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Keppel REIT's potential acquisition of SPH REIT could be yield accretive: UOB KH

Jeffrey Tan
Jeffrey Tan • 2 min read
Keppel REIT's potential acquisition of SPH REIT could be yield accretive: UOB KH
Keppel REIT is unlikely to "dabble" with SPH’s PBSA properties, says UOB KH.
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Keppel REIT’s potential acquisition and/or merger with SPH REIT is expected to be yield accretive for the former, according to UOB KayHian.

This comes after Keppel Corp proposed the privatisation of Singapore Press Holdings (SPH).

See also: Property-focused SPH to be acquired by Keppel after hiving off media assets

Keppel Corp currently owns a 46% stake in Keppel REIT, while SPH currently owns a 65% stake in SPH REIT.

SPH REIT has a portfolio of local properties such as Paragon, The Clementi Mall and The Rail Mall.

Its portfolio also includes Australian properties, such as Figtree Grove in Wollongong and Westfield Marion in Adelaide.

See also: UOB Kay Hian sees Civmec's bid to shift domicile to Australia a positive move

UOB KH says KREIT could also acquire SPH’s Seletar Mall and The Woodleigh Mall (under construction), which could form part of its future sponsor pipeline.

However, hospitality assets, such as purpose-built student accommodation (PBSA), are unlikely to be injected into Keppel REIT given that PBSA is a different asset class.

“Keppel REIT is unlikely to dabble with SPH’s PBSA properties,” UOB KH analyst Jonathan Koh writes in a note dated Aug 12.

See also: UOBKH keeps ‘buy’ and TP unchanged on BRC Asia, sees bullish medium-term outlook

UOB KH has maintained its distribution per unit forecast.

For more stories about where the money flows, click here for our Capital section

It has kept its “buy” rating for the REIT with an unchanged target price of $1.49.

As at 2.54 pm, Keppel REIT was up 1 cent or 0.9% at $1.14 with about 4 million shares changed hands.

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