Company Coverage
Keppel REIT (KREIT SP): 1H26: Prioritising Divestment And Potential Share Buyback
BUY (Maintained)
Current price:
Target price:
Upside:
S$0.915
S$1.13
+23.5%
Analyst
Highlights
- KREIT achieved strong positive rental reversion of 12.8% in 1H25 (Singapore: 10%, Australia: >20%). Rent reversion should improve in 2027 as the average rent of leases expiring is lower at S$11.49 psf pm.
- KREIT announced the divestment of KR Ginza II in Tokyo for JPY11.5b (S$91.4m). It is also exploring divestment of T Tower in Seoul, which is valued at 305.4b Korean won (S$269.7m). Management intends to utilise the proceeds from divestment to pare down debts and pursue unit buyback.
KREIT trades at a 2026 distribution yield of 5.9% (CICT: 4.7%, Suntec: 5.0%) and P/NAV of 0.75x. Maintain BUY. Target price: S$1.13.
Analysis
- Keppel REIT (KREIT) reported 1H26 DPU of 2.61 S cents (-4.0% yoy), reflecting enlarged unit base after equity fund raisings to fund acquisitions.
- NPI increased 13.1% yoy to S$122.5m in 1H26, while share of JV income surged 37.2% yoy to S$83.8m. Excluding the acquisitions Top Ryde City Shopping Centre (completion: 19 Dec 25) and additional one-third interest in MBFC Tower 3 (completion: 31 Dec 25), NPI still increased 2.5% yoy and JV income grew 11.6% yoy, demonstrating underlying resilience.
Benefitting from flight-to-quality across its key markets. KREIT signed 1,122,500sf of leases in 1H26 and achieved strong positive rental reversion of 12.8% (Singapore: 10%, Australia: >20%). New and expansion leasing was led by the banking, insurance and financial services (65%), followed by technology, media & telecommunications (10%). Portfolio WALE was healthy at 4.5 years (top 10 tenants: 8.0 years). The average signing rent for Singapore CBD office leases was S$13.14 psf pm, above the average rent of leases expiring in 2026 of S$12.24 psf pm. Management highlighted structural demand drivers such as AI-led business expansion, growth in wealth management and continued flight-to-quality trends.
Highlights
- KREIT achieved strong positive rental reversion of 12.8% in 1H25 (Singapore: 10%, Australia: >20%). Rent reversion should improve in 2027 as the average rent of leases expiring is lower at S$11.49 psf pm.
- KREIT announced the divestment of KR Ginza II in Tokyo for JPY11.5b (S$91.4m). It is also exploring divestment of T Tower in Seoul, which is valued at 305.4b Korean won (S$269.7m). Management intends to utilise the proceeds from divestment to pare down debts and pursue unit buyback.
KREIT trades at a 2026 distribution yield of 5.9% (CICT: 4.7%, Suntec: 5.0%) and P/NAV of 0.75x. Maintain BUY. Target price: S$1.13.
Analysis
- Keppel REIT (KREIT) reported 1H26 DPU of 2.61 S cents (-4.0% yoy), reflecting enlarged unit base after equity fund raisings to fund acquisitions.
- NPI increased 13.1% yoy to S$122.5m in 1H26, while share of JV income surged 37.2% yoy to S$83.8m. Excluding the acquisitions Top Ryde City Shopping Centre (completion: 19 Dec 25) and additional one-third interest in MBFC Tower 3 (completion: 31 Dec 25), NPI still increased 2.5% yoy and JV income grew 11.6% yoy, demonstrating underlying resilience.
Benefitting from flight-to-quality across its key markets. KREIT signed 1,122,500sf of leases in 1H26 and achieved strong positive rental reversion of 12.8% (Singapore: 10%, Australia: >20%). New and expansion leasing was led by the banking, insurance and financial services (65%), followed by technology, media & telecommunications (10%). Portfolio WALE was healthy at 4.5 years (top 10 tenants: 8.0 years). The average signing rent for Singapore CBD office leases was S$13.14 psf pm, above the average rent of leases expiring in 2026 of S$12.24 psf pm. Management highlighted structural demand drivers such as AI-led business expansion, growth in wealth management and continued flight-to-quality trends.
BUY (Maintained)
Current price:
Target price:
Upside:
S$0.915
S$1.13
+23.5%
Analyst
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