The Goldman Sachs Group, Inc.
) announced its intention to buy a 6.7% stake in Keppel REIT from
a subsidiary of
) for S$279.9 million ($223 million). Keppel is the world's
largest oil-rig maker. On completing this transaction, Keppel
Corp.'s stake in the REIT will be reduced to 51.5%. The deal is
expected to close by May 27.
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Goldman Sachs will acquire 180 million shares of the real estate
investment trust for S$1.555 per unit ($1.238). The price
reflects a discount of 3.5% to Keppel REIT's (KREIT) closing
price on May 20, 2013.
Keppel REIT qualifies as the largest proprietor of office assets
in Singapore and Goldman is depending on the expected rise in
office building rents in 2014. Moreover, for locations in prime
areas, rents are expected to increase 13% per annum in 2 years
Goldman is not new to the REIT sector. Earlier in July 2012, the
banking major had plans to venture into Japan's property market
through its asset management wing. The U.S. investment bank aimed
to expand private real estate investment trust (REIT) in the
Japanese soil to 300 billion yen ($3.7 billion) till 2017.
The company's decision to purchase stake in Keppel REIT is
engendered by the expected boom which it foresees in the
Singaporean real estate market. It believes that investing in
Singapore properties will yield higher returns over the long
term, once the economy stabilizes and the government's policies
come into effect extensively.
Currently, Goldman carries a Zacks Rank #3 (Hold). Better
performing banks include
Meta Financial Group, Inc.
Provident Financial Holdings, Inc.
), both carrying a Zacks Rank #1 (Strong Buy).