Keppel REIT to buy 51% of Keppel South Central

The 33-storey Grade A building in Tanjong Pagar is priced at $626.2m.

Keppel Real Estate Investment Trust (REIT) has signed an agreement to acquire a 51% interest in Keppel South Central from its sponsor, Keppel Ltd, its manager announced.

The deal values the property at $626.2m, equivalent to approximately $2,350 per square foot (sq f) on a 70-year leasehold basis.

The property is a 33-storey Grade A commercial building located in the heart of Tanjong Pagar, comprising office space and retail, event, and flexible workspace offerings.

The acquisition offers an attractive initial property yield of 4.3% and a pro forma distribution per unit accretion of 2.01%, the manager added.

Keppel REIT will receive a guaranteed monthly income of $2.23m from the vendor for up to five years, supported by existing rental income at the property.

As of 30 September, committed leases and leases undergoing documentation covered 52.7% of net lettable area at an average monthly rent of $11.30 per sq f, above the $11.15 assumed under the arrangement.

The proportion rose to about 60% by 15 October, with potential for higher rents from available mid-to-high floors, the manager added.

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