Keppel Reit acquires 51% stake in Singapore CBD office for S$626.2 million
The deal boosts the Reit's Singapore office presence to 82% and forecasts a 2.01% distribution per unit uplift, with completion expected by Q2 2027.
Keppel Reit Expands Singapore Footprint
Keppel Reit announced its acquisition of a 51% interest in Keppel South Central, a 33-storey Grade A commercial building in Singapore's central business district (CBD). The agreed property value for this stake, on a 70-year leasehold basis, totals S$626.2 million. This transaction will increase Keppel Reit's Singapore office portfolio to 82% of its total assets.
The entire Keppel South Central property is valued at approximately S$1.2 billion, equating to about S$2,350 per square foot for its 522,500 sq ft of net lettable area.
Anticipated Financial Returns
Keppel Reit anticipates a 2.01% accretion in its distribution per unit (DPU) and an initial property yield of 4.3% from the acquisition. The Reit will also benefit from a five-year income guarantee of S$2.23 million per month from K-Commercial Investment, a wholly-owned subsidiary of its sponsor, Keppel.
Chua Hsien Yang, CEO of Keppel Reit Management, stated the acquisition reinforces the Reit’s position in Singapore’s supply-constrained CBD office market.
Funding and Portfolio Adjustments
The acquisition includes the repayment of S$462.1 million in existing shareholder loans. Keppel Reit plans to finance the deal through a mix of bank loans, perpetual securities, internal cash, and/or equity financing, projecting an aggregate leverage of 39.2% post-acquisition.
As of October 15, approximately 60% of Keppel South Central’s net lettable area was under committed leases or in documentation, up from 52.7% at the end of September. These leases averaged S$11.30 per square foot per month.
Next Steps for Unit Holders
The transaction requires approval from Keppel Reit's unit holders at an extraordinary general meeting (EGM), which is expected to take place in the fourth quarter of 2026. Following this approval, the acquisition is projected to reach completion in the second quarter of 2027.
Investors will be watching for the EGM results as a key milestone for this expansion into Singapore's prime office market.
This article is journalism, not investment advice; consult a licensed professional before making financial decisions. Market data is indicative, may be delayed, and should be verified with your broker or exchange before use.
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