Is Keppel REIT A Good Buy In 2025? [Fundamental Analysis]

In this article, we'll conduct a fundamental analysis and review of Keppel REIT and its suitability to achieve the following investment objective: To deliver a stable dividend yield of 5% to 6% per year while having high capital preservation ability.

Information Is Accurate Up To April 2025

Business Description

Keppel REIT is an office REIT that was listed in 2006 and owns mainly prime commercial properties across Singapore, Australia, Korea and Japan.

What I Like About Keppel REIT:

• The quality of the underlying properties is rock solid with a high exposure in grade A properties in Singapore thereby providing a high stability in the operating performances.

  
  

• Properties have high weighted average lease expiry and high tenant retention track record over the years (Figure 12)

  
  

• Tenants are well diversified and are mostly either MNCs or government agencies that have the purchasing power and need to renew their leases regardless of economic cycles.

What I Do Not Like About Keppel REIT:

• The headline distribution per unit/dividend yield is heavily affected (around 40%) by non-operational items (i.e. capital distribution and income support) as well as non-cash items (i.e. management paid in units) which makes valuation a bit tricky (Figure 7).

Updates From Recent Performance (FY 2024)

General Comments:

• DPU from operations decreased by 5% at the back of higher borrowing cost (+32.90%) and units in issue (+1.63%) despite a strong top-line performance driven by contributions from the newly acquired stakes, higher occupancy rate (+0.8%) and positive rental reversions (+13.2%).

  
  

• Anniversary distribution of $ 20 million per year will help support the distribution per unit till 2027. (FY2024: 9.30% Of DPU) However, investors best pay attention to the operating performance during this period as should operating performance deteriorate, the DPU will sink, and price action might be badly affected by the sudden poor DPU due to the absence of the anniversary distribution.

  
  

• The cost of debt is expected to remain at current levels as around 23% of the debt is due for refinancing this year – where the interest rates have peaked but are only expected to come back down in 2H 2025.

  
  

• Aggregate leverage has worsened by 2.30% to 41.20% while the cost of borrowing increased by 0.51% to 3.40%.

Positive Headwinds:

• -

Negative Headwinds:

• With increasing economic uncertainty coupled with the potential impact of the ongoing trade war, businesses are tightening their budget and we could see an increase in the unoccupancy rate in the office space. However, with the trend of “return to office” and a “flight to quality”, Keppel’s portfolio will be more resilient to weather this headwind.

  
  

Download Full Report On Telegram

and continue reading my independent analyst report which will provide you with a detailed look at the fundamentals of the stock and a range of price targets to help you out with your investment decision for Keppel REIT:

*Join the channel → click on the channel name → under files → download the report you want!

If you would like to learn about REIT investing, you can find my entire methodology in my eBook: Retire With REITs here:

If you are looking for personalized financial advice, I offer a 1-to-1, fee-only consultation where you will receive personalized strategies to design, implement and manage a profitable REIT portfolio. You can find out more about it here:

Connect with me on social media platforms to receive updates on future content! You can also slide into my DMs if you have any questions :)

---

Disclaimer:

This article is meant to be the opinion of the author

This article is for information purposes only

This article should not be seen as financial advice

This advertisement has not been reviewed by the Monetary Authority of Singapore