Keppel REIT Credit Snapshot: Owner of Singapore’s CBD Jewels

Timothy Ang  |   22 Mar 2021  |    149 views

  • Keppel REIT (KREIT) is the owner of Singapore’s CBD crown jewels: Ocean Financial Centre (79.9% interest, 23.7% of FY20 net property income), Marina Bay Financial Centre (Towers 1, 2 and 3 and the subterranean mall, Marina Bay Link Mall) (one-third interest, 33.9% of NPI), and One Raffles Quay (one-third interest, 13.8% of NPI).
  • The REIT is 49.84% owned by Temasek Holdings, and is closely tied to Keppel Group, expected be a top 5 tenant in 2Q21.

Company Background

Listed on the Singapore stock exchange on 28 April 2006, KREIT owns a S$8.9bn portfolio in Grade A commercial properties in Singapore (78.0% of AUM), key Australian (18.5%) cities of Sydney, Melbourne, Brisbane and Perth, as well as Seoul, South Korea (3.5%). It has a market cap of S$4.4bn as of 22 March 2021. The REIT is sponsored by Keppel Land Limited and managed by Keppel REIT Management Limited, a wholly-owned subsidiary of Keppel Capital Holdings Pte Ltd.


  • Singapore
    • Ocean Financial Centre (79.9% interest)
    • Marina Bay Financial Centre (Towers 1, 2 and 3 and the subterranean mall, Marina Bay Link Mall) (one-third interest)
    • One Raffles Quay (one-third interest)
  •  Australia
    • 8 Chifley Square, Sydney (50% interest)
    • 8 Exhibition Street, Melbourne (50% interest in the office building and a 100% interest in the three adjacent retail units)
    • 275 George Street, Brisbane (50% interest)
    • David Malcolm Justice Centre, Perth (50% interest)
    • Victoria Police Centre2, Melbourne (50% interest)
    • Pinnacle Office Park3, Sydney (100% interest)
  • South Korea
    • Tower, Seoul (99.4% interest)

Recent Business Updates

  • Positive single-digit rental reversions expected in 2021. Singapore’s Grade-A Core CBD office rent declined 2.8% QoQ to S$10.40psf pm in 4Q20. Despite the decrease, the market rents are still above expiring rents of KREIT’s expiring leases in 2021, at S$9.76psf pm. Marina Bay Financial Centre Towers 1 & 2 and One Raffles Quay cap rates also tightened from 3.63% to 3.45%, showing resilience in the soft office market. KREIT’s average weighted signing rents was S$11.02psf pm (-0.1% QoQ), above the market average of S$10.40psf pm.
  • Recovering leasing enquiries. KREIT’s Singapore portfolio valuations were down 1.5% YoY in 4Q20 due to weaker occupancy of 97.9% (4Q19: 98.8%) and lower rents. However, leasing enquiries have since picked up, driven by non-bank financial institutions and technology sectors. ByteDance/TikTok took up 80,000sf of office space at One Raffles Quay and have embarked on a hiring spree, while Lazada and Tencent seek to expand operations in Singapore. Demand for co-working and flexible office spaces have also risen. Separately, the relocation of UBS from One Raffles Quay to 9 Penang Road was completed, and KREIT has backfilled 60% of the 230,000sf vacancy, with another 30% in advanced negotiations. The new tenants are from financial and real estate sectors. 13.9% of leases in Singapore are up for expiry in 2021.
  • Growing overseas business. In Seoul, CBD Grade A occupancies have stabilised at 86.9%, off the 2020 lows of 85.1%, while rents are at a 5-year high of KRW97k per py pm. In Australia, practical completion of the S$380mn Victoria Police Centre (50% ownership, 100% committed occupancy) was achieved on 9 July 2020, leased to the Victoria Police for 30 years, while acquisition of the S$302.1mn Pinnacle Office Park (100% ownership, 96.9% committed occupancy) in Sydney was also completed on 30 December 2020. Australia properties boast longer weighted average lease expiries of 12.8 years compared to 2.9 years for Singapore and 2.0 years for South Korea. KREIT’s Australian exposure grew to 18.5% of AUM YoY from 15.7% in 4Q19.
  • Keppel Bay Tower (100% interest) acquisition bumps Keppel Group to top 10 tenant of KREIT. The acquisition of the Grade A office located in the HarbourFront/Alexandra submarket in Singapore is expected to complete in 2Q21 for a consideration of S$667mn. As headquarters of Keppel Group, 39.7% of NLA is leased to Keppel Group entities. Post-acquisition, 3.7% of KREIT’s total NLA will be leased to Keppel Group, making it KREIT’s 5th top tenant. Total portfolio committed occupancy will remain high at 98%, WALE at 6.3 years, and aggregate leverage at 39.0%. The acquisition will be funded by 60% debt and 40% equity.

Credit Profile

  • Financial flexibility remains healthy. KREIT’s all-in interest rate was reduced to 2.35% p.a. YoY from 2.77% p.a. in 4Q20. Aggregate leverage stood at 37.3% and is expected to rise to 39.0% after the Keppel Bay Tower acquisition, low compared to the 50% ceiling by MAS. Undrawn credit facilities amounted to S$835mn, or 26% of total borrowings.
  • Strong stakeholders. As of 3 March 2020, Temasek Holdings owns 49.84% of KREIT. The REIT is also closely tied to Keppel Group as a top 5 tenant.


