Continued Positive Growth in Net Profit and Distributable Income

• Net Profit increases to $11.8 million for the first nine months of 2007, outperforming the same period last year by 46.6%
• Higher rental income pushes up Distributable income by 34.8% to $14.9 million for the nine month period to September 2007.
• Distribution Per Unit (DPU) amounts to 6.14 cents for the year to date 2007, which works out to annualised DPU of 8.21 cents.
• Portfolio’s committed occupancy remains strong at 99.6% as of 30 September 2007.

Consistent Improvement in Performance

K-REIT Asia Management Ltd, the manager of K-REIT Asia, is pleased to announce that K-REIT Asia achieved a distributable income of $14.9 million for the period from 1 January to 30 September 2007, up 34.8% from the same period in 2006. Backed by higher occupancy and rental rates, rental income was higher at $28.3 million. This in turn pushed up property income by 17.7% year-on-year to reach $29 million.

DPU continued to improve with the rise in net property income and distributable income. DPU
increased by 4.2% from 2.14 cents in 2Q2007 to 2.23 cents in 3Q2007. For the first nine months of 2007, DPU amounted to 6.14 cents and 8.21 cents on an annualised basis.

Execution of Growth Strategy with Maiden Acquisition

K-REIT Asia has proposed to acquire a one-third interest in One Raffles Quay (ORQ) from Keppel Land for $941.5 million. The strategic acquisition will more than double K-REIT Asia’s portfolio size to $1.76 billion and will further strengthen its position as a premier office-focused commercial REIT in Singapore. In addition, yield accretion from the acquisition of the ORQ stake will benefit unitholders with a higher distribution payout. The acquisition is subject to the approval of shareholders of Keppel Land and unitholders of K-REIT Asia at their respective Extraordinary General Meetings to be held on 11 October 2007.

The manager will continue to actively seek acquisitions of prime commercial properties in Singapore and other Asian growth cities to further grow K-REIT Asia’s portfolio size to a targeted $2 billion. KREIT Asia will also identify possible asset enhancement initiatives to add value and achieve better returns for its existing properties.

Rosy Office Market Outlook Suggests Further Rental Growth

The Singapore economy continues to expand at a steadily pace and the Singapore government has earlier revised upward its GDP growth forecast for 2007 to 7 – 8% from 5 – 7% previously. Economic growth is now more broad-based, driven particularly by the construction, manufacturing and financial services sectors.

Demand for prime office space is expected to remain strong with continued economic growth, sound business prospects and further expansion of the financial services sector. As such, prime office rents are expected to increase further, especially when new office supply in the central business district (CBD) remains scarce over the next two to three years. With demand surpasses supply, prime office rents edged up further to $12.60 psf in 3Q2007 from $10.80 psf in 2Q2007 and $6.90 psf a year ago.

The buoyant prime office market will continue to augur well for K-REIT Asia, given its portfolio of quality office buildings in the CBD and the new downturn at Marina Bay following the acquisition of the one-third stake in ORQ. With about 70% of the portfolio’s net lettable area due for renewal between 2008 and 2010, K-REIT Asia is in a good position to ride on the rising rental market, underpinned by strong underlying demand and tight supply.

Source : SGX