Keppel REIT (SGX: K71U)'s Net Property Income Dropped 7.2% But DPU Hold

Source: Keppel REIT's homepage

Keppel REIT (SGX: K71U) has recently announced its first-half 2020 financial results. It is currently trading at 5% yield based on the last traded of $1.10 based on 29 July.

Key Highlights:

  • Distribution per unit (DPU) and Dividend Yield (5%)

  • Price to book ratio (0.81)

  • Gearing (36.3%)

  • Interest coverage ratio (3.5x)

  • Portfolio occupancy rate (98.6%)

  • Growth catalyst

Background of Keppel REIT

Keppel REIT manages a portfolio of prime commercial properties in Singapore, Australia, and South Korea that worths S$7.9 billion.

Its core assets in Singapore includes Ocean Financial Centre (79.9% interest), one-third of Marina Bay Financial Centre Towers 1, 2 and 3 and Marina Bay Link Mall, and one-third of One Raffles Quay.

1. Distribution per unit and dividend yield

Net property income for second-quarter slid 7.2% to $28.8m. This was mainly due to lower gross rental income from Ocean Financial Centre, divestment of Bugis Junction Towers and rental relief given to eligible tenants. However, its DPU was up marginally by 0.7% due to the capital gain from previous divestment.

Based on its latest price, the REIT is currently trading at about 5% dividend yield. The REIT does not pass our DPU criteria as it has been declining over the years. Its current yield is also well below the historical average yield of 6.38%.