KEPPEL Reit’s distribution per unit (DPU) fell by 3.4 per cent to S$0.028 for its first half-year ended June, from S$0.029 the year before.
Property income was up 8.9 per cent year on year at S$125.1 million for H1, from S$114.9 million.
Net property income (NPI) grew 7.7 per cent to S$96.8 million from S$89.9 million.
The increase was mainly attributed to higher property income and higher NPI from Ocean Financial Centre, KR Ginza II and 2 Blue Street which achieved practical completion on Apr 3, 2023, and contribution from 255 George Street which was acquired on May 9, 2024.
“This was partially offset by lower net property income from 8 Exhibition Street, Victoria Police Centre and Pinnacle Office Park due mainly to higher property expenses and a weaker Australian dollar,” said the manager.
Distributable income from operations declined 2.1 per cent year on year to S$96.9 million from S$99 million. This comes as borrowing costs rose 29.8 per cent to S$41.3 million from S$31.8 million.
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The distribution will be paid out on Sep 13, after books closure on Aug 7.
Koh Wee Lih, chief executive officer of the manager, highlighted a strong performance by the Reit’s Singapore properties with committed occupancy of 98.9 per cent, on an NPI increase of 4.1 per cent on the year.
Koh noted that the performance of its Australia portfolio has also improved, with committed occupancy increasing to 93.6 per cent as at end-June from 91.6 per cent a quarter ago. NPI for the Australia portfolio for the period grew 12.3 per cent despite a stronger Singapore dollar.
In North Asia, the Reit’s two properties achieved full committed occupancy and posted a 13.8 per cent growth in NPI, Koh highlighted.
With the completion of the acquisition of a 50 per cent interest in 255 George Street, the Reit’s aggregate leverage increased to 41.3 per cent as at June, 2024.
Borrowings on fixed rates constituted 65 per cent of total borrowings. Weighted average term to maturity of borrowings stood at three years, as compared to 2.3 years a quarter ago.
All-in interest rate was 3.31 per cent per annum with adjusted interest coverage ratio at 2.8 times, its manager noted.
The manager added that it adopts a proactive approach towards capital management and has completed most of the Reit’s refinancing requirements for 2024. “The majority of the borrowings due in 2025 will mature in H1 2025.”
As at Jun 30, the Reit’s portfolio committed occupancy increased to 97 per cent from 96.4 per cent as at Mar 31. Portfolio weighted average lease expiry (Wale) stood at 4.6 years and the Wale of the top 10 tenants stood at 8.3 years.
Koh noted that delivering sustainable long-term total return to the unitholders despite the high-interest-rate environment remains the Reit’s priority.
“Moving ahead, we will continue to focus on asset management and exercise discipline in implementing our portfolio optimisation strategy to maintain a sound capital structure over the long term, with a strong and resilient balance sheet,” said Koh.
Units of Keppel Reit closed on Monday up 0.6 per cent or S$0.005 to S$0.88.
