- What is K-REIT Asia?
K-REIT Asia is a real estate investment trust established by Keppel Land to unlock value for its unitholders.
K-REIT Asia is established with the objective of generating stable returns to its Unitholders by owning and investing in a portfolio of high quality real estate and real estate-related assets which are income producing and are predominantly used for commercial purposes.
K-REIT Asia has an initial portfolio of four high quality commercial buildings, namely Prudential Tower Property (approximately 44% of the strata area of the building), Keppel Towers and GE Tower as well as Bugis Junction Towers. In 2007, K-REIT Asia enlarged its portfolio with the acquisition of a one-third interest in One Raffles Quay, the gateway to Singapore's new downtown at Marina Bay. In November 2009, K-REIT Asia increased its stake in Prudential Tower to 73.4% of the total strata area of the building. These buildings have a diverse and quality tenant base, including many international and local tenants.
In March 2010, K-REIT Asia made its maiden venture overseas with the purchase of a 50% stake in 275 George Street - a newly completed Grade A 30-storey office development in Brisbane, Australia.
K-REIT Asia announced its second overseas acquisition in July 2010. The acquisition of the prime office tower at 77 King Street in Sydney, Australia is expected to be completed in the fourth quarter of 2010.
- How is Keppel Land related to K-REIT Asia ?
Keppel Land is the sponsor for K-REIT Asia.
K-REIT Asia has acquired its initial portfolio of four buildings from wholly-owned subsidiaries of Keppel Land for S$630.7 million. This was satisfied in part by cash of approximately S$190.6 million and the balance of about S$440.1 million by units in K-REIT Asia.
Keppel Land has distributed about 60% or up to 144.4 million units in K-REIT Asia to unitholders by
way of a distribution in specie and retained a 40% stake in K-REIT Asia. To demonstrate its commitment to K-REIT Asia,
Keppel Land and Keppel Corporation have held onto their combined stake of about 76% in K-REIT Asia.
In 2007, K-REIT Asia completed the acquisition of a one-third interest in One Raffles Quay from Keppel Land for $953.6 million, including acquisition related expenses and accrued purchase consideration.
K-REIT Asia is supported by the management resources and experience of Keppel Land. These resources include, amongst others, the skill sets of Keppel Land and its extensive local knowledge of real estate gained through many years of investing in real estate in Asia. Keppel Land will also provide on-going assistance and support to K-REIT Asia by making available from time to time as it considers appropriate, property investment and evaluation expertise and assistance advice on the management and maintenance of investments which are acquired by K-REIT Asia.
- What is Keppel Land's rationale for holding a 45% stake in K-REIT Asia?
Keppel Land hopes to align its interests with unitholders by retaining a meaningful stake in K-REIT Asia. A stake in K-REIT Asia also reinforces the Group's confidence in the future growth of K-REIT Asia and allows the Group to participate in the future appreciation of its asset value.
- How and when will income distribution be made available to unitholders?
K-REIT Asia distributes at least 90% of its distributable income on a semi-annual basis.
- What is the size of K-REIT Asia's property portfolio and what are the criteria for the selection of properties?
K-REIT Asia's portfolio consists of six quality office buildings - Bugis Junction Towers, Keppel Towers and
GE Tower, a one-third interest in One Raffles Quay, a 73.4% interest in Prudential Tower and a 50% interest in 275 George Street in Brisbane, Australia. The enlarged property portfolio has a total lettable area of about 1.5 million sf. The buildings are strategically located within or near the Central Business Districts in Singapore and Brisbane, Australia.
Going forward, K-REIT Asia will seek to expand its scale of the portfolio through acquisitions of assets that
are yield-accretive and meet its investment objective of providing stable returns and long-term growth in asset
values for Unitholders.
- What are the occupancy and rental rates of K-REIT Asia's property portfolio?
The committed occupancy of K-REIT Asia's property portfolio was 97.9% as at 30 June 2010.
K-REIT Asia's average Singapore portfolio rent was S$8.19 per square feet for June 2010.
- What is the investment strategy of K-REIT Asia?
