Keppel REIT has reported a property income of $193.7 million for the 9MFY2024 ended Sept 30, 12.3% higher y-o-y. Net property income (NPI) for the same period was up by 10.8% y-o-y to $148.5 million. The increases in both figures were mainly due to the higher occupancy at Ocean Financial Centre in Singapore and KR Ginza II in Japan. Contributions from 2 Blue Street and the newly-acquired 255 George Street, both in Australia, also led to the increases.
However, distributable income from operations of $145.6 million for the 9MFY2024 fell by 2.1% y-o-y as borrowing costs were up by 33.3% y-o-y to $65 million.
Including the REIT’s anniversary distribution of $15 million, the total distributable income stood at $160.6 million, 1.9% lower y-o-y.
As at Sept 30, the REIT’s aggregate leverage stood at 41.9% with 68% of borrowings on fixed rates, compared to the aggregate leverage of 39.5% with 76% of borrowings on fixed rates as at Sept 30, 2023.
The REIT’s interest coverage ratio (ICR) also fell to 3.0 times as at Sept 30 from 3.3 times last year.
As at Sept 30, Keppel REIT reported a portfolio occupancy of 97.6% compared to an occupancy rate of 97% a quarter ago and 95.9% a year ago.
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The portfolio’s weighted average lease expiry (WALE) stood at 4.6 years compared to the WALE of 5.6 years last year.
For this period, rental reversion stood at a positive 10.2%.
The team at DBS Group Research has maintained its “buy” call with an unchanged target price of $1.15 as it sees “steady improvement” across the REIT’s portfolio.
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In its view, key positives include the double-digit positive rental reversions, higher occupancy rates as well as the full-quarter income contribution from 255 George Street.
Meanwhile, it is watchful of the REIT’s higher gearing and higher borrowing costs, although it sees those as “likely to have peaked”.
As at 10.36am, units in Keppel REIT are trading 0.5 cents lower or 0.53% down at 93.5 cents.
