Ambitious acquisition plans worth over US$670 million (S$911 million) are on the cards for Keppel-KBS US Reit as it readies for its listing here, it said yesterday.
The Reit's joint sponsors, Keppel Capital and KBS Pacific Advisors, said the trust has the option of buying four other properties in the United States - two in Seattle, one in Austin and one in Atlanta - with a combined gross value of over US$320 million to US$350 million in the next one to two years.
"The Reit will be looking at acquisitions in the open market - in addition to the four assets we have identified to be ready in 2018-2019," said Mr Peter McMillan, chairman of Keppel-KBS US Reit.
Those assets are part of the KBS Strategic Opportunity Reit, which is initially selling 11 freehold properties valued at US$829.4 million to Keppel-KBS US Reit as its initial public offering (IPO) portfolio.
There could be another US$300 million to US$320 million worth of assets under a second Strategic Opportunity Reit managed by KBS that could be stabilised for acquisition in the next two to three years, Mr McMillan added. Two properties are in San Francisco, one in Dallas and one in Phoenix.
There is no right of first refusal for these assets for Keppel-KBS US Reit due to US rules preventing any class of investors being unfairly favoured. But the Keppel-KBS Reit "has certain advantages in buying from the Opportunity Reits", thanks to better access to information and lower transaction costs without the need for a broker, said Mr McMillan, who is also co-founder of California-based KBS.
Its IPO portfolio spans a net lettable area of 3.2 million sq ft across Seattle, Sacramento, Denver, Austin, Houston, Atlanta and Orlando. Close to 70 per cent is Class A.
LOOKING AT OPEN MARKET
The Reit will be looking at acquisitions in the open market - in addition to the four assets we have identified to be ready in 2018-2019.
MR PETER MCMILLAN, chairman of Keppel-KBS US Reit.
Yesterday, Keppel Capital's IPO prospectus was registered. It had said last week that its IPO of 88 US cents per share could raise gross proceeds of US$553.1 million.
Its offering of 262.77 million shares comprises an international placement of 228.68 million units to investors outside the US and a tranche of 34.09 million units to the Singapore public.
Separately, the cornerstone investors have agreed to subscribe for 246.37 million units, while the joint sponsors - who own the Reit manager - are subscribing for about 119.43 million units at the offer price. Each sponsor will end up with no more than 9.5 per cent stake in the Reit.
Mr McMillan said KBS was initially considering the US, London and Singapore for the public listing of the Opportunity Reit's assets. It was during a trip to Singapore in January that KBS was introduced to Keppel Capital.
"We felt that it made sense to come into Singapore with a local partner who knew the market and investors," he said, adding such a partner can also provide KBS with local talent for the Reit manager.
Keppel-KBS US Reit's distribution yield for 2018 is estimated to be 6.8 per cent, with an expected distribution yield of 7.2 per cent for 2019, reflecting a total return of 12.6 per cent.