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Keppel REIT’s distributable income for the first nine months of the year rose by 0.7 percent to S$160.3 million from 159.1 million in the corresponding period last year, according to a report from Credit Suisse.
This is attributed to better performance at several properties (PT, OFC, 8ES and 8CS), but it was partly offset by the weaker Australian dollar and lesser income from OFC and Marina Bay Financial Centre (MBCF).
However, its distribution per unit (DPU) fell by 3.2 percent to 5.72 cents from 5.91 cents previously due to placements in March and July 2013. Another factor is the 195 million new notes issued at S$1.17 apiece in September 2014, which was used to partly finance the purchase of MBFC Tower 3.
Nevertheless, the occupancy rate at KREIT’s properties, which are predominantly Grade A offices, remains strong at 99.3 percent, noted the Swedish financial institution.
“Management has pro-actively forward renewed 175,000 sq ft of attributable net leasable area (NLA) in the first nine months of the year, achieving a tenant retention rate of 92 percent in Q3 2014 and a 32.3 percent rent reversion (but only for 25,000 sq ft). For the rest of 2014, KREIT has another ~5,500 sq ft outstanding to be renewed and another ~182,000 sq ft of tenants’ rents up for review.”
Furthermore, its leverage declined to 42.1 percent in Q3 2014 compared to 42.8 percent in the preceding quarter, following the completion of the sale of Prudential Tower on 26 September.
However, it is expected to rise after the purchase of a 33 percent stake in MBFC Tower 3, said Credit Suisse, adding that KREIT has no refinancing obligations in the next 14 months.
Nikki De Guzman, Editor at CommercialGuru, edited this story. To contact her about this and other stories, email nikki@propertyguru.com.sg
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