People are leaving the big entry markets and condos like Treasure Tampines, which have high taxes, lots of rules, and high crime rates. Businesses are moving into towns in the Sunbelt and in the 18-hour time zone for the best balance unit charts and awesome showflat location. (Photo by Shahrill Basri for The Edge)
Keppel Pacific Oak US REIT (KORE) intends to improve occupancy rates by attracting people from gateway cities to second-tier towns, where its properties are situated, amid a weak US office market.
In an interview with The Edge in Kuala Lumpur, KORE management Keppel Pacific Oak US REIT Management CEO David Snyder says several of the Singapore-listed REIT’s 13 sites have been rehabilitated to attract tenants.
It was difficult when we debuted and still is. Since we don’t invest in Asian markets like San Francisco, Los Angeles, or New York, self-education has been necessary. However, those huge markets are losing population and have high taxes, regulations, and crime. Snyder said Sunbelt and 18-hour cities are flooded with businesses.
Sunbelt cities are in the US’s southern tier, whereas 18-hour cities are thriving mid-sized cities with above-average urban population growth, appealing facilities, and cheaper cost of living and doing business than gateway cities.
KORE has 13 freehold office buildings and business campuses with a combined asset value of US$1.42 billion (RM6.5 billion) and a net lettable area of 4.8 million sq ft in eight markets: Seattle, Washington; Denver, Colorado; Sacramento, California; Nashville, Tennessee; Orlando, Florida; and Austin, Dallas, and Houston, Texas.
Technology tenants choose our low-rise buildings and company campuses. Except for Amazon.com Inc., most technological businesses have low-rise campuses for testing, fabrication, or manufacturing on the first level and offices above. Snyder says it’s hard to sell that situation to people who are accustomed to gorgeous, glittering structures, but KORE provides regional variety. The strong US currency may not now benefit Malaysian investors.
According to Snyder, the US economy will have ups and downs like everywhere else, but it will recover. Sunbelt cities have higher GDP, employment rates, wage growth, and lower taxes, despite rising crime rates in gateway cities since the COVID-19 pandemic.
The US-based Pacific Oak Capital Advisors and Singapore’s Keppel Corp founded KORE, which was listed in November 2017. Snyder was chief financial officer of Pacific Oak, a publicly listed, non-traded REIT previously known as KBS, for seven years.
Snyder says Pacific Oak managed a REIT with assets bought following the 2008 global financial crisis. The assets have funding issues or deteriorated structures. After turning the buildings around, the partners launched the REIT in Singapore, Asia’s biggest REIT market, taking advantage of its regulatory framework and investor tax benefits.
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