The Acquisition Of Pinnacle Office Park Will Improve Keppel Reit’s Income Resilience – Paul Tham
SYDNEY – Paul Tham, the Chief Executive Officer of Keppel REITS has claimed that the acquisition of their new commercial property in Sydney will boost business for the company, particularly by improving income resilience.
Keppel REIT had to pay the sum of A$306 million for Pinnacle Office Park, a Grade A office building in Sydney. In a press release made by the company, it was said that the fee would be fully paid before the year (2020) is over. With the post-acquisition and aggregate leverage approximated for 38.7%, Keppel Reit arrived at the agreement with Goodman Group (a company in Sydney).
The company accepted a 100% stake for the property, a freehold asset having three office buildings in Macquarie Park. Its CEO Paul Tham had this to say: “with an initial net property income yield of 5.25%, the acquisition of Pinnacle Office Park is in line with our active portfolio optimization strategy to improve Keppel REIT’S income resilience and Portfolio yield. The expansion into the Grade A Metropolitan office space strengthens our portfolio as it complements our prime CBD offering.”
With such new development in the company’s portfolio, their worth is expected to increase to as much as S$8.2 billion. They now manage ten (10) properties, 77% in Singapore, 19.4% in Australia, and 3.6% in South Korea. It is with these achievements Mr. Tham sees great prospects for his firm.
He also believes that the demand for office space is likely to increase as companies in Australia are now seeking for office locations fit for business in this time. For his company, this is an opportunity, perhaps on a silver platter to gain exposure and public acceptance by providing quality metropolitan office space to previously unsatisfied tenants.
In his words, he stated, “In the wake of Covid-19, we believe demand in Australia for quality and well-networked metropolitan locations such as Macquarie Park will increase as more companies seek cost-effective solutions or adopt a hub-and-spoke business model for office locations. The acquisition of Pinnacle Office Park allows Keppel REIT to gain exposure to this key metropolitan office.
With a total NLA of 35,132 Square Metres, Pinnacle Office Park is well-positioned, providing easy access to the Central Business District, quality means of transportation, major roads and highways, hospitals and similar health centres, restaurants and bars, retail and wholesale stores, entertainment centres, etc.
It was also noted that if local authorities give permission, one of the three buildings within the site, 6 Giffnock Avenue, could be diversified or redeveloped into a new office building having an NLA higher than it currently has.
Mr. Tham revealed that the property is blessed with loyal renters like Aristocrat Technologies, Coles Supermarket, Konica Minolta, among others. Its ‘committed occupancy’ is rated 96.3%, a rate enough to spur the interest of Companies.
If things go as meticulously predicted, the acquisition of this property would serve as a gargantuan boost for the Real Estate Investment Trust Company and a motivation to them and other companies to make more of such business decisions in the face of Covid-19.