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Keppel Reit's DPU up 0.7% to 1.4 Singapore cents for Q2

KEPPEL Reit (real estate investment trust) declared a distribution per unit (DPU) of 1.40 Singapore cents for the second quarter ended June 30, a notch above its DPU of 1.39 Singapore cents from the same period a year ago.

Distributable income was up 0.4 per cent to S$47.5 million, including capital-gains distribution of S$5 million for Q2. This was despite net property income declining by 7.2 per cent to S$28.8 million from a year ago.

For the half year of 2020, Keppel Reit’s DPU went up 0.7 per cent to 2.80 Singapore cents, while distributable income ticked up 0.2 per cent to S$94.8 million.

This comes on the back of contributions from T Tower in Seoul, the commencement of major leases in the Singapore portfolio, higher capital-gains distribution, and lower borrowing costs.

For the half year of 2020, Keppel Reit’s net property income fell 5.4 per cent to S$59 million.

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The Reit has a portfolio committed occupancy of 98.6 per cent, and long portfolio weighted average lease expiry (WALE) of 4.6 years.

Keppel Reit’s manager estimated that, based on the initial eligibility criteria of the Covid-19 Temporary Measures Amendment Bill, about 4.2 per cent of its tenants qualify for mandatory relief in Singapore. The bill provides for eligible small and medium-sized enterprise (SME) retail tenants in Singapore to receive a minimum of four months of rental support from the government and landlord. Office SME tenants who qualify will receive two months of rental support co-shared by the government and landlord.

In addition, Keppel Reit has allowed eligible tenants to utilise part of their security deposit to offset rental payments and defer a certain amount of rent under a prescribed repayment scheme.  

In Australia, partial rent waivers and deferrals are being progressively granted to qualifying SME tenants, as guided by the “Mandatory Code of Conduct” issued by the Australian National Cabinet. Australian SMEs constitute approximately 1.4 per cent of Keppel Reit’s portfolio.

Meanwhile in South Korea, none of Keppel Reit’s tenants qualify for mandatory relief measures.

Keppel Reit’s tenant-support measures are estimated to amount to S$12.5 million as at June 30, 2020. These include the full pass‐through of property tax rebates and cash grants from the Singapore government, estimated to stand at S$9.2 million. Additionally, as at June 30, 2020, Keppel Reit has allowed $1.6 million of rents to be deferred.

The manager said that it will continue to review the situation and provide further targeted support where required.  

In its outlook, the manager noted that the Covid‐19 pandemic continues to present “unprecedented challenges” to the business community, with its impact on the global economy yet to be fully determined.

The manager added that it “remains focused on maintaining stable and sustainable distributions to unitholders, and achieving long‐term growth”. 

The DPU for Q2 will be paid out on Aug 28, with a record date of July 28.

Keppel Reit units closed up 1 Singapore cent to S$1.09 on Monday before the results.

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