SINGAPORE (April 19): The manager of Keppel REIT on Wednesday announced a 13.7% drop in DPU to 1.45 cents for the first quarter ended March 31, from 1.68 cents a year ago.
Distributable income fell 11.6% to $48.1 million in 1Q, from $54.4 million a year ago.
This was mainly due to absence of income from the divested 77 King Street in Sydney in January 2016, lower income contribution from Bugis Junction Towers, as well as absence of other gains distribution.
Net property income fell 4.6% to $31.4 million, from $32.9 million a year ago.
Despite the oversupply in the office market, Keppel REIT’s manager says it has maintained a committed portfolio occupancy of 99.4% as at end-March.
It adds that there are minimal leasing risks for the REIT for the rest the year as only 2.8% of leases by net lettable area are due for renewal and 1.7% of leases are due for review in 2017.
Share of results of associates grew 23.2% to $23.1 million, mainly due to one-off income from One Raffles Quay and Marina Bay Financial Centre.
Share of results of joint ventures increased 22.2% to $8.3 million, due to higher income contribution from Keppel REIT’s share in David Malcolm Justice Centre in Perth.
Cash and cash equivalents stood at $242.8 million as at March 31, 2017.
Looking ahead, Keppel REIT says leasing activities in Singapore have increased amid dissipating concerns over supply overhang from new office projects.
In Australia, it adds that leasing activities remained strong in the central business districts of Sydney and Melbourne, while showing early signs of recovery in the CBDs of Brisbane and Perth.
“Borrowing costs are likely to increase as a consequence of the anticipated US rate hikes,” Keppel REIT manager says in a filing to SGX, adding that it will “continue its prudent capital management approach to mitigate financing, interest rate and foreign exchange risks.”
Units of Keppel REIT closed 1.5 cents higher at $1.07 on Wednesday.
