Keppel Reit's DPU for Q4 up 11.3 per cent

Higher earnings from Keppel Reit's Singapore properties helped offset lower returns from its Australian assets to boost returns to investors in the fourth quarter.

Distributable income rose 17.8 per cent to $54 million for the three months to Dec 31.

Distribution per unit (DPU ) was 11.3 per cent higher at 1.68 cents.

Higher revenue from Ocean Financial Centre and Bugis Junction Towers sent property income up 1.1 per cent to $42.8 million and net property income ahead 1.5 per cent to $34.8 million.

But property income contributions from Australian assets 275 George Street in Brisbane, 77 King Street in Sydney and 8 Exhibition Street in Melbourne were lower.

Earnings were lower for the year due to the divestment of Prudential Tower in September 2014.

Property income fell 7.5 per cent to $170.3 million while net property income fell 9.2 per cent to $137.5 million.

Distributable income rose 5.4 per cent to $217.3 million but DPU fell 5.9 per cent to 6.8 cents.

"2015 was a demanding year for the office leasing market," the Reit manager noted.

Even so, it signed 114 leases over the 12 months, equivalent to about 1.6 million sq ft or 23 per cent of net lettable area under management.

Of these leases, half were from tenants new to the Reit's portfolio, one quarter from tenants new to Singapore and the rest expansions by existing tenants.

The Reit retained 90 per cent of its tenants over the year and achieved a 13 per cent positive rent reversion for the Singapore portfolio in 2015.

Committed occupancy for its overall portfolio was 99.3 per cent, similar to last year.

The occupancy rate for its assets in Singapore was 99.3 per cent, and 99.2 per cent for the Australian properties.

The Reit's Australian assets comprise about 11 per cent of its total portfolio value.

The manager expects challenges ahead, saying: "In Singapore, new office space is expected to come onstream over these two years."

Still, about 75 per cent of total leases are not due for renewal until 2018 and beyond, when limited new office supply is expected.

Weighted average lease expiry was about eight years for the top 10 tenants, down from nine years a year earlier. It was about six years across its portfolio, down from 6.1 years previously.

Keppel Reit units closed 1.5 cents lower at 88 cents yesterday.

AT A GLANCE

PROPERTY INCOME: $42.8 million (+1.1 per cent)

NET PROPERTY INCOME: $34.8 million (+1.5 per cent)

INCOME AVAILABLE FOR DISTRIBUTION: $54.1 million (+17.8 per cent)

DISTRIBUTION PER UNIT: 1.68 cents (+11.3 per cent)

wrennie@sph.com.sg

This article was first published on January 19, 2016.
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