Keppel REIT (“Keppel”) plans to issue new SGD NC4 perpetuals at the initial price guidance (“IPG”) of 3.55%. The new bond is expected to be issued on 27 November 2025. These perpetuals have their first reset date on 27 November 2029, with subsequent resets every four years after. The reset rate will be calculated using the SGD 4Y SORA plus the initial spread. Both the issuer and bonds are expected to be unrated. The net proceeds from the issuance will be used for general corporate and working capital purposes, investments, refinancing of existing borrowings, and financing of asset enhancement works.
Keppel REIT is one of Asia’s leading commercial trusts with a portfolio of prime office assets located in Asia-Pacific’s key business districts. Other than Singapore, Keppel has properties in Australia, South Korea, and Japan. Keppel manages approximately S$9.5 billion in assets (as of 30 September 2025 ). Recently, the REIT also acquired 75% of a retail property (Top Ryde City Shopping Centre) in Sydney, Australia . The acquisition is expected to close by the first quarter of 2026.
As of end September 2025 (“9M2025”), Keppel REIT saw property income increasing 5.5% year-on-year (YoY) to S$204.5 million . Attributable net property income (“NPI”) rose faster at 8.6% YoY growth to S$161.3 million owing to contribution from 255 George Street in Sydney and higher occupancy at 2 Blue Street in Sydney . The office operator also remarks that the REIT is enjoying robust office demand, particularly for its prime Singapore offices. These factors point to resilient underlying portfolio performance, underpinned by Keppel REIT’s high-quality and geographically diversified offices.
Keppel REIT’s core operating performance continues to be driven by its Singapore offices. As of 30 September 2025, the Singapore portfolio constitutes roughly 68.8% of the REIT’s NPI , with Australia making up 27.5% and North Asia (South Korea and Japan) rounding things off. In general, all regions enjoyed robust occupancy rates, ranging from mid to high 90% . The office operator also achieved a positive rental reversion of 12%. With Singapore’s prime offices occupancy rates and rents expected to be constructive owing to tight supply and demand dynamics, we are positive that Keppel REIT’s positive operating performance is likely to persist in the future.
Keppel REIT reported an aggregate leverage ratio of 42.2% as of 30 September (30 June: 41.7% ), which is slightly higher compared to other SGD REIT issuers. However, we do not think this is an immediate concern as the REIT has roughly S$700 million debt headroom before its leverage ratio breaches the MAS’ limit of 50%. Do note that this debt headroom figure is approximated from Keppel’s half-yearly results (30 June 2025) as the REIT does not disclose borrowings and cash balances for the 9M2025.
As of 30 September 2025, Keppel has total borrowings amounting to S$4.06 billion , with roughly S$832 million coming due annually from 2026 to 2028 . With a reported total available liquidity (cash + credit facilities) of S$1.08 billion as of 30 June , and positive operating cash flow momentum , this debt refinancing might be manageable. There is also potential for additional financing given the REIT’s ability to access the debt markets.
The REIT also reported an interest coverage ratio of 2.6x as of 30 September, unchanged since 30 June, and above MAS’ threshold of 1.5x. Keppel’s REIT’s ability to refinance at lower costs, with weighted average cost of debt falling to 3.45% as at 30 September (3.51% at 30 June ), supports the REIT’s interest coverage ratio, especially with Keppel REIT’s operating momentum likely to be sustained. We believe the interest coverage ratio can be maintained moving forward, barring any material increase in debt levels, given the company’s ability to refinance at lower interest rates.
Recommendations
Table 1: Peer Comparison
|
Issuance |
Issuer |
Ask Price |
Years to Call |
Yield to Worst |
|
KREITS New Issue Perpetual Corp (SGD) |
Keppel REIT MTN Pte. Ltd. |
100.00* |
4.00 |
3.55% |
|
KREITS 3.780% Perpetual Corp (SGD) |
Keppel REIT MTN Pte. Ltd. |
101.867 |
2.73 |
3.06% |
|
SUNSP 4.480% Perpetual Corp (SGD) |
Suntec REIT |
105.417 |
4.58 |
3.20% |
|
AREIT 3.180% Perpetual Corp (SGD) |
CapitaLand Ascendas REIT |
101.567 |
4.74 |
2.82% |
|
EREIT 5.750% Perpetual Corp (SGD) |
ESR-REIT |
106.675 |
4.34 |
4.05% |
Source: Bondsupermart, iFAST Compilations.
Data as of 19 November 2025
*Yet to be issued
Do note that the bonds are issued by Keppel REIT MTN Pte. Ltd., a wholly owned subsidiary of Keppel REIT.
Overall, we think Keppel REIT’s overall credit is stable with a manageable debt profile and interest coverage. At an IPG of 3.55%, Keppel REIT’s new perpetual issuance is fairly priced when compared to other SGD real estate perpetuals with 2029-2030 call dates, which are trading at a yield-to-worst of between low to mid 3.0%. That said, we expect the final price guidance (“FPG”) to adjust downwards from the IPG.
In our opinion, Keppel REIT’s new issuance has a higher yield compared to its closest peers – specifically the perpetual from CapitaLand Ascendas REIT (Industrial / Business Space REIT issuer) and the perpetual from Suntec REIT (Commercial / Retail REIT Issuer). We think this is due to the elevated risk profile of Keppel REIT, having a higher aggregate leverage ratio compared to CapitaLand Ascendas REIT and Suntec REIT.
However, the attractiveness of Keppel REIT’s new issuance pales in comparison compared to EREIT 3.980% Perpetual Corp (SGD). We think this is due to Keppel REIT having stronger credit ratios compared ESR-REIT. Do note that ESR-REIT has a different portfolio exposure, to industrial/logistics assets.
Investors who wish to participate in this new issuance should note the risks relating to perpetuals, including non-call risks. As calls are at the full discretion of the issuer, they have every right to let it reset at the prevailing reset rate (based on 4y SORA). As we have shared in previous articles, issuers will consider (i) whether they wish to develop a stronger reputation for calling their perpetuals; and (ii) the economics of such a call. On the latter, non-call risks could potentially emerge if spreads widen from today.
Declaration: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) and the analyst who produced this report hold NIL positions in the abovementioned securities.
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