Is Keppel-KBS US REIT’s acquisition in Seattle beneficial for unitholders?


In this guest post by Tam Ging Wien, he analyses the details of Keppel-KBS US REIT's rights issue and acquisition, and explains to unitholders how the move might affect them.

On the 24-Sep-2018, Keppel-KBS REIT announced its maiden acquisition of Seattle assets known as the Westpark Portfolio in Redmond, Washington for US$169.4mil.

The assets are valued at US$178.0mil and US$181.4mil by valuers Cushman and JLL respectively. The agreed acquisition price is therefore 4.8% and 6.6% discount to both the independent valuations.

According to the announcement, the acquisition is expected to be yield accretive based on pro forma figures with the following assumptions:

    Portfolio has an occupancy rate of 97.7%
    Partially funded with a rights issue of US$0.59 per unit to raise US$102.3mil
    Resulting theoretical ex-rights price of US$0.7854
    In a surprising twist, Keppel-KBS REIT announcement late Monday on the 23-Oct-2018 for a 295-for-1000 rights issue priced at only US$0.50 per unit, 15% lower than its initial assumption. This larger than expected rights would result in the theoretical ex-rights price of US$0.666 instead.

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