Keppel Pacific Oak US REIT to acquire Dallas property for US$102 million

U.S. one-dollar currency notes; taken September 2018.U.S. one-dollar currency notes; taken September 2018.

Keppel Pacific Oak US REIT, or KORE, entered a deal to acquire One Twenty Five, an office complex in the Dallas-Fort Worth area in Texas from KBS SOR 125 John Carpenter for US$101.5 million, the REIT said in a filing to SGX Friday.

The office complex has two class-A buildings, located at 125 East John Carpenter and 5100 North O’Connor, in the Las Colinas submarket, located in North Central Texas, the filing said. The area has one of the highest concentrations of corporate headquarters in the U.S., it added.

The acquisition is expected to be accretive, with pro forma distribution per unit expected to get a 1 percent boost, assuming the property had been purchased on the listing date of 9 November 2017 through end-2018, KORE estimated.

David Snyder, CEO and CIO of the REIT’s manager said the acquisition is part of the strategy to invest in U.S. growth markets.

“We are capitalising on the positive leasing dynamics in a strong submarket in one of the largest and fastest growing office markets in the country,” he said in the statement. “This is a great example of a modern and vibrant live-work-play environment that has been developed in a strong suburban submarket rather than in a more traditional downtown.”

The REIT said it plans to finance the deal with a combination of the proceeds of a private placement to institutional and other investors, debt financing and internal cash resources.

The property has a committed occupancy of 95.5 percent and limited lease expiries until 2023, the REIT said, adding it is currently leased to 20 tenants from diverse industries, including government, medical, healthcare, financial and insurance.

Rents at the property are 10.7 percent below market, offering the opportunity for organic growth as leases are marked to market, KORE said.

Once the acquisition is completed, KORE will have 13 properties across eight U.S. markets, the filing said.

The acquisition is subject to approval from KORE unitholders, the filing said.

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