Keppel REIT's $192m Melbourne venture spurred fund raising woes

What could be the reasons behind it?

According to Barclays, the recent Melbourne acquisition of 8 Exhibition Street for S$192mn has raised concerns of a fund raising, especially in light of its high gearing.

Analysts estimate the acquisition could still be accretive at 60:40 equity/debt funding structure, and a 3% cost of debt and 6% cost of equity.

Here's more from Barclays:

Four of five of its Australian assets are 97-100% committed, and their long leases and stepped rental escalations should render their incomes relatively defensive.

We expect KREIT to benefit from a prime office upturn and expect rising free float to improve its investability. It is trading at undemanding 1.05x P/B, forward yields of 5.9% and a yield spread of 3.4%.

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