Broker: CGS International
Date of Report: July 29, 2026
Excerpt from CGS International report.
Report Summary: Keppel REIT (KREIT SP)
Actionable Call:
ADD (Buy) – Target Price: S$1.09 (Current Price: S$0.915)
Upside: 19.3%
Key Highlights:
- Strong 1H26 Distributable Profit: Rose 23% YoY, mainly due to new acquisitions (Top Ryde Shopping Centre, additional stake in MBFC Tower 3), partially offset by higher borrowing costs.
- Distribution per Unit (DPU): 1H26 DPU at 2.61 Scts (5.7% annualised yield), fell 4% YoY due to a substantial increase in units issued for funding acquisitions.
- Financial Health: Aggregate leverage dropped to 40% (from 47.9%), interest coverage ratio steady at 2.7x.
- Portfolio Performance: Singapore office assets posted positive rental reversions, with average signing rent (S\$13.14 psf pm) above expiring rents for the next three years. Portfolio occupancy remains high at 96%.
- Asset Sale and Share Buybacks: KR Ginza II Tokyo office sale (S\$90m, 9.7% above valuation) to complete in 3Q26; T Tower Seoul (S\$271m valuation) also up for sale. Proceeds from Seoul sale earmarked for share buybacks, not new acquisitions.
- 2026-2028 Outlook: Positive rental reversions expected for Singapore office portfolio. No major new acquisitions planned; focus may shift to capital return via share buybacks.
- Risks: Delays in asset sales or backfilling vacancies at Pinnacle Office Park could weigh on performance.
Implications for Investors:
- KREIT offers a 19.3% upside to target price and an attractive dividend yield (5.5%–5.7%).
- Share buybacks could support unit price if Seoul asset sale completes.
- Business fundamentals remain strong, with visible rental growth drivers and prudent balance sheet management.
- No new acquisitions expected, de-risking the outlook and focusing on capital returns.
Ticker: KREIT SP
Above is an excerpt from a report by CGS International. Clients of CGS International can access the full research report from the broker’s website.
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