Keppel Reit divests Australian property for A$275m

K71U : K71U 0% has divested its stake in its Brisbane property for A$275 million (S$277.4 million), the real estate investment trust (Reit) said on Thursday.

The Reit's 50 per cent stake in 275 George Street was sold to Charter Hall Prime Office Fund, which currently holds the other 50 per cent interest in the property. The contract of the sale was executed on June 30, 2021.

Proceeds of the divestment will be used to repay debt and transaction costs to enhance capital efficiency and manage borrowing costs, and also for further growth opportunities, the Reit's manager said.

The Brisbane property was Keppel Reit's first Australian asset, which it acquired in 2010 for A$166 million. It had been valued at A$245 million on a 50 per cent interest basis by CBRE Valuations on Dec 31, 2020.

The Reit's manager expects it will recognise an estimated accounting gain of A$9.8 million from the divestment.

Chief executive of Keppel Reit Management Paul Tham said: "The divestment of 275 George Street is part of our continuing portfolio optimisation strategy, and will provide us with greater financial flexibility as we seek strategic and higher-yielding acquisitions to enhance the Reit's income resilience and deliver sustainable total return to unitholders."

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Post divestment, Keppel Reit's portfolio will consist of 10 properties across Singapore, Australia and South Korea. Its portfolio committed occupancy will remain at 96.9 per cent.

Units of Keppel Reit closed at S$1.17 on Thursday, down one Singapore cent or 0.85 per cent.