Keppel Capital, together with partners from the US and Singapore, has filed the final paperwork to launch a $813 million Singapore IPO of a set of 11 US commercial properties. according to a stock market announcement on Tuesday.
KBS US Prime Property Management Pte Ltd, which serves as the manager of real estate investment trust Prime US REIT, indicated on Tuesday that it has now registered its final prospectus with the Monetary Authority of Singapore to being offering shares to the public.
Should the listing be implemented according to plan, it would debut as the largest IPO so far this year on Singapore’s main board.
Singaporean Investors Take Cornerstone Stakes
“We are delighted with the strong response to our IPO, with firm support from prominent cornerstone investors and high net worth individuals,” Barbara Cambon, CEO and chief investment officer of the trust’s manager said in a statement. “This is indeed a vote of confidence in our portfolio and its visible growth potential underpinned by built-in rental escalations and rental reversion potential as well as inorganic growth potential.”
The REIT, has already secured commitments of $317 million from nine cornerstone investors — including wholly owned subsidiaries of Keppel Capital and Singapore Press Holdings.
With Singapore’s AT Investments Limited and Hiap Hoe Investment joining the founding partners, the cornerstone backers together have subscribed for a 39 percent stake in the trust, which is equal to 360.3 million units.
KBS Real Estate Investment Trust III, which is selling the initial portfolio to Prime US REIT, is subscribing to 228.4 million units or a 24.7 percent stake in the REIT.
Priced at $0.88 per unit, the trust listing represents a distribution yield of 7.4 percent for 2019 and 7.6 percent in 2020, according to the prospectus.
11 Assets Across 9 Markets
The trust’s assets consist of a set of 11 office properties located in nine markets across the US which the manager’s team considers “landlord-favourable.” The cities represented in the initial portfolio include Oakland, California; Salt Lake City, Utah; Denver, Colorado; St Louis, Missouri; Dallas and San Antonio, Texas; Philadelphia, Pennsylvania; the Washington, DC area and Atlanta, Georgia.
With the REIT manager viewing these urban centres as focal points for rising rents and favourable macroeconomic conditions, the trust will be taking possession of a total of 3.4 million square feet (316,000 square metres) of offices by net lettable area.
As at Dec 31, 2018, Prime US REIT’s set of freehold assets had a total appraised value of $1.2 billion and an occupancy rate of 96.7 percent, according to the prospectus.
Second US REIT on the Way
The proposed offering delayed from earlier attempts last year, is set to follow in the footsteps of Keppel-KBS US REIT which raised $553.1 million when that KBS-Keppel Corp joint venture debuted in 2017.
The trust is to be managed by a joint venture between KBS Asia Partners — which takes a 60 percent stake in the trust manager, with Keppel Capital Two — which holds a 30 percent interest, and Experion Holdings, a wholly owned subsidiary of Singapore’s AT Holdings, holding the remaining 10 percent.
Sponsor KBS Asia Partners is linked to KBS, one of the US’s largest commercial real estate managers with $11.6 billion of assets under management as at December 31, 2018.