Keppel Pacific Oak US Reit buys Dallas office complex for US$101.5m

Keppel Pacific Oak US Reit, previously known as Keppel-KBS US Reit, on Friday said that it has agreed to acquire One Twenty Five, an office complex in Irving, Dallas, from vendor KBS SOR 125 John Carpenter, LLC for US$101.5 million.

The office complex, comprising two class A buildings - 125 East John Carpenter and 5100 North O'Connor - is located in the submarket of Las Colinas, a key economic hub of North Central Texas with a high concentration of corporate headquarters in the US.

The complex offers a total of 445,317 sq ft of space, and has undergone extensive capital improvements and asset enhancements since 2015. It has a committed occupancy of 95.5 per cent, and is currently leased to 20 tenants from industries, mainly in the professional services, medical and healthcare, government, as well as financial and insurance sectors.

The Reit manager said: "Las Colinas has been experiencing strong leasing demand supported by limited supply of quality office spaces, as well as strong employment growth and population expansion. Las Colinas is also home to mixed-use developments, Gables Water Street and the Toyota Music Factory, and new multifamily housing projects, which have created a desirable urban live-work-play community in this attractive suburban submarket, and continues to attract a young, well-educated and affluent population."

Upon completion of the acquisition, expected in the fourth quarter of 2019, the pro-forma distribution per unit (DPU) to unitholders would have grown by 1 per cent from 6.22 US cents to 6.28 US cents.

At the same time, the Reit's net leasable area will increase by 10.5 per cent to over 4.7 million sq ft of quality office space, with an improved portfolio committed occupancy rate of 94.2 per cent as at end-June 2019. Assets under management will also expand by 9.3 per cent to about US$1.2 billion.

The manager plans to finance the acquisition with the proceeds from a private placement to institutional and other investors, debt financing and internal cash resources. The proportion of debt and equity to be employed will be decided at a later date.

The acquisition is subject to unitholders' approval at an extraordinary general meeting.

Units of the Reit closed a cent higher at US$0.75.