Keppel Pacific Oak REIT (SGX:CMOU)'s 8.5% Yield Supported By Healthy Performance

Image Source: Keppel Pacific Oak REIT's Website

Keppel Pacific Oak REIT (SGX:CMOU)'s second-quarter DPU was up 4% to 1.56¢. It is currently trading at 8.5% yield based on the last traded share price of $0.725 on 19 Aug.

Key Highlights:

  • Distribution per unit (DPU) and Dividend Yield (8.5%)

  • Price to book ratio (0.88)

  • Gearing (37.4%)

  • Interest coverage ratio (4.4x)

  • Portfolio occupancy rate (94.3%)

  • Growth catalyst

Background of Keppel Pacific Oak REIT

Keppel Pacific Oak REIT was formerly known as Keppel-KBS US REIT, is a REIT that owns freehold commercial assets in the US. The REIT manages 13 freehold office buildings in its portfolio. Keppel Pacific Oak REIT is managed by Keppel Pacific Oak US REIT Management Pte Ltd, which is jointly owned by two sponsors, Keppel Capital owned by Keppel Corporation Limited (SGX: BN4) and KPA.

1. Distribution per unit and dividend yield

In its second quarter 2020 result, Keppel Pacific Oak REIT continues to deliver a healthy operational performance, with a 4% increase in DPU on an enlarged unit base of 13.8%. Its net property income was up 16.3% to US$20.9m. This was mainly due to the contributions from the new asset, One Twenty Five and positive rental reversion last year. Based on its latest price, the REIT is currently trading at about 8.5% dividend yield.

2. Price to book ratio

The REIT is currently trading at a price to book ratio of 0.9, which is slightly above its 3-year average of 0.88. However, the current valuation still indicates a 10% discount on its net asset value.

3. Gearing