Keppel Pacific Oak US REIT to acquire Dallas office complex for $140.23m

One Twenty Five comprises two Class A buildings with a total space of 445,315 sqft.

Keppel Pacific Oak US REIT (KORE) will acquire One Twenty Five, an office complex in Dallas, Texas, for $140.23m (US$101.5m) after an agreement with KBS Strategic Opportunities REIT I&II, according to a media release.

One Twenty Five comprises two class A buildings, 125 East John Carpenter and 5100 North O'Connor, with a total space of 445,317 sqft. It is currently leased to 20 tenants, including dialysis service company Bio-Medical Application of Texas and investment advisory firm United Capital Financial Advisors.

It has a committed occupancy of 95.5%, with a weighted average lease expiry (WALE) of 7.0 years and limited lease expiries until 2023.

RHB Investment Bank reported that the property's WALE is nearly double the length of KORE's current portfolio average of 3.8 years.

Upon the expected completion of acquisition by Q4 2019, its pro-forma DPU to unitholders will grow 1.0% to 8.7 cents (6.28 US cents). KORE's net leasable area will also increase 10.5% to over 4.7 million sqft of quality office spaces, with portfolio committed occupancy rate increasing to 94.2%.

In addition, assets under management (AUM) will expand 9.3% to about $1.66b (US$1.2b), and tenant base will increase to 486, with top 10 tenants' cash rental income contribution reducing 18.5%.

DBS also commented the acquisition highlighted that KORE will continue to have the first look on any potential asset divestment by KBS.

"The name change and parting of the relationship with KBS would provide clarity to investors given that there have been questions raised on the close relationships and investment mandates with Prime US REIT, which is also sponsored by another entity of KBS," DBS said.