Kore strength in building relationships puts it ahead in real estate business
KEPPEL Pacific Oak US Reit (Kore) enjoys the highest portfolio occupancy rates among the three Singapore-listed real estate investment trusts (S-Reits) with a focus on US office assets. And it comes as no surprise to David Snyder, chief executive officer of Kore’s manager.
Committed occupancy across Kore’s portfolio of 13 office properties in eight US cities stood at 90.8 per cent as at end-June. In comparison, Prime US Reit’s occupancy stood at 85.6 per cent as at end-June, according to its latest results announcement.
The third US office S-Reit, Manulife US Reit , last reported occupancy at 86.1 per cent, including leases signed up to mid-April. It is expected to release its latest results for the period ended June on Aug 14.
At the core of Kore’s success is its relatively resilient tenant base. “We’ve got higher overall occupancy in large part because we have better tenancy,” Snyder said. “We’ve got a lot more technology and a lot more healthcare tenants; both of those are generally recession-proof.”
It also helps that most of Kore’s assets are located in growth cities that have benefitted from an exodus of Fortune 500 companies from the traditional gateway cities.
But Snyder has another ace up his sleeve: the strong relationships that the real estate investment trust (Reit) manager has built with its strategic partners, from leasing agents to property managers and even designers.
“In other people’s minds, real estate is all about location, location, location. That is important in how you select a building,” Snyder explained. “But how you run a real estate business is relationship, relationship, relationship.”
“We have friendships with these people, it’s not just a business relationship,” he added. “We actually know each other, and we like each other.”
Many of these relationships had started even before Kore was listed in 2017. For example, Doug Little, executive managing director at commercial real estate company Transwestern, said that he has worked with Snyder and Kore’s portfolio manager Jeff Rader for “over 15 years”.
In a recent media and analyst tour of Kore’s properties in the US, Little spent the entire day with the group. “Doug Little runs the entire Midwest for Transwestern. We shouldn’t even be seeing him, but he spent the whole day with us,” Snyder said. “That’s unheard-of for a company our size, but it’s relationship, relationship, relationship. That’s how we build our business; that’s how we have the best leasing teams.”
“The working relationship is like working for your best friend or a family member. There is so much respect and trust, and you don’t want to let them down,” Little noted. “The relationship is seamless.”
“The best part is the trust and camaraderie that is evident when we are around brokers and tenants, (who) can sense the teamwork and care we have for the property and experience we want to provide for them or their client,” he added. “(This) allows us to exceed market expectations.”
Another leasing partner who has worked with Snyder and Rader for close to a decade is CBRE senior vice-president Tim Owens.
“Jeff and David bring care and integrity to the table, and we mutually hold each other accountable to deliver on what we create together,” Owens said. “When you spend that much time in the trenches, you really get to know who you’re working with. And if you don’t enjoy that relationship, it just won’t work in the long run,” he added. “In our case, even our families know each other from short vacations together.”
“The Kore team is one of our favourite clients,” said another CBRE senior vice-president, JT Martin. “We have a respectful and trusting relationship, and they have become close friends to our team.”
While building relationships is important, Martin pointed out that the team at Kore remains business-minded dealmakers. “They can see the forest through the trees and know what it takes to get a deal done,” he added.
“We have built partnerships,” Snyder said. “Jeff Rader has built a partnership with CBRE and Transwestern over a decade plus. He knows everybody there and they treat us like their most important business partner, even though we’re a small company compared to a lot of their clients.”
The strength of Kore’s relationships also extend to other partners such as designers.
Candice Riley Campbell, founder of Nimble Design Co, began working with Kore over six years ago on a brand consulting project in Atlanta. The firm now oversees design for Kore across its entire portfolio. This includes the creation of “speculative suites”, or spec suites, which are move-in-ready spaces designed to attract tenants.
“Kore is collaborative, present and incredibly mindful of the impact of every considered capital project on its current and future tenant base,” Campbell said. “The asset management team at Kore trusts the creative process, removing personal design bias in favour of optimal tenant influence. Every project, new or renovated, is an extension of the property’s brand value.”
Nimble’s projects with Kore include a total redesign of a 25,000 square foot, full-floor spec suite at the 1800 West Loop South property in Houston, Texas.
“Kore was willing to believe in the tangible benefit of design influence at a time when many landlords were holding still,” Campbell added. “It was wholly leased within six months and inspired an additional full-floor lease and ongoing delivery of high-impact spec suites that have earned the trust and reputation of the market.”
