Keppel-KBS US Reit posts Q3 DPU of 1.5 US cents, slightly higher than forecast

A STABLE performance in line with its initial public offering (IPO) forecast, supported by strong leasing momentum, positive rental reversion and lower property expenses, boosted results for US office landlord Keppel-KBS US Reit in its third quarter.

Distribution per unit crept up to 1.5 US cents from 1.49 US cents in its IPO forecast, the group said in a Singapore Exchange filing on Wednesday. 

For the three months ended Sept 30, gross revenue dipped 2 per cent below forecast to US$22.7 million largely due to lower rental income and recoveries income. The latter is recognised from charging tenants for reimbursements of certain property expenses.

"The lower rental income was from a drop in rental from a tenant at Westmoor Center (in Denver, Colorado) which vacated the premises ahead of its lease expiry and paid a compensation fee in Q1 2018. The compensation income received will be used to offset the drop in rental income and maintain the distribution until the replacement tenant begins contributing cash rental income ... Recoveries income was lower than forecast, in line with the lower property expenses for the period," it said.

Net property income was flat at US$13.6 million compared to the earlier forecast figures. Income available for distribution to unitholders edged up 0.2 per cent to US$9.5 million from its forecast, due mainly to lower property expenses and the one-off compensation income from the early lease termination that was recognised in Q1 2018. 

The Reit also updated that the space at Westmoor Center has since been taken up by an expanding tenant, and cash rental contribution will start this December. 

Keppel-KBS US Reit units closed half a US cent or 0.7 per cent down at US$0.735 on Wednesday.