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Keppel Reit posts Q3 DPU of 1.4 S cents on higher rents, T Tower contribution

HIGHER rentals from Ocean Financial Centre and 275 George Street, and a full quarter of income contribution from T Tower in Seoul, acquired in May, as well as its unit buyback programme, lent a boost to Keppel Reit's third quarter ended Sept 30.

This was partially offset by lower revenue and earnings from Bugis Junction Towers, which Keppel Reit announced in August it was divesting for S$547.5 million, as well as the absence of rental support for Marina Bay Financial Centre Tower 3, which was fully drawn in Q1, and lower contribution from Ocean Financial Centre following the Reit's divestment of a 20 per cent stake.

The divestment of its strata ownership of Bugis Junction Towers in Singapore, translating to a yield of 3 per cent, will realise capital gains of about S$378.1 million for the Reit, it had said.

The Reit's distribution per unit (DPU) rose to 1.40 Singapore cents, up from 1.36 cents a year ago.

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Property income rose 15.6 per cent to S$42.4 million, while net property income rose 17.6 per cent to S$33.2 million.

Income available for distribution added 2.5 per cent to S$47.5 million.

As for its other property, 8 Exhibition Street in Melbourne, its operating performance remained stable year-on-year, but the Reit said that a weaker Australian dollar contributed to the lower revenue and earnings from this property.

Keppel Reit's manager also said that it had purchased and cancelled about 13.6 million issued units in the third quarter, which helped partially to boost its DPU.

The average signing rent for its Singapore office leases committed in the last nine months averaged about S$12.35 per sq ft per month (psf pm).

The Reit cited CBRE data as showing that Singapore average Grade A office rents continued to trend upwards in Q3, rising from S$11.30 psf pm to S$11.45 psf pm. Average occupancy also rose during the quarter from 95.8 per cent as at end-June 2019 to 96 per cent as at end-September 2019.

In Australia, the national CBD office market occupancy was reported by JLL Research to be stable quarter-on-quarter at 91.7 per cent as at end-June 2019.

In Seoul, JLL Research saw an improvement in CBD Grade A occupancy from 82.5 per cent as at end-March 2019 to 84.5 per cent as at end-June 2019. Occupancy is expected to decline going into 2020, before rising in the subsequent years on a lack of new supply.

The books closure date is on Oct 24 and the DPU will be paid on Nov 27.

Units of the trust ended flat at S$1.24 on Wednesday.