K-REIT Asia up stake in Prudential Tower to 93%

The Acquisition is expected to be DPU accretive and enlarges K-REIT Asia's existing 73% strata interest.

K-REIT Asia Management Limited, the 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 on Monday entered into a sale and purchase agreement with Innisvale Investments Pte Ltd, Maraha Pte Ltd, Lima Bintang Holdings Pte Ltd and Mirabeau Gardens Pte Ltd (collectively, the "Vendors") for the acquisition (the "Acquisition") of levels 26 to 29 of the 30-storey Prudential Tower (the "Property") at a purchase price of approximately $125.1 million inclusive of rental support. Excluding the rental support, the effective purchase consideration is approximately $117.0 million or $2,430 psf.

The Acquisition enlarges K-REIT Asia's existing 73% strata interest in Prudential Tower and is expected to be immediately accretive to K-REIT Asia's distribution per unit ("DPU"). The increased ownership interest will provide the Manager greater flexibility in managing Prudential Tower, according to a Keppel report.

Post-acquisition, K-REIT Asia will own approximately 93% of the total strata area which translates to 223,830 sf of Grade A net lettable area office space at Prudential Tower. The committed leases in the Property have a weighted average lease expiry of 3.6 years providing a stable income stream for Unitholders of K-REIT Asia.

Independent property valuer, Knight Frank Pte Ltd has valued the Acquisition with the rental support at $125.2 million. Under the agreement, the Vendors will provide a rental support of up to $8.1 million to be drawn over a period from the date of completion of the Acquisition until 31 March 2015.

Ms Ng Hsueh Ling, Chief Executive Officer of K-REIT Asia Management Limited, said "This DPU accretive acquisition of contiguous high floors in the award-winning Prudential Tower is in line with K-REIT Asia's aim to generate stable and growing returns to our Unitholders. It reinforces K-REIT Asia's strategy to be a leading landlord in Singapore's key business and financial districts. Post-acquisition, more than 90% of our Singapore portfolio will be located in the prime areas of Raffles Place and Marina Bay."

The acquisition will be funded entirely by debt and when completed, will increase K-REIT Asia's aggregate leverage ratio marginally from 37% to approximately 39%.