Keppel Pacific Oak US REIT Offers A High 8.2% Yield

Updated: Jan 23



Key Highlights:

  • Keppel Pacific Oak US REIT (SGX: CMOU) has announced a 20.8% growth in 4Q19 DPU to US1.51¢

  • The price to book ratio is 0.96


1. Dividend growth


Net property income went up 37.1% to US$20.1m, mainly due to the contributions from The Westpark, Maitland Promenade and One Twenty 5. However, the increase in income was partially diluted by higher interest cost on the debt-financed for the three new properties.


Despite an enlarged unit base of 13.7%, Keppel Pacific Oak US REIT still managed to grow DPU. It is currently trading at 8.2% yield.


2. Portfolio remains stable


Aggregate leverage went down slightly to 36.9%. The average interest cost remains steady at 3.69%. The downside risk is limited, with 81% of debt are on fixed rates. The REIT portfolio occupancy remains at 93.6%. In the last quarter, the REIT also enjoyed strong rental reversion of 14.3%.



3. Growth catalyst


With a more stable US economy and President Trump is likely to maintain the market momentum to prepare for the November Presidential Election, the retail trade and healthcare sectors are expected to grow strongly in 2020. The management expects rental reversions to remain healthy moving forward.


Summary


With a portfolio of US assets, Keppel Pacific Oak US REIT is one of the beneficiaries on the recovery of the US economy and the booming of the tech sector. While the fundamental is getting attractive at 8.2% yield, we will watch Keppel Pacific Oak US REIT closely in the coming months.



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