Keppel unit to set up Australian office-focused funds with new JV

KEPPEL Capital Holdings, the asset management arm of Keppel Corp, has entered into a shareholders' deed with Australian Unity to form a 50:50 joint venture (JV) company.

Australian Unity provides services in healthcare and finance, as well as retirement and living services.

The JV's main objective is to establish funds focused on the Australian metropolitan office sector, to provide "attractive income yield and total return to investors over the long term", Keppel Corp said in a statement on Friday.

In addition, the JV will also acquire the entire stake in Australian Unity's wholly-owned subsidiary, Australian Unity Investment Real Estate Limited (AUIREL), for about A$400,000 (S$365,634) in cash.

This will be funded equally by Keppel Capital and Australian Unity through equity contributions in the JV.

AUIREL is the responsible entity of Australian Unity Office Fund, an Australia-listed real estate investment trust (Reit) which has a market cap of A$467 million and assets under management of A$668 million as at Dec 31.

The Australian Reit's portfolio comprises nine office properties located across key metropolitan and central business district markets in Sydney, Adelaide, Melbourne, Brisbane and Canberra.

The purchase consideration for AUIREL took into account its book value and net tangible assets, which totalled about A$482,000 as at June 30, 2019.

Christina Tan, chief executive officer of Keppel Capital, said the partnership with Australian Unity marks a "significant milestone" as it seeks to deepen its footprint in Australia.

"Australian real estate continues to be an attractive asset class, generating attractive income returns in a low yield environment," Ms Tan added.

Both the JV company and AUIREL will be associated companies of Keppel Corp upon formation and completion of the acquisition respectively.

Shares in Keppel Corp closed at S$6.69 on Thursday, down five Singapore cents, or 0.7 per cent.