Keppel REIT’s Latest Earnings: What Investors Should Know

Keppel REIT (SGX: K71U) is a real estate investment trust (REIT) that has nine commercial real estate properties in Singapore and Australia as part of its portfolio. In our shores, it has stakes in Ocean Financial CentreMarina Bay Financial CentreOne Raffles Quay, and Bugis Junction Towers.

On Tuesday, the REIT announced its financial results for the third quarter ended 30 September 2017 (3Q2017). The reporting period was from 1 July 2017 to 30 September 2017.

Here’s a quick rundown on the financial figures from the earnings release:

1. The REIT’s property income rose 2.3% year-on-year to S$40.4 million.

2. Net property income (NPI) for the quarter inched up 0.3% to S$31.7 million. The higher property income and NPI were mainly due to increased contributions from Bugis Junction Towers, 275 George Street and 8 Exhibition Street.

3. Distribution per unit was 1.40 cents, a 12.5% decline from 1.60 cents paid out in 3Q2016. The decrease was largely on the back of lower rental support and lower share of results of associates.

4. As of 30 September 2017, Keppel REIT had a net asset value per unit of S$1.42, down from $1.44 as of 31 December last year.

The portfolio occupancy rate stood at 99.6%, as of 30 September 2017. All leases due for renewal in 2017 have almost been completed, with only 0.5% of the total portfolio net lettable area remaining. The REIT has also started negotiations for some leases that are due for renewal and review in 2018.

As of 30 September 2017, the trust had a gearing ratio of 38.8%, with an all-in interest rate of 2.58% per annum.

The REIT commenced construction of its newly acquired premium office tower at 311 Spencer Street during the quarter. When completed in the fourth quarter of 2019, the office tower will station Victoria Police’s headquarters.

For the Singapore office market, property consultants feel that sentiments are improving amidst stronger economic fundamentals. The average rental rate of Grade A office space seemed to have bottomed out, with a 1.7% quarter-on-quarter increase to S$9.10 per square foot per month.

Over in Australia, the Australian CBD office market saw positive leasing activities in the second quarter this year with business confidence at healthy levels.

The REIT’s units are going at S$1.185 now. This translates to a historical price-to-book ratio of 0.83 and a trailing yield of 4.9%.

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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.