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.
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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.
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UOB KH has maintained its distribution per unit forecast.
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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.
