Keppel REIT, the Singapore-listed office trust, announced on 20 October 2026 that it has agreed to buy a 51% interest in Keppel South Central, a 33-storey office tower at 10 Hoe Chiang Road in Tanjong Pagar, from a subsidiary of its sponsor, Keppel Ltd. The agreed property value for the stake is S$626.2 million, or about S$2,350 per square foot, and the purchase consideration is estimated at S$610.9 million. Adding an acquisition fee of about S$3.1 million, paid to the manager in units, and about S$13.1 million of stamp duty and other costs, the manager puts the total cost at about S$627.1 million.
The tower received its temporary occupation permit in January 2025 and is still being let. Committed leases covered 48.8% of its roughly 522,500 square feet of lettable space at 30 September. Counting leases still being documented, the figure was 52.7%, and the manager says it reached about 60% by 15 October. Space let so far averages about S$11.30 per square foot a month. One condition of the deal is committed occupancy of at least 51% at an average rent of no less than S$11.15 per square foot a month.
The manager quotes an initial net property yield of about 4.3% and states that this figure includes the income support. For up to five years after completion, the Keppel seller will pay Keppel REIT any shortfall below a guaranteed S$2,230,170 a month for its 51% share. After taking into account the tower's expected operating margin, the manager sets that amount at 79.0% of about S$2,823,000, the monthly rent the stake would earn at an estimated S$11.15 per square foot a month and a stabilised occupancy of 95%. The support ends earlier if the tower reaches 95% occupancy with all leases paying and the REIT's share of income meets the guarantee in a month. Over a year the guaranteed sum comes to about S$26.8 million, or about 4.3% of the agreed value on Realtopedia's arithmetic. The opening return therefore tracks the guarantee itself, not rent already being collected. The manager estimates the value of the support deed at S$12.5 million, and the seller also pays for fit-out works, tenant incentives and capital spending while it runs.
The two independent valuers priced the stake higher with the support than without it.
| Valuer, 30 September 2026 | With income support | Without income support |
|---|---|---|
| Colliers | S$646.7 million | S$631.0 million |
| CBRE | S$652.0 million | S$642.0 million |
The agreed value sits 3.2% and 0.8% below the Colliers figures and 4.0% and 2.5% below the CBRE figures, according to the announcement.
The tenure differs from the building's title. Keppel South Central is freehold, but Keppel REIT is buying a 70-year leasehold interest. Under an option deed, a Keppel entity can buy the REIT's interest back for S$1.00 once the 70 years expire, and the price per square foot is set on that 70-year basis.
The manager assumes about 51% of the cost will come from new loans, about 40% from new units and perpetual securities, and about 9% from cash. On its pro forma for the 2025 financial year, which also counts the sales of T Tower and KR Ginza II, distribution per unit rises from 4.65 to 4.75 Singapore cents, a gain which the manager puts at 2.01%. Net asset value per unit at the end of 2025 would be S$1.27 after the purchase and both sales, against S$1.28 reported. Aggregate leverage was 40.0% at 30 June. It rises to 41.1% on the purchase alone and falls to 39.2% once the two sales are counted, with about S$56.2 million of T Tower proceeds put towards the deal. Committed occupancy across the enlarged portfolio would fall from 96.2% to 93.9%.
The seller belongs to the Keppel group, which has a deemed interest in about 33.7% of Keppel REIT's units. Unitholders will vote on the deal at an extraordinary general meeting the manager expects in the fourth quarter of 2026. Deloitte has been appointed independent financial adviser, and its view on whether the terms, including the income support, are on normal commercial terms will appear in the circular to unitholders. Completion is expected in the second quarter of 2027. Units and distributions are in Singapore dollars, so a holder who measures returns in another currency also carries the exchange rate. Earlier broker moves on Singapore REITs are covered in Why DBS cut S-REIT target prices but kept its distribution forecast.
Corrected 21 October 2026: The guaranteed monthly amount is 79.0% of the stake's estimated rent at S$11.15 per square foot and 95% occupancy, with the manager saying it takes into account the expected operating margin. An earlier version said it was 79% of that rent after expected operating costs.
Sources
Sources read 20 October 2026.
- Proposed Acquisition of 51.0% Interest in Keppel South Central, announcement, Keppel REIT Management Limited, 20 October 2026
- Proposed Acquisition of 51.0% Interest in Keppel South Central, investor presentation, Keppel REIT, 20 October 2026