SINGAPORE (Apr 17): The manager of Keppel-KBS US REIT has announced a maiden 1Q distribution per unit (DPU) of 2.32 US cents for period of its listing date on Nov 9 2017 to end March this year, exceeding the IPO forecast of 2.31 US cents by 0.4%.
This translates to an annualised available for distribution yield of 6.73%, based on the unit closing price of 88 US cents as at end March.
As Keppel‐KBS US REIT declares distributions on a half‐yearly basis, no distribution has been declared for the quarter under review.
Gross revenue for the quarter was 1.6% above forecast at US$36.1 million due to a one-off compensation income of US$1 million from a tenant at Westmoor Centre in Denver, Colorado, that was granted permission to terminate its lease ahead of its lease expiry.
Property expenses were lower than forecast by 3.7% at US$13.8 million compared to the IPO forecast of US$14.2 million.
The lower property expenses arose from lower net property management fees and lower actual property expenses -- such as utilities and other property expenses -- compared to higher expenses from its straight-lined forecast.
Consequently, net property income (NPI) for the quarter exceeded forecasts by 5.2% at US$22.3 million compared to the US$21.2 million IPO forecast, thanks to the trust’s stable portfolio performance and one-off compensation from early lease termination.
Keppel‐KBS US REIT’s manager notes positive leasing momentum from REIT’s IPO up until end 1Q18, and says it signed 32 leases amounting to more than 252,000 sq ft during the period.
As at end March, the REIT’s committed portfolio occupancy stood at 89.8%, and had an aggregate leverage of 33.6%. The weighted average term to maturity was 4.1 years.
As the REIT’s borrowings are entirely in USD, its manager says this provides a natural hedge for the REIT’s income and investments. As at end March, 75% of the REIT’s interest rate exposure were hedged.
In its outlook, the manager says it remains committed to delivering sustainable distributions and strong total returns to Keppel-KBS US REIT’s unitholders and continues to actively market the available space in its portfolio to improve NPI.
To capture further upside from improving office market conditions, it also intends to seek acquisition opportunities in key growth markets it currently has a presence in as well as other US cities with similar growth characteristics.
Units in Keppel-KBS US REIT closed flat at 88 US cents on Tuesday.
