29-June-2017
Keppel REIT acquires a 50% interest in a premium office tower to be built in Melbourne

This will be the REIT’s second freehold office development in Melbourne, with completion expected in 4Q 2019

Keppel REIT Management Limited, as Manager of Keppel REIT, is pleased to announce that Keppel REIT, through its wholly-owned sub-trust, Keppel REIT (Australia) Sub-Trust 5, has entered into an agreement with Australia Postal Corporation to acquire a 50% stake in a premium office tower to be developed at 311 Spencer Street in Melbourne. The acquisition is for an aggregate consideration of A$347.8 million or approximately S$362.4 million1.

The 50% stake in the new office tower will be Keppel REIT's second asset in Melbourne. The remaining
50% stake will be held by Cbus Property Pty Ltd (Cbus Property), one of Australia's leading property investors and developers. Cbus Property is also the developer for this development. Construction of the office tower will commence in the third quarter of 2017, and practical completion expected in the fourth quarter of 2019.

The Grade A2 office tower is strategically located between Melbourne's central business district (CBD) and
the new Docklands precinct, which is an extension of the CBD. Sited on freehold land, the development is within walking distance to the Southern Cross Station, the city's major railway and transportation hub. Designed by leading architecture firm, Woods Bagot, the office tower will feature an estimated net lettable area of 717,000 square feet across 42 levels.

When the development is completed, it will be fully leased to the Assistant Treasurer for the State of Victoria on a 30-year net lease. Under the agreement, the lease will include fixed annual rental escalations throughout the entire lease term, and options to renew for three additional terms of five years each. The lease is also subject to a market rent review at the commencement of year 16, subject to a cap and collar.

Mr Tan Swee Yiow, CEO of the Manager, said, "The new office tower at 311 Spencer Street will provide Unitholders sustainable income growth over the long term and a stable average yield of 6.4%3 per annum over the first 15 years from the lease commencement.

"It will also enhance Keppel REIT's portfolio, extending its weighted average lease expiry to approximately nine years4. This is part of Keppel REIT's continuous process to improve its portfolio through strategic divestments and acquisitions, and in line with Keppel REIT's objective of delivering sustainable returns to our Unitholders over the long term."

The acquisition will be funded through a combination of a part of the proceeds from the divestment of
77 King Street in Sydney in January 2016 and through debt. The Manager will determine the optimal funding structure for the subsequent progress payment tranches, depending on prevailing market conditions, amongst other factors. The acquisition is expected to be completed by the third quarter of 2017.

Incorporating the latest in green technology, the development is designed to meet the 5-Star Green Star and 4.5-Star energy rating standards by the Green Building Council of Australia and National Australian
Built Environmental Rating System, respectively.


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1Based on an exchange rate of A$1.00 to S$1.042.
2Based on the Property Council of Australia's "A Grade" specifications.
3Based on the expected net property income of the Building for the first 15 years of the lease to the tenant, over the consideration. There is a market rent review at the commencement of year 16, subject to a cap and collar.
4As at 31 December 2016, and assuming the 30-year lease to the tenant in respect of the building commenced on 1 January 2016.

 

 

For more information, please contact:

Media Relations

Ms Teri Liew
Deputy General Manager
Group Corporate Communications
Keppel Corporation Limited
Tel: (65) 6413-6425 / (65) 9686-4038
Email: teri.liew@kepcorp.com

Investor Relations

Ms Grace Chia
Head
Investor Relations & Communications
Keppel Capital
Tel: (65) 6803-1739
Email: grace.chia@kepcapital.com



About Keppel REIT (www.keppelreit.com)

Keppel REIT was listed by way of an introduction on 28 April 2006. Keppel REIT is one of Asia's leading REITs with the youngest and largest portfolio of premium Grade A commercial assets in Singapore's prime business and financial districts.

Keppel REIT's objective is to generate stable income and long-term growth for Unitholders by owning and investing in a portfolio of quality income-producing commercial real estate and real estate-related assets in Singapore and pan-Asia.

As at 31 March 2017, Keppel REIT had assets under management of approximately S$8.4 billion comprising interests in eight premium office assets with 11 office towers strategically located in the central business districts of Singapore, as well as key Australian cities of Sydney, Melbourne, Brisbane and Perth.

In Singapore, the assets are Ocean Financial Centre (99.9% interest), Marina Bay Financial Centre (comprising office Towers 1, 2 and 3 and the subterranean mall, Marina Bay Link Mall) (one-third interest), One Raffles Quay (one-third interest) and Bugis Junction Towers (100% interest).

In Australia, the assets are 8 Chifley Square (50% interest) in Sydney, 8 Exhibition Street in Melbourne
(50% interest in the office building and two retail units, as well as a 100% interest in the three adjoining
retail units), 275 George Street in Brisbane (50% interest), as well as the David Malcolm Justice Centre in Perth (50% interest). On 29 June 2017, the Manager announced the acquisition of a 50% stake in a premium office tower to be developed at 311 Spencer Street in Melbourne. The acquisition is expected to be completed by the third quarter of 2017.

Keppel REIT is sponsored by Keppel Land Limited, one of Asia's leading property companies. It is managed by Keppel REIT Management Limited, a wholly-owned subsidiary of Keppel Capital Holdings Pte. Ltd.
(Keppel Capital). Keppel Capital is a premier asset manager in Asia with assets under management of approximately $25 billion in real estate, infrastructure and data centre properties in key global markets.

 

Important Notice

This Announcement is for information only and does not constitute an invitation or offer to acquire, purchase or subscribe for Units.

This Announcement may contain forward-looking statement that involves risks and uncertainties. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statement as a result of a number of risks, uncertainties and assumptions. Representations examples of these factors include (without limitation) general industry and economic conditions, interest rate trends, cost of capital and capital availability, competition from other companies and venues for the sale or distribution of goods and services, shifts in customer demands, customers and partners, changes in operating expenses (including employee wages, benefits and training costs), governmental and public policy changes and the continued availability of financing the amounts and the terms necessary to support future business. Investors are cautioned not to place undue reliance on these forward-looking statements, which are based on the Manager's current view on future events. The past performance of Keppel REIT and the Manager are not necessarily indicative of the performance of any of them.

The value of Units and the income derived from them may fall as well as rise. Units are not obligations of, deposits in, or guaranteed by, the Manager, or any of its affiliates. An investment in Units is subject to investment risks, including the possible loss of the principal amount invested.

Investors have no right to request the Manager to redeem their Units while the Units are listed. It is intended that Unitholders may only deal in their Units through trading on the SGX-ST. Listing of the Units on the SGX-ST does not guarantee a liquid market for the Units.

The past performance of Keppel REIT is not necessarily indicative of the future performance of Keppel REIT.