Keppel Reit Q1 distributable income up 4.3% to S$53.8m

KEPPEL real estate investment trust (Reit) : K71U 0% posted a 4.3 per cent increase in its first-quarter distributable income from operations to S$53.8 million, from S$51.6 million a year earlier.

In its Q1 business update on Wednesday (Apr 20), the Reit’s manager attributed the increase in distributable income mainly to the acquisition of Keppel Bay Tower in May last year. This was partially offset by the impact from its divestment of 275 George Street in Brisbane, Australia last July.

Property income rose 6.7 per cent to S$54.5 million for the quarter ended Mar 31, from S$51.1 million a year ago.

Net property income attributable to unitholders climbed 9.9 per cent to S$40 million, from S$36.4 million the year before.

Keppel Reit’s portfolio committed occupancy stood at 95.1 per cent, slightly lower than the 96.5 per cent it reported in the same period a year earlier. Its portfolio weighted average lease expiry stood at 6.1 years as at Mar 31, 2022.

While interest rates are expected to rise this year, the Reit’s manager said that every 50 basis point increase in the Singapore Swap Offer Rate, Singapore Overnight Rate Average or the Bank Bill Swap Rate for applicable loans would result in approximately 2.4 per cent decline in distributions per unit per annum.

Still, the manager noted that all-in interest rate had been reduced year on year to 1.81 per cent per annum, from 2.01 per cent per annum.

The Reit’s aggregate leverage as at Mar 31, 2022 stood at 38.7 per cent, while its weighted average term to maturity stood at 3.1 years. Borrowings on fixed rates stood at 71 per cent.

The Reit manager expects its Grade A properties to benefit from improved office market fundamentals as global economies become more resilient against Covid-19 amid geopolitical uncertainties.

It noted that central business district Grade A office rents in Singapore reported by real estate services firm CBRE increased slightly in the first quarter of 2022 to S$10.95 per square foot per month.

Singapore made up 78.3 per cent of Keppel Reit’s portfolio, while Australia and South Korea made up 18.2 per cent and 3.5 per cent of the portfolio, respectively.

Approximately 475,000 square feet of leases were committed by the manager in the first quarter of this year, with new leases and expansions mainly from the real estate and property services sector and manufacturing and distribution sector.

The manager added that most of the leases concluded were in Singapore. Average signing rent for Singapore office leases was approximately S$11.15 per square foot per month.

Units of Keppel Reit closed flat at S$1.19 on Wednesday before the business update.