Keppel Pacific Oak US Reit to acquire two US office buildings for $143 million

The properties are Bridge Crossing (left) in Nashville, Tennessee, and 105 Edgeview in Denver, Colorado. PHOTOS: KEPPEL CORPORATION

SINGAPORE (THE BUSINESS TIMES) - Keppel Pacific Oak US Reit (Kore) is proposing to acquire two office assets in the United States for a total of US$105.1 million (S$143 million), the real estate investment trust (Reit) manager announced on Wednesday morning (July 28).

The properties are Bridge Crossing in Nashville, Tennessee, which will be purchased for US$46 million, and 105 Edgeview in Denver, Colorado, at US$59.1 million.

Both are 100 per cent leased to tenants in the technology sector as at June 30 this year.

Occupants include Bridge Crossing's anchor tenant Comdata, which is a part of the New York-listed Fleetcor Group. Meanwhile, 105 Edgeview's anchor tenant is broadband connectivity services provider Gogo Business Aviation, whose lease expires in 2029.

In its announcement, Kore's manager said it believes its proposed acquisitions of these buildings will deepen the Reit's presence in key growth markets and enhance its portfolio's income resilience.

The acquisitions are seen as distribution per unit (DPU)-accretive, and the manager believes additions of these assets will strengthen Kore's distributions and total unitholder returns.

Further, Kore's manager highlighted Nashville and Denver as prime locations in key sub-markets with limited upcoming supply. The acquisitions augment Kore's green footprint and enhance the Reit's weightage in current indexes while positioning it for further index inclusions, added the manager.

Kore's manager intends to finance the acquisitions through a combination of debt financing and proceeds from a private placement of new units in the Reit.

In a separate announcement on Wednesday morning, the manager said it is proposing to place out new units of the Reit to raise gross proceeds of about US$65 million.

The placement's issue price will be between 72 US cents and 74.3 US cents per new unit, representing a discount of 6.6 per cent to 9.5 per cent to the volume-weighted average price of 79.59 US cents per unit of Kore for trades done on Tuesday.

DBS Bank and UOB have been appointed joint bookrunners and underwriters of the deal.

The manager also said Kore's trustee, Perpetual (Asia) Limited, has obtained a 5.5-year US$120 million loan facility following a July 27 facility agreement.

Under the terms and conditions of the agreement, the aggregate level of facilities that may be affected by a mandatory pre-payment event - or a cross default under other borrowings of Kore and its subsidiaries - is US$684.7 million.

Units of Kore ended 1.5 US cents, or 1.9 per cent higher, at 80 US cents on Tuesday, before the Reit manager called for a trading halt pending the announcement.

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