Keppel Reit obtains A$300m in green loans from UOB, BNP Paribas, Companies & Markets

Thu, Dec 10, 2020 – 11:16 AM

KEPPEL Reit has obtained A$300 million (S$299.8 million) in green loans from UOB and BNP Paribas, its manager said on Wednesday evening in a bourse filing.

The Reit will use part of the loans for financing the real estate investment trust’s acquisition of Pinnacle Office Park, a freehold Grade A commercial property in Sydney’s Macquarie Park. The manager expects the deal to complete in Q4 2020.

The Reit’s trustee has provided a corporate guarantee for the green loans, the manager said.

The green loan facilities adhere to the Keppel Reit green loan framework, which is in line with the Green Loan Principles (2018) administered by the Loan Market Association and the Asia Pacific Loan Market Association, the manager said in a separate press statement.

Paul Tham, chief executive of the Reit manager, said: “We are committed to strengthening our green funding sources through working together with like-minded partners such as UOB and BNP Paribas, a long-time Keppel Reit tenant, who share in our commitment towards responsible growth.”

DBS Group Research said in a separate note that the proposed Pinnacle Office Park deal kick-started the Reit’s acquisition mode. The proposed transaction will contribute to revenue in fiscal 2021, the research team added.

It has maintained “buy” and a target price of S$1.40 on Keppel Reit. The Reit is “well-positioned” to benefit from a potential recovery in a very tight net supply market, DBS said.

DBS analysts Rachel Tan and Derek Tan said valuation remains attractive at a price/net asset value of 0.8 times, below the sector’s historical mean.

They have moderated their fiscal 2021 to 2022 distributable income estimates by 4-5 per cent to factor in potential vacancies ahead with the increasing adoption of flexible work arrangements.

However, the Reit has “ample” capital distributions buffer to offer stronger distribution per unit growth and well-placed to capture growth from China tech giants, the analysts said.

Keppel Reit units were trading at S$1.06 as at 11.01am on Thursday, up S$0.01 or 1 per cent.

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