K-Reit

K-Reit: The Australian is reporting that Australian developer and fund mgr Mirvac Group is close to finalising the sale of a 50% stake in its central Sydney office devt to K-Reit. 8 Chifley is expected to be completed in 2013 with a completed valuation of A$300m. It will offer 19k sm of office NLA. According to the newspaper's sources, the deal is due to be signed within a fortnight, with K-Reit making progress payments during the construction period...

If accurate, this would be K-Reit’s 3rd invmt in Australia. This would also be its first devt project - and may be motivated by a need to secure high quality office assets. K-Reit has debt headroom of ~$430m before reaching its target gearing of 45%, which should be sufficient to finance this acquisition. StanChart currently has an Outperform rating and TP $1.61.