Keppel Bay Tower (Photo: Google Maps)

Keppel REIT is acquiring a 100% stake in Keppel Bay Tower from Keppel Land Limited for SGD657.2 million (USD490 million).

The property is Grade A office building located in the Keppel Bay waterfront precinct in the HarbourFront area in Singapore.

“The proposed accretive acquisition of Keppel Bay Tower is part of our ongoing portfolio optimisation efforts to enhance the REIT’s distributions and improve total unitholder returns”, said Paul Tham, CEO of the REIT’s manager.

“This is also consistent with our strategy of strengthening and diversifying the REIT’s portfolio, while staying focused on our core markets”, said Tham.

“The strategic addition of a quality CBD-fringe office property such as Keppel Bay Tower, with its established tenant base, complements our existing portfolio and increases income resilience”, he added.

Tenants at the property include the Keppel Group, BMW Asia, Mondelez International, Pacific Refreshments and Syngenta.

As at 30 September 2020, the property has a committed occupancy of 99.2% and a weighted average lease expiry (WALE) of 3.3 years by net lettable area.

The acquisition is targeted to be completed in 2Q 2021.

Keppel REIT intends to fund the acquisition with debt and proceeds from an equity fund raising that comprises a private placement.

The acquisition is subject to unitholders approval, which will be sought at an EGM in 1Q 2021.

Keppel REIT’s full statement on the acquisition can be viewed here.

Keppel REIT was last done on the SGX at SGD1.10, which implies a distribution yield of 5.05% according to data compiled on the Singapore REITs table.

By Shariffa Al-Habshee

Shariffa joined REITsWeek in 2017, and monitors Asia-Pacific REITs for the publication.