- Keppel REIT (SGX:K71U)'s 1H23 DPU fell 2.4% y-o-y to 2.90 cents, slightly below our estimates. The decline was mainly due to higher property expenses and interest cost but was partially mitigated by the Anniversary Distribution of S$10m.
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- Keppel REIT's gearing inched up marginally q-o-q to 39.2% vs 38.7% and the interest rate hedge ratio inched up to 76% from 75% in 1Q23. All-in cost of debt was relatively stable at 2.84% vs 2.86% in 1Q23.
- There are no major refinancing requirements in 2023 with the remaining 4% of debt (S$155m TMK bond) maturing in 4Q23. The majority of the debt due in 2024 (22% of debt/S$800m) will mature in 2Q2024.
Portfolio occupancy stable; achieved high signing rents of S$12psf
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- Most properties saw stable or improved occupancy. The key notable improvements include OFC having achieved 100% occupancy, MBFC occupancy having improved 1.2ppt q-o-q to 98.3%, and 8 Chifley Square having secured a new government tenant, bringing occupancy up to 87% from 82% in 1Q23 with ~10% reversions.
- Expect vacancies to be filled in 2H23.
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