K-REIT Asia Management Limited has announced that RBC Dexia Trust Services Singapore Limited – a trustee of K-REIT Asia – through K-REIT (Australia) Sub-Trust 1 – a wholly-owned subsidiary of K-REIT Asia – has entered into an agreement with Kingvest Pty Limited for the acquisition of an office tower and portion of a retail component located at 77 King Street in Sydney, at a price of approximately S$145 million (A$120 million).
The recently refurbished property, which is located in Sydney’s CBD, has a total net lettable area of 170,662 sq ft across five levels of quality retail space and 18 levels of Grade A office space. It is located near the main CityRail Stations – Martin Place, Wynyard and Town Hall Stations.
Following the acquisition, K-REIT Asia will own the 18-level office tower or around 130,394 sq ft of office space, as well as 16,856 sq ft of retail space across the ground and two basement levels.
"This acquisition is in line with K-REIT Asia’s investment strategy of acquiring quality commercial buildings pan-Asia. In addition, it demonstrates our ability to acquire yield accretive and income-producing assets overseas that strengthen K-REIT Asia’s sterling portfolio," said Professor Tsui Kai Chong, chairman of K-REIT Asia Management Limited.
Ms. Ng Hsueh Ling, chief executive of K-REIT Asia Management Limited, added that it’s "a rare opportunity to be able to acquire a prime asset that is strategically located in the heart of Sydney. More importantly, as all the leases for this acquisition are embedded with fixed annual rental escalations, the stable and growing cash flows will contribute towards the steady returns which K-REIT Asia aims to provide to unitholders. The acquisition will also improve income diversification and enhance K-REIT Asia’s current tenant base."
Funding for the acquisition will come from a combination of equity and debt from the proceeds of the rights issue of K-REIT Asia. The aggregate leverage of the company is likely to increase from 15.2 percent to 20.4 percent following the acquisition’s completion in Q4 2010.