The manager of Keppel REIT has reported a distribution per unit (DPU) of 2.97 cents for the 1HFY2022 ended June, 1.0% higher than the DPU of 2.94 cents posted in the corresponding period the year before.
The number of units in the REIT in issue during this period stood 1.24% higher y-o-y at 3.72 billion.
During the period, the REIT’s property income increased by 3.7% y-o-y to $109.8 million.
Net property income (NPI) increased by 6.0% y-o-y to $89.5 million, while NPI attributable to unitholders increased by 6.6% y-o-y to $81.0 million.
The higher property income and NPI were mainly attributable to the contribution from Keppel Bay Tower, which was acquired on May 18, 2021, as well as the higher NPI from the REIT’s Ocean Financial Centre, 8 Exhibition Street and Pinnacle Office Park.
The figure was slightly offset by the absence of contribution from 275 George Street following its divestment on July 30, 2021 and lower NPI from Victoria Police Centre and T Tower. The lower NPI from the two buildings were attributable to the weaker Australian dollar and Korean won respectively.
During the period, Keppel REIT’s income available for distribution and distribution to unitholders stood the same, growing 4.6% y-o-y to $110.5 million.
As at June 30, the REIT’s portfolio committed occupancy was 95.5% while its weighted average lease expiry (WALE) remained long at 6.0 years.
The REIT’s tenant retention rate was 89% for the 1HFY2022.
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During the period, a total of 881,900 sq ft with an attributable area of 466,900 sq ft was committed. This included new and expansion leases from tenants across diverse industry sectors, says the REIT manager.
During a results briefing, Koh Wee Lih, CEO of Keppel REIT's manager and his team indicated that they had managed to backfill one-third of the space vacated by Standard Chartered Bank at Marina Bay Financial Centre. Another one-third is in the negotiation and documentation stage. Of the space vacated by DBS Bank, 90% has been let.
According to Koh and his team, rental reversions in 1H2022 was at 8.7% while in 2Q2022, reversions were a positive 7.5% for the entire portfolio. In Singapore CBD however, rental reversions in 1H2022 were at 11%.
Reversions continue to rise. For leases that are being signed, rental reversions range from $9 to $13, while leases under documentation are being agreed at the $10 to $15 range.
"In other words we are seeing very strong demand and we continue to expect this for the coming quarters," Koh notes. "Space is tight. And we’ve seen rents in the market move up very quickly in the one to two months of the last quarter."
As at June 30, Keppel REIT’s net asset value (NAV) per unit stood at $1.36. The REIT’s aggregate leverage was at 37.9%, below the regulatory limit of 50%.
The REIT, as at end-June, has assets under management (AUM) of $9.0 billion in Singapore, Australia and South Korea.
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Cash and cash equivalents stood at $123.4 million as at June 30.
Based on an annualised DPU and the REIT’s closing price per unit of $1.09 as at June 30, its distribution yield is at 5.4%.
Unitholders will receive their DPUs on Aug 29.
Units in Keppel REIT closed 2 cents higher or 1.85% up at $1.10 on July 26.
