Keppel REIT share price faces big trouble

February 23, 2025 sgwealthbuilder 0 Views 0 Comments

Lifetime Membership The last time that I covered Keppel REIT share price was in November 2020. That was during the dark period of pandemic and Keppel REIT share price fell from the $1.20 bandwidth during pre-pandemic to the $1.00 level. Post-pandemic, Keppel REIT did not recover but continue to decline to the current $0.80 level instead. What the hell has happened to this S-REIT?

For background, Keppel REIT is a real estate investment trusts with a portfolio of prime commercial assets in Asia Pacific’s key business districts. Its portfolio is valued of over $9.5 billion, comprising properties in Singapore (5), Australia (7), South Korea (1) as well as Japan (1).

Keppel REIT share price has been quite volatile in recent years, possibly due to the short selling activities. Data from SGX Securities Borrowing and Lending (SBL) website shown that 22,255,874 units are available for lending, with borrowing rate at just 0.25%. Such low borrowing rate attracts short sellers. From SGX website, the daily average short selling volume for this counter amounts to about 4 to 5 million.

Year-to-date, Keppel REIT share price declined by 5% at the point of writing. At the going rate, its only a matter of time that the counter broke the support level of $0.80. One of the biggest factors for the weak performance of Keppel REIT share price is the payment of management fees via the issuance of new units. For FY2024, a whopping 65 million units have been issued to the Manager. Whilst it is a very common practice for S-REIT to make management fee payment through issuance of new units, the management fee of Keppel REIT is one of the highest among the S-REIT.

Another plausible factor for the bearish form of Keppel REIT share price may be the lack of unit buybacks in 2024. In fact, the last unit buyback was done on 20 June 2023. The pause in unit buybacks is indeed mystifying as Keppel REIT is considered one of the rare S-REITs to consistently buy back its units. While it is very common for listed companies in SGX to conduct shares buybacks, I believe Keppel REIT is the only S-REIT to do units buybacks. Even if it is not the only one, I don’t see the other S-REITs buying back their units on such scales.

To add uncertainty to Keppel REIT share price, the S-REIT recently changed its CEO again. In the last five years, Keppel REIT changed its CEO three times. When I covered Keppel REIT in my blog in 2020, the CEO was Paul Tham who lasted less than two years. Subsequently, Koh Wee Lih took over as CEO in December 2021. He was considered an upgrade given his appointment as the President of REITAS. However, Keppel REIT share price continued to languish at 5-year low since he took over as CEO. Three years later, Keppel REIT appointed Chua Hsien Yang as the new CEO. Such frequent changes of CEO do not really inspire confidence among investors as it reflected a lack of proper succession planning and business continuity.

But is it really all doom and gloom for Keppel REIT share price in 2025? Over at DBS, the analysts set a target price of $1.10 for Keppel REIT share price, which I think is rather unrealistic given that the last time that this counter was trading at such level was in August 2022. In contrast to DBS, my house view is that things may get worse for Keppel REIT share price in the coming months and unitholders should brace for my volatility. In this article, I will share my insights on Keppel REIT share price in 2025.

Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. Furthermore, I am not vested and have never invested in Keppel REIT before. Whether Keppel REIT share price will surge or collapse has no impact on me. Thus, this article is not meant to induce readers to make any form of investment decisions.

Keppel REIT share price in for a rough ride

Like many S-REITs, both DBS and the Manager of Keppel REIT had painted a rosy picture of the upside potentials for Keppel REIT while downplaying the downside risks. In January 2025, DBS highlighted the tailwinds in terms of the S-REIT’s focus on asset recycling to drive growth and interest rate cuts in 2025. What is disturbing to me is that [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

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