Keppel REIT’s proposed S$610.9 million purchase of a 51% interest in a Singapore office tower requires unitholder approval because the seller is affiliated with its sponsor, Keppel Ltd.
In its Oct. 20 filing, Keppel REIT Management Limited said the estimated purchase consideration includes funding to repay S$462.1 million in existing shareholder loans. The parties agreed on a S$626.2 million value for the 51% property interest. Keppel REIT would acquire that interest through a 70-year lease, while the property itself is freehold.
The seller, K-Commercial Investment Pte. Ltd., would retain the remaining 49%. The proposed purchase would increase the share of Keppel REIT’s portfolio in Singapore to 82%, the manager said.
Keppel South Central was completed in January 2025. The 33-story building has about 522,500 square feet of lettable space, but committed leases covered 48.8% of it as of Sept. 30. Counting leases still being documented raised that measure to 52.7%. By Oct. 15, the combined figure had reached about 60%.
The leasing level makes the seller’s income commitment a significant part of the deal. For up to five years after closing, K-Commercial Investment has agreed to cover any gap between Keppel REIT’s monthly share of adjusted net property income and S$2.23 million. The seller also bears tenancy work, leasing incentives and capital expenditure while the support applies. The arrangement can end earlier if the filing’s occupancy and income conditions are met.
Keppel REIT projects an initial property yield of 4.3% that includes the income support. It also estimates a 2.01% increase in distribution per unit on a pro forma basis. Those figures are projections for the proposed transaction, which has yet to close.
Closing also requires tax approvals and committed office and retail leases covering at least 51% of lettable space, with average monthly rent of at least S$11.15 per square foot. Keppel REIT expects unitholders to vote in the fourth quarter of 2026 and is targeting completion in the second quarter of 2027.
