Keppel REIT is set to maintain its positive rental growth trajectory, according to a recent update from RHB. The real estate investment trust (REIT) reported that its financial performance for the second quarter and first half of the year was in line with expectations, with rent reversions continuing to show double-digit growth. This trend is anticipated to persist, bolstered by the REIT’s strategic positioning amidst falling domestic interest rates and a significant portion of its debt being floating.
The REIT’s portfolio occupancy is expected to remain stable, with Keppel REIT positioned as a key beneficiary of the current economic climate. The trust’s exposure to floating debt—37% of its total—allows it to capitalise on savings from upcoming debt maturities and the resetting of perpetual securities. Furthermore, the potential for overseas asset divestments at a premium presents a significant catalyst for the REIT, which is currently trading at approximately a 25% discount to its book value.
Analyst Vijay Natarajan highlighted the REIT’s strategic advantages, noting, “Keppel REIT is one of the key beneficiaries of falling domestic interest rates.” This positions the trust favourably for future growth and stability.
Looking ahead, Keppel REIT’s focus on maintaining high occupancy levels and leveraging asset recycling initiatives is expected to enhance its yield. The trust’s portfolio, which includes high-quality Grade-A office assets in Singapore, Australia, and South Korea, supports its robust market position. As the REIT continues to trade below book value, it offers an attractive yield for investors seeking stable returns in a fluctuating market environment.
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