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
[SINGAPORE] 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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