Prime US Reit has entered into a purchase agreement for an office tower in the downtown area of Sacramento, California, in the United States for US$165.5 million (S$229.4 million).

The property, called Park Tower, is a freehold 24-storey Class A office tower and five-storey mixed-use retail or parking garage with a net lettable area of 489,171 sq ft.

The purchase price represents a 2.6 per cent discount to the property's independent valuation of US$170 million as of Jan 16.

The estimated total cost of the proposed acquisition is about US$170.1 million, comprising the US$165.5 million purchase price, a US$1.7 million acquisition fee to be paid to the manager in cash, and estimated professional fees and other transaction fees and expenses of around US$3 million.

The latter includes financing and equity fund-raising related expenses, due diligence cost, land transfer taxes and costs to be incurred in relation to the valuation.

The proposed acquisition will allow Prime US Reit to expand its footprint to Sacramento, following which no single market will contribute more than 13 per cent of the real estate investment trust's (Reit) cash rental income, said its manager, KBS US Prime Property Management. The manager is an associate company of Singapore Press Holdings - which publishes The Straits Times. The purchase will be financed by a combination of loans and the issuance of new units in the Reit via a proposed private placement.

THE BUSINESS TIMES