Prime US Reit launches IPO to raise equity of US$813 million

Prime US REIT - 171 17th Street, Atlanta, Georgia
Prime US REIT - 171 17th Street, Atlanta, Georgia

KBS US Prime Property Management Pte. Ltd., the manager of Prime US REIT (the "Manager"), is pleased to announce that it has registered its final prospectus (the "Prospectus") with the Monetary Authority of Singapore ("MAS"), in connection with the proposed offering (the "Offering") and listing of units in Prime US REIT ("Units") on the Main Board of the Singapore Exchange
Securities Trading Limited ( "SGX-ST").

Prime US REIT aims to provide Unitholders with regular and stable distributions. Based on the Offering Price of US$0.88 per Unit, Prime US REIT offers an attractive distribution yield1 of 7.4% in Forecast Year 20193 and 7.6% in Projection Year 2020, representing a distribution yield growth of 3.1%.

Ms. Barbara Cambon, Chief Executive Officer and Chief Investment Officer of the Manager, said, "We are delighted with the strong response to our IPO, with firm support from prominent cornerstone investors and high net worth individuals. 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."

"Our high-quality portfolio of prime office properties is well-diversified and strategically located in nine primary markets in the U.S. that are in the "landlord-favorable" part of the office market cycle, where rents continue to grow, backed by robust economic and employment growth."
The Manager is jointly owned by KAP (60% stake); Keppel Capital Two Pte. Ltd. (30% stake), a wholly-owned subsidiary of Keppel Capital Management Pte Ltd; and Experion Holdings Pte. Ltd. (10% stake), a wholly-owned subsidiary of AT Holdings Pte. Ltd.

Times Properties Private Limited, a wholly-owned subsidiary of Singapore Press Holdings Limited ("SPH"), has entered into a call option agreement to acquire from KAP a 20% stake in the Manager after the Listing Date, subject to the approval of the MAS.


Prime US REIT has an initial portfolio comprising 11 high-quality, Class A and freehold office properties with a total Appraised Value5 of US$1.2 billion. The assets are strategically located in nine key office markets across the U.S. – namely, San Francisco Bay Area (Oakland); Salt Lake City; Denver; St Louis; Dallas; San Antonio; Philadelphia; Washington D.C. (suburban Maryland and Virginia); and Atlanta – and have an aggregate net lettable area ("NLA") of 3.4 million sq ft.

Most of these quality properties are located in key business districts or prominent urban centers in mixed-use amenity rich environments that provide a 'live-work-play' environment, with most properties enjoying connectivity to the light rail network. 10 out of 11 properties in Prime US REIT's portfolio enjoy LEED and/or Energy Star ratings. Backed by its sponsor, KBS Asia Partners Pte. Ltd. ("KAP"), Prime US REIT benefits from its association with KBS6, one of the largest U.S. commercial real estate managers with US$11.6 billion worth of assets under management and US$38.7 billion transactional volume since inception, as at 31 December 2018.

Mr. Charles J. Schreiber, co-founder of KBS and Chairman of the Board of Directors of the Manager, said, "We are delighted to bring Prime US REIT to the investment community in Asia through a listing on the SGX-ST. Prime US REIT's stable and resilient portfolio enjoy healthy occupancy and organic growth potential, supported by KBS' proven ability to create value and elevate portfolio performance. Our unitholders will also benefit from KBS' well-established platform in the U.S. as well as KBS' deal sourcing, deal screening and deal execution capabilities in the U.S. commercial real estate sector to deliver growth opportunities for Prime US REIT."


Prime US REIT's geographically diversified exposure across nine primary U.S. office markets provides resilience in riding out different economic and property cycles across the various markets. These markets have strong underlying fundamentals and demand drivers underpinned by robust economic and employment growth, strong population growth and favorable demand/supply outlooks. The IPO Portfolio enjoys a high portfolio occupancy rate of 96.7%7, with a well-diversified base of over 180 tenants7 across diverse trade sectors including financial, legal, real estate, technology, and information services. The IPO Portfolio has a long weighted average lease expiry ("WALE") of 5.5 years based on NLA7 and its top 10 tenants have long-tenured leases with a WALE of 6.7 years.

Prime US REIT's portfolio also enjoys a well spread-out lease expiry profile – with a three-year average lease expiry by NLA and Cash Rental Income of 6.6% and 6.5%, respectively.


