- Equifax, first anchor tenant at KREIT’s Blue & William office property in North Sydney has officially opened its doors, following a relocation from two separate offices.
- Committed occupancy has increased to c.50% from c.38% in 2Q23, bodes well for KREIT.
- Blue & William has a 3-year rental guarantee from developer, Lendlease, as such KREIT is being selective to bring good quality tenants into the property
- Maintain BUY; TP of S$1.15. Trades at close to 7% yield, close to +2SD; While KREIT’s share price could be weighed down in the near-term if interest rates continue to rise, we believe valuation is attractive for a medium term outlook especially to position for a turn in interest rate cycle.
What happened?
Equifax, first anchor tenant at Keppel REIT’s (KREIT) Blue & William in North Sydney Australia has officially opened the doors to its new workplace. Equifax occupies more than 4.3k sqm of space across levels 5 to 7, which takes up approximately a third of the occupancy at Blue & William. This new workplace is a relocation from two separate offices in North Sydney to bring its people together in a new modern and sustainable workplace. This marks the opening of Blue & William after it achieved practical completion in Apr23. Equifax and Northbrew café are the first occupants in the building followed by other tenants, including global consulting firm, Human Synergistics in early 2024. In addition to the positive news, committed occupancy at Blue & William has achieved almost 50%, up from c.38% in 2Q23.
Our Views
The opening of Blue & William with a strong first anchor tenant bodes well for Keppel REIT. Despite the building opens with only c.50% committed occupancy for now, Keppel REIT has a 3-year rental guarantee from the developer Lendlease. We believe Keppel REIT is strategically being selective of tenants to ensure good quality income visibility during this period. We estimate that Blue & William contributes approximately 4% to 5% of Keppel REIT’s attributable NPI on a 100% occupancy basis. We maintain our BUY rating on Keppel REIT with TP of S$1.15. Keppel REIT is currently trading at close to 7% yield, close to +2SD of its historical range. Keppel REIT share price could be weigh down by cautious stance on the continuation of rising interest rates in the near term. However, we believe at these levels, it is an attractive level for a medium term outlook and for a turn in interest rate hike cycle.