K-REIT Asia to acquire one-third interest in Marina Bay Financial Centre

In turn, signed agreement with Keppel Land for S$573mln purchase of Keppel Towers and GE Tower.

K-REIT Asia has entered into a conditional share purchase agreement with Bayfront Development Pte. Ltd., a wholly-owned subsidiary of Keppel Land Limited (Keppel Land), for the acquisition of a one-third interest in Phase One of Marina Bay Financial Centre (MBFC Phase One) at an agreed value of approximately S$1,426.8 million (inclusive of rental support).

At the same time, as part of the asset swap, K-REIT Asia has signed a conditional sale and purchase agreement with Mansfield Developments Pte Ltd, a wholly-owned subsidiary of Keppel Land, for the divestment of Keppel Towers and GE Tower (KTGE) at an agreed value of S$573.0 million, which is above the valuation of S$540.7 million as at 31 December 2009, according to a Keppel Land report.

MBFC Phase One comprises two office towers, Marina Bay Financial Centre Towers 1 & 2, with a total net lettable area (NLA) of about 1.65 million sf, Marina Bay Link Mall with a retail NLA of about 94,500 sf and 684 carpark spaces. Fully committed, major tenants at MBFC Towers 1 & 2 include Standard Chartered Bank, Barclays Capital, BHP Billiton, Nomura, Macquarie, American Express and Prudential.

After the asset swap, K-REIT Asia's portfolio asset size will increase from S$2.5 billion to approximately S$3.4 billion. The asset swap is expected to be completed no later than 31 December 2010.

The acquisition of the one-third interest in MBFC Phase One will be funded by a combination of the sale proceeds from the divestment of KTGE, new borrowings and part of the proceeds from K-REIT Asia's November 2009 rights issue.

Ms Ng Hsueh Ling, CEO of K-REIT Asia Management Limited, said, "With the acquisition of MBFC Phase One, 90% of K-REIT Asia's portfolio will be strategically located within Singapore's prime Raffles Place and the Marina Bay precinct.

"The asset swap will upgrade K-REIT Asia's portfolio of prime Grade A office assets without having to raise additional equity, and will improve K-REIT Asia's cashflow resilience while maintaining a healthy balance sheet."

The bundled transaction is subject to the approval of the minority unitholders of K-REIT Asia at an extraordinary general meeting.

The agreements for both the acquisition and divestment were negotiated at arm's length on a willing-buyer willing-seller basis. The one-third interest in MBFC Phase One property has, as at 30 September 2010, on an open market value basis and inclusive of a rental support of up to S$29 million, been valued at S$1,427.0 million by Savills (Singapore) Pte Ltd (Savills) and S$1,433.0 million by Knight Frank Pte Ltd (Knight Frank).

Similarly, KTGE's open market value as at 30 September 2010, based on a highest value and best use basis as residential use, has been appraised at S$573.0 million by Savills and at S$570.0 million by Knight Frank.