K-REIT – Lim and Tan

• K-Reit expects its DPU for 2011 to be 10.2% higher at 6.68 cents as a result of the recent transactions:

a. acquisition of 77 King Street property in Sydney for A$120 mln / S$145 mln and announced in July;

b. acquisition of one-third stake in Marina Bay Financial Centre‘s Towers ! & 2 for $1,426.8 mln;

c. disposal of GE Towers and Keppel Towers for $573 mln.

• K-Reit will borrow a net S$821 mln for the latest transactions, and will not issue new units.

• At $1.37, prospective yield is 4.9%.

• K-Reit merits an upgrade to BUY with the removal of the “uncertainty”, whether the Singapore transactions would be yield accretive.

(For Q3 ended Sept ’10, K-Reit’s Distributable Income rose 26% to $22.7 mln reflecting the additional 29% interest in Prudential Tower as well as the 50% stake in 275 George Street, Australia. DPU for the first 9 months came to 4.65 cents or 6.22 cents annualized.)