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9 Quick Things Investors Should Know About Keppel REIT’s Latest Results

On Wednesday, Keppel REIT (SGX: K71U) announced its first-quarter results for 2019. Keppel REIT is a real estate investment trust (REIT) with a focus on commercial properties in Singapore and Australia.

Let’s look at nine things investors should know about the company’s latest results:

  1. Property income improved 0.7% year on year to S$40.0 million, while net property income (NPI) grew by 0.3% during the period to S$31.3 million.
  2. Distribution per unit (DPU) was down by 2.1% as compared to the same period last year, to 1.39 Singapore cents.
  3. Based on its annualised DPU of 5.56 Singapore cents and closing price of S$1.23 (as of time of writing), Keppel REIT has a trailing distribution yield of 4.5%.
  4. As of 31 March 2019, the REIT’s gearing stood at 35.7%, which is a safe distance from the regulatory ceiling of 45%.
  5. The REIT’s committed occupancy rate stood at 98.7% at the end of the quarter.
  6. The weighted average expiry profile was 5.7 years by NLA (net lettable area), with 54.8% of leases to expire in the next five years, while the rest will expire after 2024.
  7. In terms of rental income breakdown, Singapore and Australia accounted for 79.9% and 20.1%, respectively, of the REIT’s quarterly rental income.
  8. In Australia, the development of 311 Spencer Street in Melbourne is ongoing, with completion and commencement of the 30-year lease to the Victoria Police expected in 2020.
  9. The REIT provided the following outlook:

“CBRE’s research indicates continued growth in the Singapore office sector, with average Grade A office rents at $11.15 psf from $10.80 psf a quarter ago. Average occupancy saw similar quarter‐on‐quarter growth from 94.8% as at end December 2018 to 95.2% as at end March 2019. CBRE maintains its positive outlook on the Singapore office sector, supported by limited supply pipeline which could further tighten in the medium term if older buildings are redeveloped in view of URA’s CBD incentive scheme.

In Australia, JLL reported healthy leasing activity and strong net absorption. National CBD office market occupancy continued its upward trend from 90.9% as at end September 2018 to 91.4% as at end December 2018, and vacancy rates are expected to remain low.

Amidst the uncertain macro-economic environment, the Manager remains focused on delivering stable and sustainable distributions to Unitholders, and on achieving long‐term growth. The Manager will seek to continue its ongoing portfolio optimisation, while driving operational excellence in its asset and capital management efforts.”

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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 Lawrence Nga doesn’t own shares in any companies mentioned.