K-REIT acquires another 12.39% stake in OFC

The company just got larger after buying the OFC stake for S$261.6m.

According to Nomura, KREIT acquires a further 12.39% stake in OFC for S$261.6m
(includes S$24.1m income support). Post market close today, KREIT announced its acquisition of a further 12.39% stake in OFC at S$261.6m, c. S$2,380 psf of NLA, which includes S$24.1m of rental support.

Post the transaction, KREIT will effectively own 99.9% (previously 87.5%) of OFC, Nomura said. “The asset has a total NLA of 887,423sqft. The acquisition price of S$261.6m represents a 10% discount against Savills valuation of S$291.0m as of 15 June 2012, c. S$2,647 psf of NLA. OFC’s committed occupancy was reportedly more than 90% as of 1Q12, up from 80% reported in 4Q11.”

“Acquisition will be funded by bank borrowings and proceeds from a placement of 60m new units @ S$1.17. KREIT will be placing out 60m new shares at S$1.17 per unit, translating into an approximate 15% premium over its 25 June 2012 closing price of S$1.02. The private placement is expected to raise approximately S$70.2m. The shortfall of about S$191.4m will be funded via bank borrowings.”

Stock is currently trading at 1% premium to NAV; 0.8x FY12F PBV. KREIT is currently trading at a 1% premium to our NAV target of S$1.01and 0.8x FY12F PBV, Nomura said.