In his Jan 2 note, he maintained his “neutral” call on Keppel REIT but cut his target price to 98 cents from $1.05. Investors seeking Singapore office exposure may want to consider Suntec REIT instead, he says.
Keppel REIT’s acquisition of an additional one-third stake in Marina Bay Financial Centre (MBFC) Tower 3 will help it strengthen its asset base with a quality property in Singapore and deliver gains over time. However, several analysts, concerned about near-term dilution to both its distribution per unit (DPU) and net asset value (NAV), have lowered their target prices in response.
“Overall, we are slightly negative on the deal due to significant dilutive equity fund raising and tight pricing, and believe funding should have been from divestments instead,” says RHB Bank Singapore analyst Vijay Natarajan.
