Keppel REIT has reported a distribution per unit (DPU) of 2.80 cents for the 2HFY2024 ended Dec 31, 2024, 3.4% lower y-o-y, bringing FY2024 DPU to 5.60 cents, 3.4% lower y-o-y.
The lower DPUs for the 2HFY2024 and FY2024, which include the annual distribution of $20 million, were mainly due to higher borrowing costs.
Otherwise, distributable income from operations fell by 2.1% y-o-y to $97.6 million in the 2HFY2024 and fell by 2.1% y-o-y to $194.5 million in the FY2024.
For the 2HFY2024, borrowing costs rose by 34.3% y-o-y to $47.3 million. Borrowing costs for the FY2024 increased by 32.2% y-o-y to $88.5 million. The higher costs were mainly due to higher borrowings following the acquisition of 255 George Street in May 2024. They were also attributable to the refinancing of borrowings in FY2024 at market interest rates.
Property income for the FY2024 grew by 12.2% y-o-y to $261.6 million due mainly to better performance reported at Ocean Financial Centre, T Tower and KR Ginza II.
The higher income was also attributable to contributions from 2 Blue Street and 255 George Street. Meanwhile, 8 Exhibition Street, which the REIT has a 50% interest in the office building and 100% interest in the three adjacent retail units, saw FY2024 income drop by 8.3% y-o-y.
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During the year, net property income (NPI) rose by 10.7% y-o-y to $201.9 million while NPI attributable to unitholders increased by 11.7% y-o-y to $182.9 million.
Share of results of associates, which refers to Keppel REIT’s one-third interests in One Raffles Quay and Marina Bay Financial Centre, increased by 7.7% y-o-y to $86.3 million in the FY2024. This was mainly due to higher rentals and occupancy rates.
During the FY2024, Keppel REIT’s share of results of joint ventures, which refer to the REIT’s 50% interests in 8 Chifley Square and David Malcolm Justice Centre, inched up by 0.3% y-o-y to $23.7 million.
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As at Dec 31, 2024, the REIT’s portfolio occupancy rose by 0.3 percentage points q-o-q to 97.9%. The REIT reported a strong positive rental reversion of 13.2% while its portfolio weighted average lease expiry (WALE) stood at 4.7 years compared to 4.6 years as at Sept 30, 2024.
Keppel REIT’s gearing as at the same period stood at 41.2%, 0.7 percentage points lower q-o-q with an interest coverage ratio of 2.5 times. About 69% of the REIT’s borrowings are on fixed rates.
“Keppel REIT’s portfolio of prime commercial assets continued to perform strongly as demonstrated by the higher portfolio committed occupancy and robust rental reversion,” says Chua Hsien Yang, CEO of the manager.
He notes that the REIT’s Singapore properties are a “solid foundation” for its portfolio due to its “sustained growth” in attributable NPI and high committed occupancy of 98.8%. The REIT’s Australia portfolio also did well with committed occupancy increasing to 96.1% as at the end the of 2024. The Australian portfolio’s attributable NPI also rose by 16.6% y-o-y in FY2024.
Furthermore, the REIT’s two properties in North Asia also registered a high attributable NPI growth of 18.7% in FY2024. The properties maintained full committed occupancy as at Dec 31, 2024, Chua adds.
In his prepared remarks, Chua says the REIT’s focus remains on managing its assets proactively in a bid to capitalise on the “flight-to-quality” trend.
“We continue to be disciplined in capital management to deliver sustainable long-term total return to the unitholders,” he adds.
For the management fees attributable to FY2025 and thereafter, the manager has elected to receive 25% in cash.
Units in Keppel REIT closed 1 cent lower or 1.15% down at 86 cents on Jan 27.
