US Reits headed here can only be a good thing

IT was certainly good news for the Singapore market when Keppel Capital, the asset management arm of Keppel Corporation, confirmed that it was working with American real estate investment firm KBS Realty to list Singapore's second US real estate investment trust (Reit).

But the market reaction to this potential mainboard listing was mixed with sceptics wondering why a US company would want to cross the Pacific to list its assets here instead of in its home turf. The underlying perception seems to be that if a business or portfolio is promising, it will be well received back home and there is no need to woo overseas investors who are unfamiliar with the American market.

Compounding the perception problem was news that a majority of the 11 office assets in the KBS-Keppel Capital Reit's portfolio are in the suburban markets of Seattle, Sacramento, Denver, Austin, Houston, Orlando and Atlanta. What appears to have been overlooked was that the potential Reit would offer an estimated investment yield of close to 7 per cent.