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Bond Market News

Keppel REIT Divests Brisbane Property for $205mn

Singapore’s Keppel REIT has executed a contract to sell 50% of its stake in a property in Brisbane, Australia to Charter Hall Prime Office Fund for a consideration of A$275mn ($205.3mn). The sale for an adjusted consideration of A$264mn ($197mn) is 7.8% above the last valuation of A$245mn ($182.9mn) and 59% above the purchase price of A$166mn ($123.9mn) in 2010 and bodes well with Keppel’s divestment strategy to optimize its portfolio. The divestment is likely to be completed by 3Q2021 and its proceeds will be used to repay debt and transaction costs which could help the REIT to lower its aggregate leverage by ~1.6% to 37.8%. Upon completion of the sale, Keppel will have a portfolio of  S$8.7bn ($6.45bn) constituting 10 premium commercial properties across Singapore (79.7%), Australia (16.8%) and South Korea (3.5%). Mr Paul Tham, CEO of the Manager, said, “The divestment of 275 George Street is part of our continuing portfolio optimisation strategy, and will provide us with greater financial flexibility as we seek strategic and higher yielding acquisitions to enhance the REIT’s income resilience and deliver sustainable total return to Unitholders.”

Keppel’s 2% 2026s and 3.15% perps were stable at 100.14 and 97.37 respectively.
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