- Initiate coverage on Keppel REIT with fair value estimate of S$0.87; risks include rising recession risks, higher interest rates and currency fluctuations.
- Healthy occupancy rates and rental reversions given office rental upcycle in Singapore.
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Healthy occupancy rates and rental reversions.
- Keppel REIT (SGX:K71U) is a pure-play office S-REIT with a portfolio of quality Grade A commercial assets in key business districts in pan-Asia. Keppel REIT's portfolio committed occupancy rate stood at a healthy 96.8%, as at 30 Sep 2022, an improvement of 1.3 percentage points (ppt) on a quarter-on-quarter basis. Additionally, Keppel REIT was able to achieve solid positive rental reversions of ~10% in 3Q22, although the outlook for similar rental uplifts is likely less sanguine in 2023 given higher average expiring rents of S$11.35 per square foot per month (psf pm), versus S$10.06 psf pm in 2022.
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Rising cost of debt could weight on growth
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