S$1.03-KRET.SI / $2.72-KPLD.SI
?? K-Reit’s unit price will likely “do little” in the near term following its purchase of 87.5% of recently completed Ocean Financial Centre.
?? Like all its recent yield-accretive acquisitions, the seller is sponsor K-Land which will provide income support for 5 years, and funding will come from a rights issue (17-for-20 to raise about $976 mln) and borrowings.
?? K-Reit is paying $1571.3 mln.
?? K-Land will realize profit of $493 mln.
?? A key reason for not expecting much investors enthusiasm is that interest in the office sector has waned considerably because of the current crisis, which has led many international financial institutions to shrink workforce.
?? K-Reit’s exposure to the Singapore office segment (primarily in Raffles Place, Marina Bay ) will rise to 93% from 89.5%.
?? We maintain BUY on both K-Reit and K-Land, although there is likely no hurry to do so in the case of the former.
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