Tuesday 7 November 2023

Keppel Corp Owners-Have You Checked Your “Free” Keppel Office REIT Units Have Been Correctly Credited To Your Accounts?

Today is 7th November 2023 which is the much anticipated dividend in specie disbursement of Keppel REIT units for Keppel Corp shareholders. For those holding their Keppel Corp shares in nominee beneficiary accounts in trust and not their own CDP account, do check with your respective stockbroker in case of administrative screw up. I would also like to touch base on a dry topic of how should one record the cost of these free Keppel Office REITs unit- those who are not interested can just skipped point 2 below. 

1. Shares held in Trust (Non-CDP trading account).
I was rather impressed with Tiger Brokers which has an impressive digital platform that immediately allocated the Keppel REIT units in the morning to the sub-account holders. For my shares held in custody with Maybank Trading, they apparently have either (i) screwed up & missed out on this special dividend distribution or (ii) their administrative trust team are doing things too manually and need another few more working days to sort out the allocation of the Keppel REIT units to their sub-account holders.   

2. Cost of the Keppel Office REITs units given out is not zero cost or free of cost.
I was a bit puzzled when Tiger Brokers allocated my Keppel Office REITs units to me and display my cost of purchase as “zero” which means I am sitting on a profit of current market valuation less “zero” cost. This is not correct. 

2(a) Strange concept of “freehold” investment into stocks/REITs
Technically, the disbursed Keppel Office REIT is not a “freehold”. (Btw: I borrowed this term “freehold” from Master Leong when he disputed such a concept of measurement of profits with another fellow investment blogger- freehold means free of cost after taking into account historical dividends paid out that has accumulated over the years and adding that to the current market valuation of one’s investment whereby this total effect becomes easily greater to the original cost of investment). I do not want to dwell into details on who is right or wrong with regard to this concept of one’s investment becoming “freehold” as it really depends on the perspective of whether (i) one is looking at measurement associated with unrealized gain/loss or (ii) just looking at a higher level of realized plus unrealized gains/losses from an investment.  

2(b) What is the cost to assign to Keppel Office REITs one gained from the dividend in specie exercise?
Anyway, back to the costing of this exercise.  Personally, I will neither be be taking dividend cum date nor the ex-dividend date to record the cost of the Keppel office REIT as a retail investor. Despite having absolute certainty that I have a legal right to the asset (via this special dividend exercise) on the as aforesaid dates, the problem is that I am unable to do anything at this particular stage as a retail investor as the units have not been transferred into my CDP or trust account with other brokerages. This is similar to a normal dividend being declared, you can only use the cash given out to buy new shares/units when it has been credited into your bank account on the payment date being declared.

The keppel Office REIT should be valued at S$0.83 per unit which is the opening trade price as at 7th November 2023. This is also the date whereby the units are given to all direct shareholders thus one has the rights to trade or hold the Keppel REIT units on the secondary market. Substance over form, this special dividend exercise is still a dividend income in terms of one’s own P&L and a recording of long term investment instead of cash in one’s Statement of Financial Position. 

I think it is extremely silly to view this as a zero dollar cost investment for future measurement which give rise to a very useless and impractical situation whereby whatever is the market price fluctuation, the percentage profits is always 100% profit even when the market price dropped by half as the cost of holding is “freehold”. How does this perpetual non moving 100% profit margin help one in making sell or hold decision?

Parting thoughts
Anyway, the above is just the accountant in me making a big fuss over the zero cost of purchase of Keppel REITs being assigned by Tiger Brokers. For my own Stocks Cafe recording, I will be imputing a cost to the Keppel Office REITs being disbursed to my CDP and brokerage trust sub-accounts.


  1. Hi Blade, in terms of how to treat your KREIT units, this is what I would do personally:

    Add the total current value of your Keppel Corp + KREIT units you received together and minus the cost basis of the initial Keppel Corp shares to calculate your percentage PnL.

    Hope this makes sense!

  2. Hi PL mate, thanks for dropping by. Good to hear from you. Trust all's well at your side and that you feeling much better liao. :)

    For Keppel Corp, agree fully with you that the overall P&L will need to include this KREIT disbursement (realised gain) as it is still a dividend albeit a dividend in species.

    As for Keppel REIT, the recording of the initial cost of this new investment will be the monetary market value at the point of disbursement of new units received akin to cash purchase of new Keppel REIT as at 7th Nov 2023. Then its P&L will be the current market value relative to this (i) initial cost recorded plus (ii) subsequent future realised dividends paid out.

  3. Hi Blade Knight,

    I have the same experience with my CPF Investment Account. Whenever there is a distribution in specie of shares, be it Seatrium, Keppel Infrastructure Trust, Keppel REIT etc from Keppel Corp, the unit and total cost of those distributed shares was always recorded as zero by them. The cost of Keppel Corp though, was not reduced as it is not a capital reduction but dividend payout of shares.

    1. Hi ghchua Sir, thanks for sharing and adding on about the CPF investment account. So this seems to be quite prevalent for most systems. Only way is to do own manual adjustments in personal records.

  4. Myself, I prefer to take the value of KR share on day of credit as dividend for KC...and as cost of my credited KR shares.