Investors displaying mixed reaction to asset swap between Keppel Land (K17.SG), K-REIT Asia (K71U.SG), with former +1.5% at $4.17 while REIT down 2.2% at $1.34, says Dow Jones.

Developer will sell its one-third stake in Singapore’s Marina Bay Financial Centre to REIT for $1.43 billion, reaping $321 million net gain; will also buy K-REIT’s office buildings Keppel Towers, GE Tower for $573 million for redevelopment.

Deutsche Bank, which has Buy call with $4.74 target, says MBFC sale price of $2,450 psf above expectations, sets new benchmark for office sector; “with its enhanced balance sheet capacity, it looks well positioned to capitalise of accretive acquisitions in the region.” 

 

CIMB, which has Underperform call with $1.26 target on K-REIT, says deal “not exactly the most accretive” for REIT as price tag for MBFC more in Keppel Land’s favor; notes yield-to-cost for K-REIT merely 3.5%-3.9% based on assumed monthly gross rents of $9-$10 psf.