K-REIT Asia (KREIT), the Singapore office landlord partly owned by Keppel Corp., climbed to the highest in more than nine months after saying it bought an additional stake in Ocean Properties LLP.
The stock rose 2.9 percent to S$1.055 at the close in Singapore trading, the highest since Sept. 9. The real estate investment trust paid S$261.6 million ($204 million) for an additional 12.39 percent of the downtown Ocean Financial Centre, raising its holding to 99.9 percent, it said in a Singapore stock exchange statement yesterday. The property has 887,423 square feet of rentable space.
The acquisition will add to K-REIT’s assets where office rents in the city-state advanced to the highest in three years at the end of 2011, based on government data. The purchase will be funded by bank borrowings and proceeds from a placement of 60 million new units at an offer price of S$1.17 per share that will help raise S$70.2 million.
“The acquisition price represents a 10 percent discount against Savills valuation of S$291 million as of 15 June 2012,” Min Chow Sai and Paul Lin Zikai, Singapore-based analysts at Nomura Holdings Inc., said in a note to clients yesterday. Ocean Financial Centre’s committed occupancy is estimated at more than 90 percent as of the first quarter, compared with 80 percent in the previous three months, according to the note. The stock is rated neutral by the brokerage.
The Ocean Financial Centre, a 43-story office tower, is located on a site with a 999-year leasehold title that commenced from 1862. The acquisition will allow K-REIT to increase its interest in a premium office building and is expected to be yield-accretive and increase the distribution to unit holders, it said in the statement.
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