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Important Highlights From Keppel REIT’s Latest Financials

Keppel REIT

Keppel REIT (SGX: K71U), an owner of 10 commercial real estate properties in both Singapore and Australia, announced its earnings results for the first half of 2014 on Monday. The period covered runs from 1 January to 30 June 2014.

In our shores, Keppel REIT has interests in Ocean Financial Centre, Marina Bay Financial Centre Towers 1 and 2, Marina Bay Link Mall, One Raffles Quay, Prudential Tower, and Bugis Junction Towers. In Australia, it has interests in five properties in cities like Sydney, Melbourne, Brisbane, and Perth. As of 30 June 2014, Keppel REIT has an asset size of more than S$7.2 billion.

For the first half of 2014, the REIT’s property income rose 14% year-on-year to $94.1 million, mainly on the back of better performance from Ocean Financial Centre and Prudential Tower. Additional income from 8 Exhibition Street in Melbourne, which was acquired only in August last year, helped as well. As a result of the increase in property income, Keppel REIT’s net property income had grown by 18% to S$78.7 million compared to a year ago.

Despite the growth in net property income, the REIT’s distribution per unit (DPU) had slipped by 1.8% to 3.87 Singapore cents partly as a result of an increase in the outstanding units of the REIT.

As of 30 June 2014, Keppel REIT’s gearing ratio stood at 42.8% and the average term to expiry for its borrowings is at 3.6 years. The REIT’s net asset value per unit came up to S$1.40, a rise from S$1.39 seen on 31 March 2014.

In May this year, the trust had sold its 92.8% interest in Prudential Tower for S$512.0 million and the deal is slated for completion on 26 September 2014. Majority of the sale proceeds will be used to repay existing debt while the rest will be used for “general corporate and working capital purposes and/or for pursuing acquisition opportunities.”

Keppel REIT ended the second quarter of 2014 with a strong occupancy level of 99.4% for its portfolio; that’s also a fair bit higher than the occupancy rate of 95.8% for the average building in the core of Singapore’s central business district. The REIT would have 6.1% of its portfolio reviewing their rents for the remainder of this year.

Going forward, Keppel REIT will “continue to maintain prudent interest rate and foreign exchange hedging policies so as to manage financial risks”. It will also “selectively pursue opportunities for strategic acquisitions and also review any asset divestment opportunities”.

Keppel REIT last traded at S$1.28 on Monday. That translates to a historical price-to-book ratio of 0.91 and a distribution yield of around 6%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.