Prime US REIT's yield growth is driven by 98.3% of contracted leases9 having built-in escalation clauses on a fixed rate basis, ranging annually between 1.0% and 3.0%, with strong rental reversion potential as the current weighted average rental rates on expiring leases are generally below the market rental rates10.

In addition, 96.9% of leases by NLA7 are on a triple-net or modified/full-service gross basis, shielding Prime US REIT from increases in real estate taxes and property expenses.


Prime US REIT aims to provide Unitholders with regular and stable distributions and to achieve long-term growth in distribution per unit and net asset value per unit while maintaining an appropriate capital structure. 97.6% and 91.6% of the Prime US REIT's Cash Rental Income for Forecast Year 2019 and Projection Year 2020, respectively, is based on contractual leases7, reflecting the stability of the portfolio and certainty of rental cash flows from the Properties.

Prime US REIT has a conservative capital structure with an Aggregate Leverage11 of 37.0%, as well as adequate financial flexibility with debt headroom of US$177.8 million to fund future growth.

Prime US REIT's distribution policy is to distribute 100.0% of its Annual Distributable Income for the period from the Listing Date to the end of the Projection Year 2020. Thereafter, Prime US REIT will distribute at least 90.0% of its Annual Distributable Income. Distributions will be made semi-annually with the first distribution, which will be in respect of the period from the Listing Date to 31 December 2019, to be paid by the Manager on or before 31 March 2020. Distributions will be declared in U.S. dollars and eligible Unitholders will receive their distributions in Singapore dollars equivalent of the U.S. dollars declared. Unitholders can also elect to receive the relevant distribution in U.S. dollars.


The Offering of 335,203,200 Units (subject to the Over-Allotment Option) consists of (i) an international placement of 318,442,200 Units to investors, outside the U.S.; and (ii) an offering of no less than 16,761,000 Units to the public in Singapore (the "Singapore Public Offer"). Concurrently with, but separate from the Offering, Prime US REIT has secured commitments of US$317.0 million from nine cornerstone investors including AT Investments Limited; Keppel Capital Investment Holdings Pte. Ltd., a wholly-owned subsidiary of Keppel Capital Holdings Pte. Ltd; Times Properties Private Limited, a wholly-owned subsidiary of SPH; and Hiap Hoe Investment Pte. Ltd., amongst others. The Cornerstone Investors have subscribed for an aggregate of 360,251,800 Units, representing 39.0% of the total number of Units in issue immediately after completion of the Offering.

Similarly, concurrently with, but separate from the Offering, KBS REIT Properties III
LLC, an indirect wholly-owned subsidiary of KBS Real Estate Investment Trust III, Inc., which is selling the initial portfolio to Prime US REIT, has entered into a subscription agreement to subscribe for an aggregate of 228,408,999 units (the "KBS Units"), which will result in 24.7% stake in Prime US REIT.

Based on the Offering Price, gross proceeds of US$813.0 million are expected to be raised from the Offering, the issuance of KBS Units and the Cornerstone Units. The Singapore Public Offer will open at 9.00 p.m. on 8 July 2019 and closes 12.00 noon on 15 July 2019. Trading of the Units in Prime US REIT on the Main Board of the SGX ST is expected to commence at 2.00 p.m. on 19 July 2019. Copies of the Prospectus and the application forms relating to the Offering may be obtained upon request, subject to availability, during office hours, from DBS Bank Ltd., Merrill Lynch (Singapore) Pte. Ltd., China International Capital Corporation (Singapore) Pte. Limited, Credit Suisse (Singapore) Limited, Maybank Kim Eng Securities Pte. Ltd., and Oversea-Chinese Banking Corporation Limited. The Prospectus is also available on the SGX-ST website at and the MAS' OPERA website at Anyone wishing to acquire the Units will need to make an application in the manner set out in the Prospectus.

DBS Bank Ltd. is the Sole Financial Adviser and Issue Manager for the Offering. DBS Bank Ltd. and Merill Lynch (Singapore) Pte. Ltd. are the joint global coordinators for the Offering. The Joint Bookrunners and Underwriters of the Offering include DBS Bank Ltd., Merrill Lynch (Singapore) Pte. Ltd., China International Capital Corporation Limited, Credit Suisse (Singapore) Limited, Maybank Kim Eng Securities Pte. Ltd. and Oversea- Chinese Banking Corporation Limited.