Keppel REIT's Outlook Is Not Favorable



Key Highlights:

  • Keppel REIT's (SGX:K71U) 3Q19 DPU grew 2.9% to 1.4 cents

  • The annualised yield and price to book ratio are 4.5% and 0.91 respectively


1. Dividends


Net property income and distribution per unit grew 17.6% and 2.9% to $33.2m and 1.4 cents, respectively. The increase was mainly due to

  • higher rental contribution from Ocean Financial Centre

  • full quarter contributions from T Tower, Seoul


However the distributable income is also impacted by

  • reduced takings from Bugis Junction

  • weaker AUD

  • absence of rental support for MBFC Tower 3


The annualised yield is 4.5%. It is currently trading at historical low yield.




2. Portfolio


Portfolio occupancy remains stable at 98.9%. 11.9% of its leases will be up for renewal in 2020. Portfolio leverage went up slightly to 38.9%. The interest cost is 2.82%, 91% of the loans are on fixed rates and $637m of loans are up for refinancing next year. It is currently trading at a price to book ratio of 0.91.

3. Growth catalyst


The REIT is the midst to divest the Bugis Junction Towers for $547.5m. The proceeds will be used for share buy-backs and potential acquisitions.

Summary


The increase in DPU this quarter was mainly due to the unit buybacks. The DPU has been trending downwards over the years and the REIT has a low dividend ratings. Thus, it does not fit our criteria to be included in our portfolio.


Access to all new features and get the "Premium" for one year at 35% discount (Limited time only)! Get access now>>

0 views

REITs Newsletter

Get the latest insights on REITS. Stay informed and continued to be a profitable REITs investor, for free.

©2020 by reitscompass