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Keppel-KBS US Reit posts Q2 DPU of 1.5 US cents

AN enlarged number of units from a rights issue, which outweighed contributions from two more recently acquired properties, led Keppel-KBS US Reit (KORE) to post a distribution per unit (DPU) in its second quarter ended June 30 of 1.5 US cents, lower than its forecast of 1.58 US cents for the period.

Restated for the Nov 26 rights issue, its forecast DPU for that quarter would have been 1.47 US cents. Its actual Q2 2018 DPU was also 1.5 US cents.

This came as Q2 income available for distribution reached US$12.4 million, 23.4 per cent higher than the forecast for Q2 2019, and 31.2 per cent higher than actual Q2 2018 performance.

For the three months ended June 30, gross revenue was 21.5 per cent higher at US$29.3 million than Q2 2019 forecast, thanks to contributions by The Westpark Portfolio and Maitland Promenade I, following their acquisitions on Nov 30, 2018 and Jan 16, 2019 respectively.

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That result was also 29.3 per cent higher than actual performance in the previous year.

Net property income climbed 27.9 per cent to US$18 million from the forecast, and was 30.4 per cent better than the actual performance a year ago.

For the first half of its fiscal year, actual DPU was at three US cents, down from its un-restated forecast of 3.16 US cents, up from the restated forecast of 2.94 US cents, and same as the actual DPU in 2Q 2018.

The forecast figures for 2Q 2019 and H1 2019 were respectively derived from one quarter and one half of its projection year 2019, based on its prospectus.

Its properties include 13 office properties in the United States with an aggregate net lettable area (NLA) of over 4.2 million sq ft.

KORE's portfolio committed occupancy was at 94 per cent as at June 30. It saw positive rental reversion of 8.6 per cent for its overall portfolio as expiring leases were marked to market. Weighted average lease expiry by NLA was 3.9 years and 5.2 years for the portfolio and top 10 tenants respectively.

KORE said that a combination of stable GDP growth, low unemployment rates and expectations of future rate cuts "provides for an encouraging backdrop and potential tailwinds for KORE's growth".

Unitholders will receive their distributions on Sept 25, 2019.

KORE units finished unchanged at US$0.81 on Tuesday before the results were announced.