EL7.AI
StocksMedium•20 October 2026•
4 min read

Keppel REIT agrees to buy 51.0% stake in Singapore tower for S$610.9 million

Key Facts

1Keppel REIT agreed to buy a 51.0% stake for an estimated S$610.9 million, subject to post-completion adjustments.
2The total estimated acquisition cost, including fees and expenses, is S$627.1 million.
3The expected initial property yield is 4.3%, including the income support arrangement.
4The seller will provide guaranteed monthly income of S$2.23 million for up to 5 years.
5Leasing including leases under documentation stood at 52.7%, compared with 48.8% for committed leases alone at the end of September.

Keppel REIT announced a conditional agreement to buy a 51.0% stake in the company that owns the Keppel South Central office building in Singapore for an estimated S$610.9 million. The REIT said in its acquisition disclosure that the agreement was signed with its sponsor, Keppel, in a move aimed at strengthening its Singapore office portfolio. Under the agreement, the REIT will acquire the stake in K Commercial, which owns the building, through a structure giving it a 70-year property interest from completion. The deal is classified as a related-party transaction and therefore requires unitholder approval. The underlying property is freehold, according to the acquisition disclosure.

The estimated purchase price is subject to post-completion adjustments and excludes goods and services tax, according to the REIT's disclosure. The agreed property value attributable to the stake is S$626.2 million, a figure separate from the purchase price for the stake in the property-owning company. The total estimated acquisition cost is S$627.1 million, according to the same disclosure. This includes acquisition-related fees and expenses, alongside the estimated purchase price for the stake. Keppel South Central has about 522,500 square feet of net lettable area, according to the property details in the acquisition announcement.

The REIT expects the acquisition to generate an initial property yield of 4.3%, including the seller's income support arrangement, according to the deal announcement. Under the arrangement, the seller will provide the REIT with guaranteed monthly income of S$2.23 million from completion of the acquisition. The income guarantee will last for up to 5 years, according to the terms announced by the REIT for the proposed transaction. The REIT's manager expects pro forma distribution per unit accretion of 2.01%, according to the adjusted calculation accompanying the acquisition. That calculation includes the impact of the divestments of T Tower and KR Ginza II, alongside the addition of the new stake to the portfolio.

Committed leases and leases under documentation covered 52.7% of space at the end of September, according to the acquisition presentation to investors. Committed leases alone accounted for 48.8%, compared with the broader figure that also includes leases under documentation. Average rent for space covered by committed leases or leases under documentation was about S$11.30 per square foot per month. The REIT's manager said this average primarily reflected leasing on the building's lower and middle floors. The manager sees scope to increase rents on the middle and upper floors, among the reasons it presented for acquiring the stake in the property.

The REIT's manager linked the appeal of Singapore's downtown office market to what it described in the investor presentation as "resilient tenant demand and limited new supply". The addition of the property to the portfolio comes alongside the inclusion of the impact of the T Tower and KR Ginza II divestments in the pro forma estimates. The portfolio's value before adding the property, and after accounting for the two divestments, is S$11.5 billion, according to the presentation. The enlarged portfolio's value rises to S$12.1 billion in the pro forma calculation presented by the manager to investors. The REIT's pro forma aggregate leverage after the acquisition and the two divestments is 39.2%, according to the presentation accompanying the proposed deal.

On upcoming dates, Keppel REIT will release its business update before the market opens on 28 October 2026, according to the business update schedule notice. The update covers the third quarter and nine months, according to the schedule announced by the REIT. Keppel will follow with its business update on 29 October 2026, according to the same notice. For the acquisition process, an extraordinary general meeting of unitholders to vote on the transaction is expected in the fourth quarter of 2026. The REIT expects to complete the acquisition in the second quarter of 2027, according to the timeline in the conditional deal announcement.