Keppel Ltd. Announces Proposed Special Dividend: Cash and Keppel REIT Units Distribution

Summary of Key Points

• Special Dividend Proposal: Keppel Ltd. will reward shareholders with a proposed special dividend of 2 cents per share in cash and 1 unit in Keppel REIT (“KREIT”) for every 9 Keppel shares held.
• Record Date: Shareholders who hold shares as at 5.00 pm, 28 April 2026 will be eligible for the proposed special dividend.
• Distribution Rationale: The dividend reflects Keppel’s strategy to monetize assets and reward shareholders with 10-15% of gross value from completed asset monetisation transactions during FY2025, totalling approximately S\$1.6 billion.
• KREIT Units Distribution: The company will distribute approximately 200.2 million KREIT Units (about 4.1% of total issued KREIT Units), with Keppel’s post-distribution stake in KREIT dropping from 37.3% to 33.2%.
• Strategic Benefits: The move is aimed at growing KREIT’s investor base, increasing public float, and improving trading liquidity. Shareholders will directly participate in KREIT’s future corporate actions and distributions.
• Impact on Share Capital: The distribution will not affect the number of Keppel shares held by shareholders or the company’s share capital.
• Odd Lots: Shareholders may receive odd lots (less than 100 units) of KREIT; these can be traded on the SGX-ST Unit Share Market, though odd lot trading may be less liquid and incur higher brokerage costs.
• Overseas Shareholders: Keppel reserves the right not to distribute KREIT Units to shareholders whose registered addresses are outside Singapore. Instead, KREIT Units will be sold, and net proceeds distributed to those shareholders.
• Financial Effects:
  • NTA Per Share: Drops from S\$5.58 to S\$5.43.
  • EPS: Drops from 43.5 cents to 40.8 cents.
  • Net Debt-to-Equity Ratio: Rises from 0.82x to 0.84x.
• Approval Required: The special dividend is subject to shareholder approval at the AGM and necessary consents from SGX-ST and other relevant parties.

Detailed Analysis and Investor Insights

Keppel Ltd. has unveiled a significant special dividend for FY2025, distributing both cash and units in its sponsored real estate investment trust, Keppel REIT. This dual-distribution approach is a direct result of Keppel’s asset monetisation programme, which unlocked S\$1.6 billion in value during the financial year. The company’s dividend strategy aims to provide ordinary dividends based on business performance and special dividends amounting to 10-15% of gross proceeds from asset sales.

Implications for Shareholders

• Direct Ownership in KREIT: Shareholders will now hold both Keppel shares and KREIT units, enabling them to benefit from future KREIT corporate actions and distributions without additional investment outlay.
• Potential Share Price Sensitivity: The reduction in Keppel Ltd.’s stake in KREIT (from 37.3% to 33.2%) may be viewed positively, as it increases KREIT’s public float and liquidity, potentially attracting new institutional investors and improving market valuation.
• Financial Impact: While the special dividend is value accretive for shareholders, it will slightly reduce Keppel’s net tangible assets and earnings per share. However, this is offset by the opportunity for shareholders to participate directly in KREIT’s growth and distribution income.
• Trading of Odd Lots: Shareholders receiving less than a board lot (100 units) of KREIT may face higher transaction costs or liquidity issues if they wish to sell these units. Nevertheless, the SGX-ST Unit Share Market supports the trading of odd lots.
• Overseas Shareholders: Non-Singapore shareholders may not receive KREIT units directly due to regulatory restrictions. Instead, net proceeds from the sale of their entitled KREIT units will be distributed to them.
• Approval and Timing: The distribution is contingent on shareholder approval at the AGM and necessary regulatory clearances. Shareholders are advised not to make investment decisions until further details and recommendations are provided in the AGM Notice Appendices.

KREIT Overview

Keppel REIT is a leading Asia-Pacific real estate investment trust with S\$11.7 billion in assets, including premium commercial properties across Singapore, Sydney, Melbourne, Perth, Seoul, and Tokyo. KREIT is managed by Keppel REIT Management Limited, a wholly-owned subsidiary of Keppel Ltd. For FY2025, KREIT reported S\$274 million in revenue and S\$518 million in net profit before tax, with a net asset value of S\$5,124 million.

Director and Substantial Shareholder Interests

Keppel’s board members and substantial shareholders (including Temasek Holdings and BlackRock) have direct and deemed interests in both Keppel shares and KREIT units. This alignment is important for governance and demonstrates sponsor commitment to KREIT’s ongoing development.

Conclusion

This proposed special dividend is a major corporate action that could materially impact Keppel Ltd.’s share price and KREIT’s unit price. Investors should closely monitor further updates, particularly the AGM and regulatory outcomes, and assess their own portfolio strategies in light of the new direct exposure to KREIT.

Disclaimer

This article is for informational purposes only and does not constitute investment advice, an offer, or solicitation to buy or sell any securities. Investors should consult their financial advisers and review all official company documents and regulatory filings before making any investment decisions. The views expressed are based on information available as of the date of publication and are subject to change without notice.

View Keppel Historical chart here