Positive takeaways for Singapore Reits from Keppel Reit's dpu dilutive MBFC Tower 3 deal
With demand for office trusts focused in the Republic despite lower yields, more capital should be allocated domestically
Investors buy real estate investment trusts (Reits) to earn recurrent income from periodic distributions. Managers therefore strive to grow a trust’s distribution per unit (DPU).
One strategy is to buy properties that raise DPU. However, Keppel Reit recently did a mega deal where the immediate impact was to lower DPU.
The trust acquired an additional one-third stake in Marina Bay Financial Centre (MBFC) Tower 3 at an agreed property value, based on one-third interest, of S$1.453 billion or S$3,268 per square foot. The acquisition cost totalled S$937.5 million.
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