Keppel Wins Approval to List $500M US Office REIT in Singapore

Keppel Corporation announced on Friday that it has received approval from the Singapore stock exchange for a proposed listing of a new real estate investment trust (REIT), composed of $820 million in US office assets.

The Singaporean conglomerate, which already manages some S$25 billion ($18.3 billion) in assets under its Keppel Capital division, received an eligibility to list letter from the Singapore Exchange for the REIT, according to an official announcement by the company, which noted that no final decision has been made about following through on the proposed initial public offering.

The REIT, which is aimed at raising $500 million for its sponsors, would be managed together with a division of Newport Beach, California-based property investment group KBS Realty through a new joint venture firm. Keppel Capital, which already manages three Singapore-listed REITs, sees the new listed trust as an opportunity to expand into new geographies, according to a statement by the parent company.

New REIT Would Offer Singaporean Access to US Office Assets

While final plans for the REIT have not yet been officially announced, accounts last month indicated that the REIT would initially hold 11 office assets spread across US cities with a total valuation of approximately $820 million. The cities represented in the REIT’s portfolio include Seattle and Sacramento on the west coast, Orlando and Atlanta in the south, Austin and Houston in Texas and Denver, Colorado.

“With growing demand by global investors for US real estate investments in view of the continued stable and sustainable growth of the US economy, this joint venture will provide Keppel with a strategic platform to expand its geographic footprint in the US market,” Keppel said in its statement.

The REIT would be the second such listed trust offering access to income from US assets on the Singapore exchange after Canadian insurer Manulife listed Manulife US REIT via a $470 million IPO in May 2016.

KBS will be providing the properties for the new REIT, with the partners planning to raise some $500 million through the potential IPO, with an article in the Wall Street Journal which cited sources familiar with the proposed REIT saying it would offer an investment yield of close to seven percent.

US-SG Joint Venture to Manage REIT

With the stock exchange approval in hand, Keppel also announced on Friday that it had agreed to acquire from KBS Pacific Advisors, a unit of KBS Realty, a 50 percent interest in Keppel-KBS US REIT Management Pte Ltd for an aggregate consideration of $27.5 million, with the company being proposed as the manager of the planned REIT.

KBS, which is controlled by partners Peter McMillan III, Keith D Hall, Rahul Rana and Richard Bren, would retain the remaining 50 percent stake in the REIT manager. The Newport Beach-based company has previously established seven REITS in the US covering both residential and commercial assets.

Keppel Capital already manages Keppel REIT, Keppel Infrastructure Trust and Keppel DC REIT, and in recent years has been expanding the geographic footprint of these listed vehicles. In June Keppel REIT bought a 50 percent stake in a Melbourne office project for A$347.8 million ($271 million), and in September the company’s DC REIT, which specialises in data centres, acquired a data facility in Dublin, Ireland for 66 million euros ($79 million).