The principal investment strategy of K-REIT Asia is to achieve stable income and long-term growth in net asset value for Unitholders by investing primarily in a portfolio of quality real estate and real estate-related assets which are income-producing and used predominantly for commercial purposes in Singapore and Asia.
Strategic plans to achieve this include :
- Acquisition growth strategy to acquire yield-accretive commercial properties that meet its investment criteria.
- Active asset management strategy to increase property yield and maximise returns from the properties.
- Capital management strategy by employing appropriate debt and equity financing strategies.
- Going forward, what will be K-REIT Asia's growth strategy?
K-REIT Asia will seek to grow organically and through selective acquisition of prime commercial properties in Singapore and around the region. It has made three acquisitions since its inception in 2006. The first was a one-third interest in One Raffles Quay in 2007 followed by a 29.0% increase in interest in Prudential Tower in November 2009. In March 2010, K-REIT Asia completed its maiden overseas investment of a 50% stake in 275 George Street - a newly completed Grade A 30-storey office development in Brisbane, Australia.
More recently in July 2010, K-REIT Asia announced the acquisition of the prime office tower at 77 King Street in Sydney, Australia.
- Which overseas countries is K-REIT Asia targeting to venture into?
K-REIT Asia will look to invest in commercial properties in Asia's growth cities that offer good potential for income growth and asset appreciation for the longer term. Potential acquisitions will be evaluated on a case-by-case basis, taking into account macro factors like economic prospects and micro market factors including the tenant mix, location and quality of the target property.
- Will K-REIT Asia consider development projects?
Under the MAS REIT Guidelines, investments by S-REITs in uncompleted property development activities are subject to a limit
of 10% of total assets. As such, given K-REIT Asia's current assets under management of about S$2.3 billion, the Manager is unlikely to take on any significant property development activities.
- What is the level of revenue and distributable income generated by K-REIT Asia?
For the period 1 January 2009 to 31 December 2009, property income was about S$62.8 million. Income available for distribution to unitholders was about S$70.5 million.
For the period 1 January 2010 to 30 June 2010, property income is about S$41.4 million. Income available for distribution to unitholders is about $39.8 million.
- What is the distribution per unit (DPU) for the period ended 31 December 2009?
For the period 1 January 2009 to 31 December 2009, K-REIT Asia announced a DPU of 5.28 Singapore cents.
- Has K-REIT Asia revalued its property portfolio?
Including the additional six strata floors of Prudential Tower and the 50% interest in 275 George Street in Brisbane Australia that was acquired in March 2010, K-REIT Asia's portfolio size was valued at S$2.3 billion as at 30 June 2010.
- What are the fees payable by K-REIT Asia?
Fees payable by K-REIT Asia are as follows :-
- Manager's management fee - Comprises base fee of 0.5% per annum of the value of property portfolio and a performance fee of 3% of the net property income.
- Trustee's fee - a maximum of 0.03% per annum of the value of property portfolio.
- Acquisition fee - 1% or lower of the purchase price of any investment acquired.
- Divestment fee - 0.5% or lower of the sale price of any investment divested by K-REIT Asia.
- Property management fee payable to the property manager - 3% per annum of the property income.
- Leasing commission payable to the property manager - (i) one month's gross rent for securing a tenancy of two years or more, (ii) one-half month's gross rent for securing a renewal of tenancy of at least a year but less than two years in proportion to the lease, and (iii) one-quarter month's gross rent for securing a renewal of tenancy of less than a year in proportion to the lease.
About 28 million units have been issued as payment for management fees for the period since K-REIT Asia's listing up till 31 December 2009.
- How much security deposit does the Manager usually collect from tenants?
When a prospective tenant has committed to a tenancy, a security deposit equal to at least three months' rent is usually payable.
- The definition of an "interested party" has also been revised. Would this have any impact on K-REIT Asia acquiring assets from Keppel Land in future?
MAS has indicated that the change in definitions is primarily to align the REIT Guidelines with that in the SGX Listing Manual.
As Keppel Land remains a controlling unitholder of K-REIT Asia, Keppel Land is still defined as an interested party of K-REIT Asia. Both K-REIT Asia and Keppel Land have to safeguard the interests of their respective stakeholders. Any transactions will be conducted at arm's length and on normal commercial terms.
