As Built rating, as well as a 4.5 Star NABERS Energy rating.
On the Acquisition, Professor Tsui Kai Chong, Chairman of K-REIT Asia Management Limited, said, “We are pleased to have made our maiden commercial investment outside Singapore. We are committed to growing K-REIT Asia’s quality asset base and this Acquisition marks our first step towards becoming a pan-Asian REIT.”
Ms Ng Hsueh Ling, CEO of K-REIT Asia Management Limited, added, “The acquisition of this yield accretive asset will augment K-REIT Asia’s asset size by about ten per cent, from S$2.1 billion to S$2.3 billion. This Acquisition is in line with our aim to generate steady and sustainable returns to our Unitholders.”
The Manager of K-REIT Asia believes that the Acquisition will benefit Unitholders of K-REIT Asia as:
• the Acquisition is expected to be immediately yield-accretive to K-REIT Asia’s distribution per unit resulting from the current cashflows it generates.
• the Acquisition will improve income diversification and further enhance the tenant base that K-REIT Asia currently has. The Property is currently 99.4% leased with fixed annual rental escalation embedded in the lease agreements.
• the Acquisition extends K-REIT Asia’s portfolio WALE from 5.2 years as at 31 December 2009 to 5.9 years. The Property has a significantly long WALE of approximately 9.4 years which is expected to provide robust and stable cashflows to Unitholders.
• the Acquisition diversifies K-REIT Asia’s geographical risk exposure, which is currently concentrated within Singapore. Australia has a large and developed real estate market and the Acquisition will provide K-REIT Asia opportunities to scale up with quality assets that meet its investment criteria, and support its overall objectives.
• 275 George Street is a newly completed Grade A building located in the heart of the Brisbane CBD and the office block is fully let to well-credited tenants. The Acquisition provides a strategic fit with K-REIT Asia’s portfolio, and is in line with K-REIT Asia’s objective of acquiring quality commercial buildings with strong cashflows, across the Asia Pacific region.
The Acquisition will be funded entirely by equity from the proceeds from K-REIT Asia’s rights issue that was completed in November 2009. As a result of the enlarged portfolio asset base, K-REIT Asia’s aggregate leverage is expected to improve from 27.7% as at 31 December 2009, to 25.2% after completion of the Acquisition in the first quarter of 2010.
About K-REIT Asia (http://www.kreitasia.com)
Sponsored by Keppel Land Limited, one of the largest listed property companies in Singapore, K-REIT Asia was listed on the Singapore Exchange on 28 April 2006 following a distribution in specie of units in K-REIT Asia to shareholders.
K-REIT Asia aims to generate stable income and long-term growth for Unitholders by investing in quality income-producing commercial properties across the Asia-Pacific region.
K-REIT Asia's current portfolio comprises five assets, namely Bugis Junction Towers, GE Tower, Keppel Towers, Prudential Tower (of which K-REIT Asia owns 73.4% of the total strata area of the building), and also a one-third interest in One Raffles Quay Pte Ltd. K-REIT Asia’s portfolio size was $2.1 billion as at 31 December 2009.
K-REIT Asia completed a rights issue exercise and issued 666.7 million rights units in November 2009. Its total number of units in issue was 1.34 billion as at end-December 2009.
K-REIT Asia is managed by K-REIT Asia Management Limited, a wholly-owned subsidiary of Keppel Land Limited.
About 275 George Street, Brisbane, Australia
275 George Street is a freehold 30-storey Grade A commercial building located in a prime location straddling the core retail precinct and the revitalised George Street precinct of the Brisbane CBD.
The building is close to major infrastructure and amenities, and is surrounded by some of Brisbane’s newest corporate headquarters. It is also centrally located between the city’s two largest railway stations, Roma Street Railway Station and Central Railway Station.
Completed in April 2009, the building has a net lettable area of 41,748 sqm, comprising 40,317 sqm of office space, 1,431 sqm of retail space and 244 basement car bays. The two major tenants (occupying 97.3% of the building) are Telstra Corporation and Queensland Gas Company. The WALE for this building is approximately 9.4 years.
The ecologically-designed 275 George Street has achieved a 5 Star Green Star – Office Design v2 rating and is targeting a 5 Star As Built rating, as well as a 4.5 Star NABERS Energy rating. For further information, please contact Media Relations
Ms Grace Chia
Assistant Manager
Group Corporate Communications
Keppel Corporation
Tel: 9694 1328
Email: grace.chia@kepcorp.com
Investor Relations
Ms Casiopia Low
Assistant Manager
Investor Relations & Research
K-REIT Asia
Tel : 6433 7622
Email: casiopia.low@kreitasia.com
Attachments:
275 George Street (seen here) in Brisbane is K-REIT Asia’s maiden acquisition outside of Singapore, reinforcing the Company’s commitment towards becoming a pan-Asian REIT.
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