This REIT is well prepared for the office oversupply situation

SINGAPORE (Oct 19): Market watchers remain positive on Keppel Real Estate Investment Trust after the REIT announced that it had renewed all of its leases expiring in FY16, and is poised to ride through the looming oversupply coming up within the next two years.

UOB Kay Hian analysts Vikrant Pandey and Derek Chang noted that the REIT is now left with just 5.2% and 5.4% of leases by net lettable area expiring in 2017 and 2018 respectively. “This would minimise tenant flight risk during the next wave of commercial supply due in 2H16 to 2017,” said the pair in a note on Wednesday, adding that the REIT’s retention was high at 98%.

Pandey and Chang cited the new supply coming from Guoco Tower which would add 0.9 million sf of office space in 2016, the 1.9 million sf of space from Marina One coming onstream by 1Q17 and the 0.6 million sf of space at Duo which would be ready by 4Q16.

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