  • Soft office market rents and occupancies could persist. Lease expiries could lead to vacancies as tenants seek cheaper fringe offices or business parks. However, leasing enquiries from new tenants has picked up recently. Average CBD office supply in the next 4 years is expected to be moderate at 670,000sf p.a., compared to 600,000sf p.a. the past 3 years. We expect demand to be able to absorb supply.
  • Government rental support will eventually end. KREIT’s rental collection in 4Q20 was 98%. Tenant relief measures was S$14.6mn including S$9.9mn of government property tax rebates and cash grants. Total rent deferrals was low at S$1.9mn.

Related Articles

Wing Tai 4.38% 5yr Senior Unsecured SGD

Wing Tai recently announced the issuance of its Senior Unsecured notes at final price guidance of 4.38%.

Shawn Sng  |   26 Mar 2024

Phillip Macro Update – Key Points for March FOMC Meeting

The U.S. Federal Open Market Committee (FOMC) concluded its two-day meeting on the 20th of March 2024. The meeting discussed the Fed’s monetary policy stance and economic projection.

Shawn Sng  |   21 Mar 2024

Oxley’s 6.9% Exchange Offer to the New 7.25% Notes

On 11th March 2024, Oxley announced the exchange offer for their bondholders to exchange their existing Oxley 6.9% 8July2024 notes for the new 7.25% notes.

Shawn Sng  |   12 Mar 2024


These commentaries are intended for general circulation. It does not have regard to the specific investment objectives, financial situation and particular needs of any person who may receive this document. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of the units and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. Investors may wish to seek advice from a financial adviser before investing. In the event that investors choose not to seek advice from a financial adviser, they should consider whether the investment is suitable for them.

The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the "Research") contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries.

Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned.

Contact us to Open an Account

Need Assistance? Share your Details and we’ll get back to you


This material is provided by Phillip Capital Management (S) Ltd (“PCM”) for general information only and does not constitute a recommendation, an offer to sell, or a solicitation of any offer to invest in any of the exchange-traded fund (“ETF”) or the unit trust (“Products”) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. You should read the Prospectus and the accompanying Product Highlights Sheet (“PHS”) for key features, key risks and other important information of the Products and obtain advice from a financial adviser (“FA“) pursuant to a separate engagement before making a commitment to invest in the Products. In the event that you choose not to obtain advice from a FA, you should assess whether the Products are suitable for you before proceeding to invest. A copy of the Prospectus and PHS are available from PCM, any of its Participating Dealers (“PDs“) for the ETF, or any of its authorised distributors for the unit trust managed by PCM.  

An ETF is not like a typical unit trust as the units of the ETF (the “Units“) are to be listed and traded like any share on the Singapore Exchange Securities Trading Limited (“SGX-ST”). Listing on the SGX-ST does not guarantee a liquid market for the Units which may be traded at prices above or below its NAV or may be suspended or delisted. Investors may buy or sell the Units on SGX-ST when it is listed. Investors cannot create or redeem Units directly with PCM and have no rights to request PCM to redeem or purchase their Units. Creation and redemption of Units are through PDs if investors are clients of the PDs, who have no obligation to agree to create or redeem Units on behalf of any investor and may impose terms and conditions in connection with such creation or redemption orders. Please refer to the Prospectus of the ETF for more details.  

Investments are subject to investment risks including the possible loss of the principal amount invested. The purchase of a unit in a fund is not the same as placing your money on deposit with a bank or deposit-taking company. There is no guarantee as to the amount of capital invested or return received. The value of the units and the income accruing to the units may fall or rise. Past performance is not necessarily indicative of the future or likely performance of the Products. There can be no assurance that investment objectives will be achieved.  

Where applicable, fund(s) may invest in financial derivatives and/or participate in securities lending and repurchase transactions for the purpose of hedging and/or efficient portfolio management, subject to the relevant regulatory requirements. PCM reserves the discretion to determine if currency exposure should be hedged actively, passively or not at all, in the best interest of the Products.  

The regular dividend distributions, out of either income and/or capital, are not guaranteed and subject to PCM’s discretion. Past payout yields and payments do not represent future payout yields and payments. Such dividend distributions will reduce the available capital for reinvestment and may result in an immediate decrease in the net asset value (“NAV”) of the Products. Please refer to <> for more information in relation to the dividend distributions.  

The information provided herein may be obtained or compiled from public and/or third party sources that PCM has no reason to believe are unreliable. Any opinion or view herein is an expression of belief of the individual author or the indicated source (as applicable) only. PCM makes no representation or warranty that such information is accurate, complete, verified or should be relied upon as such. The information does not constitute, and should not be used as a substitute for tax, legal or investment advice.  

The information herein are not for any person in any jurisdiction or country where such distribution or availability for use would contravene any applicable law or regulation or would subject PCM to any registration or licensing requirement in such jurisdiction or country. The Products is not offered to U.S. Persons. PhillipCapital Group of Companies, including PCM, their affiliates and/or their officers, directors and/or employees may own or have positions in the Products. Any member of the PhillipCapital Group of Companies may have acted upon or used the information, analyses and opinions herein before they have been published. 

This advertisement has not been reviewed by the Monetary Authority of Singapore.  


Phillip Capital Management (S) Ltd (Co. Reg. No. 199905233W)  
250 North Bridge Road #06-00, Raffles City Tower ,Singapore 179101 
Tel: (65) 6230 8133 Fax: (65) 65383066