Keppel Reit divests Sydney office building for $158m

The manager of Keppel Reit has sold an office building in the central business district of Sydney, Australia, for A$160 million (S$158 million).

The sale price of the property at 77 King Street is about 40 per cent above the original purchase price of A$116 million at the end of 2010. It is also at a premium of 27 per cent over the building's latest valuation of A$126 million.

This translates into a divestment gain of A$28 million for the Reit.

The new owners of the building - ARE Noble, a wholly-owned subsidiary of Invesco Asia Core Fund - paid a deposit of A$16 million, said the Reit manager in a Singapore Exchange filing yesterday.

"The strategic divestment of 77 King Street is in line with our commitment to maximise and capture value for unitholders, while providing Keppel Reit with greater financial flexibility," said Ms Ng Hsueh Ling, chief executive of the Reit manager.

The manager intends to use the sale proceeds to repay debt, fund general corporate and working-capital purposes and for future investment opportunities.

The office building offers approximately 147,000 sq ft of net lettable area over 18 levels of offices and two basement levels of retail space.

The divestment is expected to be completed in the first quarter of 2016, said the Reit manager.

Following the divestment, Keppel Reit will continue to own four premium-grade office assets in Australia - in Sydney, Brisbane, Perth and Melbourne.

The average lease expiry of Keppel Reit's Australian portfolio is about 10 years, with an average age of five years. Prior to the sale of the office building in Sydney, Keppel Reit had an asset size of about $8.4 billion, comprising interests in nine premium office assets with 12 office towers located in the central business districts of Singapore, as well as in key cities in Australia.

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A version of this article appeared in the print edition of The Straits Times on January 18, 2016, with the headline Keppel Reit divests Sydney office building for $158m. Subscribe