Keppel Corp (SGX: BN4) up 3.5% on real estate buy - Really, real estate, now?

2 months ago 105

Keppel Corp (SGX: BN4) shares are up 3.5% today as the company announces the acquisition of Aermont Capital. This could, of course, be a lovely deal. But we have our doubts about the European real estate market just at present. Partly this is simply the turn of the interest rate cycle but also there’s that pesky problem of a deep structural change happening. We tend to think - tend - that the entire sector is one to stay well away from. In fact, we’re very strongly of the opinion that anyone entering the market right now is trying to catch a falling knife.

But here’s the deal all the same: “Singapore's Keppel Corporation KPLM.SI on Wednesday said its unit Keppel Capital Holdings will acquire all issued voting shares in European asset manager Aermont Capital in two tranches, for a maximum sum of S$1.35 billion ($1.01 billion). Keppel Capital will buy 50% stake in Aermont for a maximum amount of 356.9 million euros ($391.6 million) in the first half of 2024, and the remaining stake for 575 million euros in the first half of 2028, Keppel said.”

Aermont is an asset manager, yes, but more pointedly: “Established in 2007, Aermont is an independent asset management business focused on real estate and real estate-related investment activities in Europe. Keppel said Aermont’s investments had included assets and businesses in the office, student accommodation, workforce housing, luxury hospitality and production studio infrastructure sectors, among others.”

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