Keppel Land to sell stake in Marina Bay Financial Center Tower 3 for $1.25bn

It translates to $2,790 psf.

Analysts have long been speculating about Keppel Land’s next move after it divested its stake in Equity Plaza in July. The mainboard-listed firm yesterday ended rumors by revealing that it is selling its 0ne-third stake in the Marina Bay Financial Center Tower 3 for a price consideration of $1.25bn.

Keppel REIT declared yesterday that it has entered into a conditional share purchase agreement with Bayfront Development Pte. Ltd., a wholly-owned subsidiary of Keppel Land, to acquire a one-third interest in the two-year-old Marina Bay Financial Centre Tower 3 at an agreed value of $2,790 psf.

The acquisition would be funded by i) units to be issued to Keppel Land for SGD185m, ii) a placement to raise SGD228m, iii) additional borrowings of SGD120m and iv) partial proceeds from the sale of prudential tower.

After the acquisition of MBFC Tower 3, KREIT will be the third largest REIT within the REIT sector. Currently, the counter is under review and is trading at a yield of 6.0%, says OSK DMG.

Meanwhile a report by OCBC notes that Keppel Land’s actively recycling capital is a core part of its strategy and that it has divested around $700m per annum in terms of net proceeds and deployed more than S$1b per year into acquisitions and investments from 2010-2013.

“Including the divestment of Equity Plaza earlier this year, the group would have gathered total net proceeds and net divestment gains of S$854m and S$155m, respectively. We expect KPLD’s net gearing ratio to fall from 44% as at end Jun 2014 to the mid-30% levels after both divestments are completed. Looking ahead, the group expects to expand its presence in overseas office and retail assets, particularly in China, Indonesia and Vietnam,” notes OCBC.