Singapore office landlord Keppel REIT.Singapore office landlord Keppel REIT.

Singapore-listed office REIT, Keppel REIT (SGX:K71U), announced on 18 January that it has achieved a distribution per unit (DPU) of 1.68 Singapore cents for its 4Q 2015, 11.2% higher that the 1.51 cents posted in the corresponding period in 2014.

This came on the back of higher year-on-year distributable income of SGD54.0 million for 4Q 2015 and SGD217.3 million for FY 2015 - 17.8% and 5.4% above the corresponding periods in 2014 respectively.

The REIT has attributed the figures mainly to full-year income contribution from its one-third stake in Marina Bay Financial Centre Tower 3, and higher contributions from 8 Chifley Square in Sydney and the office tower on the Old Treasury Building site in Perth.

However total DPU of 6.8 cents for FY 2015 is a decrease of 5.9% from the 7.23 cents paid in FY 2014.

During the quarter, Keppel REIT’s gearing level reduced by approximately 8% to 39.3%. “The improvement was due mainly to lower borrowings and revaluation gains from Keppel REIT’s investment properties in end-2015”, said the REIT. As at end-2015, 70% of the REIT’s loans are on fixed-rate. Keppel REIT’s average cost of debt is at 2.5% while interest coverage ratio is at 4.4 times.

Portfolio occupancy as of end-2015 is at 99.3% while weighted average lease expiry (WALE) is approximately 8 years .

“Looking ahead, market conditions are expected to be demanding as Singapore undergoes economic transformation. The office market will also face headwinds with the upcoming office supply over these two years”, said the REIT its statement on the results.

“The manager remains committed to deliver sustained returns to its unitholders through harnessing strengths and capturing greater value through its ongoing tenant retention and engagement programme”, said the REIT. “The manager will also continue to focus its efforts on maintaining a healthy and long lease expiry profile”, it added.

Units of Keppel REIT ended the trading day 1.6% lower from its previous close on the Singapore Exchange to finish at SGD0.88.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.