Temasek sells KReit stake for $125m

PHOTO: Temasek sells KReit stake for $125m

TEMASEK Holdings has sold its entire direct stake in office landlord Keppel Reit (KReit) in a share placement that started on Monday evening, sources close to the deal said yesterday.

The deal involved 103,994,321 shares offered at a price range of between $1.195 and $1.21 per share, the sources said. This represents a 1.6-1.8 per cent discount to the trust's last closing price of $1.23 on Oct 21. The placement offer amounted to an estimated $125 million.

By the market close on Tuesday, some 163 million shares worth $194.4 million had changed hands, market data from the Singapore Exchange showed.

Temasek's share sale works out to 3.74 per cent of KReit, representing the stake it had received from the dividend in specie distributed by Keppel Corp to its shareholders during its FY2012 final results announced on Jan 24, 2013.

On top of a final cash dividend of 27 cents, Keppel had distributed a special dividend in specie of one KReit unit for every five Keppel Corp shares held.

Temasek, Singapore's state-owned investment company, continues to hold a small deemed stake in KReit through Keppel Land and Keppel Corp.

Temasek continues to hold 21 per cent in Keppel Corp which in turn holds 54.6 per cent in Keppel Land. Keppel itself has less than a 1 per cent stake in KReit following its two rounds of dividend in specie, while Keppel Land remains KReit's largest shareholder at 44.86 per cent.

Besides Keppel group, the other significant shareholders are Capital Group, Franklin Resources, Goldman Sachs and Aberdeen.

With the Temasek share placement, KReit's free float will rise to more than 55 per cent from 24.4 per cent in January.

According to some analysts, Temasek's decision to sell its KReit shares could potentially lead to further placements from other Keppel shareholders who had received the dividend in specie earlier this year.

KReit recently posted a 9.9 per cent increase in net property income to $100.9 million for the nine months to Sept 30, 2013. Distributable income rose 6 per cent to $159 million, while distribution per unit rose 1.9 per cent to 5.91 cents.

For Q3 2013, the group announced a distribution per unit of 1.97 cents, which works out to a distribution yield of 6.4 per cent.

Management had said that its total portfolio value was more than $6.8 billion. Average portfolio committed occupancy rose to 99.4 per cent, with six out of eight existing buildings fully occupied.

Key properties in Singapore include the Ocean Financial Centre, Marina Bay Financial Centre, One Raffles Quay, Prudential Tower and Bugis Junction Towers.

KReit closed four cents lower at $1.19 yesterday.

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