Keppel REIT - CGS-CIMB Research 2023-09-25: Resilient Portfolio

• During our recent Keppel REIT (SGX:K71U)'s KL roadshow, investor discussions were centred around portfolio performance, demand and rental reversion outlook.
• Other common questions raised include
  • - Read this at SGinvestors.io -
  • whether there is potential overhang from its sponsor Keppel Corporation (SGX:BN4)’s remaining 37% stake in the REIT following the latter’s recently announced dividend-in-specie of part of its holdings in Keppel REIT.

Resilient portfolio performance

• In terms of market, Keppel REIT remains the most optimistic on Singapore demand and rental outlook in the near term, while South Korea office rents are expected to remain in an uptrend.
  • - Read this at SGinvestors.io -
  • Management anticipates Australia occupancy to improve in 2HFY23F. In addition to a new government tenant at 8 Chifley Square and a new banking sector tenant at Blue & William, management indicated that there continues to be leasing interest and anticipates committed occupancy in its Australia portfolio to continue to improve towards end-FY23F. Management indicated that rents at some of its Sydney properties have started to strengthen while tenant incentives have compressed marginally.
  • In Japan, backfilling of space by an energy sector tenant has lifted occupancy at KR Ginza II property to 75%.
• Keppel REIT allayed investors’ concerns over the structural change in office take-up due to the hybrid work-from-home trend by sharing that its Singapore properties do not have any shadow space.

Focusing on delivering DPU accretion

• Read more at SGinvestors.io.

LOCK Mun Yee CGS-CIMB Research | Natalie ONG CGS-CIMB Research | https://www.cgs-cimb.com 2023-09-25 SGinvestors.io

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