Keppel REIT - CGS-CIMB Research 2022-10-25: Dishing Out An Anniversary Distribution

Keppel REIT - Dishing Out An Anniversary Distribution

  • Keppel REIT (SGX:K71U) reported 9M22 gross revenue of S$164.4m, +1.4% y-o-y, while distributable income grew 3.4% y-o-y to S$165.4m. Keppel REIT announced plans to distribute an additional S$100m of accumulated capital gains (Anniversary Distribution) over the next 5 years (from 2H22) to celebrate Keppel REIT’s 20th listing anniversary in 2026. Refer to Keppel REIT's announcement dated 2022-10-25 for details.
  • Portfolio committed occupancy rose q-o-q to 96.8% at end-Sep 22. Keppel REIT renewed/leased 1.69m sqft of space in 9M22 (3Q: 804k sqft) at an average rental uplift of about 9.2% (3Q: +9.7%). An estimated 67% of leasing activities were renewals. As at end 3Q22, Keppel REIT had 1.4% of leases to be renewed/reviewed in 4Q22F and a further 9.2% in FY23F. Expiring rents for 4Q22F averaged S$10.06psf, and S$11.35psf in FY23F.
  • To manage rising operating costs, Keppel REIT was able to pass on the higher costs in the form of increased service charges for some of its Singapore leases. Meanwhile, the development project, Blue & William, reached structural completion in Sep 22 and is on track to be completed by mid-2023F.
  • Keppel REIT’s aggregate leverage stands at 38.4% as at end-Sep 22. In tandem with the rising rate environment, average all-in interest cost rose q-o-q to 2.13%. An estimated 72% of its debt are on fixed rates and management indicated that a 50bp hike in funding cost could erode its DPU by 0.12 cents (or ~2.1% of FY21 DPU).
  • Keppel REIT has 19% of its debt due to be refinanced in FY23F and we anticipate interest cost to continue trending up. In terms of forex exposure, Keppel REIT indicated that it has hedged its A$ and KRW income up to 18 months ahead.
  • We raise our FY22-24F DPU estimates for Keppel REIT by 2.51-4.26% to include the Anniversary Distribution, partly offset by higher average funding cost assumption. However, our DDM-based target price for Keppel REIT is lowered to S$1.14 on higher cost of equity assumption of 7.8% (vs. 7.36% previously).

Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @

LOCK Mun Yee CGS-CIMB Research | Natalie ONG CGS-CIMB Research | 2022-10-25
SGX Stock Analyst Report ADD MAINTAIN ADD 1.14 DOWN 1.290

Previous report by CGS-CIMB:
2022-07-27 Keppel REIT - Outlook Remains Positive

Target prices by 3 other brokers at Keppel REIT Target Prices.
Listing of broker reports at Keppel REIT Analyst Report.

Relevant links:
Keppel REIT Share Price History,
Keppel REIT Announcements,
Keppel REIT Dividends & Corp Actions,
Keppel REIT News Articles


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