- Keppel REIT (SGX:K71U)’s 1H23 results met our expectations. Property income rose 4.7% y-o-y to S$114.9m due to higher gross rent and carpark income but net property income (NPI) attributable to unitholders fell 0.2% to S$80.8m because of a jump in property expenses.
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Rental reversions healthy at 8.1% but flattish market rental outlook in Singapore
- Keppel REIT’s portfolio committed occupancy declined 1.4 ppt q-o-q to 94.9% due to the inclusion of its Blue & William property (37.7% occupancy) which achieved practical completion on 3 Apr 2023. Excluding this property, Keppel REIT’s portfolio committed occupancy would have been 97.0%.
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- According to CBRE Research’s data, core CBD Grade A office rent increased 0.4% q-o-q in 2Q23 to S$11.80 psf pm, which is still above Keppel REIT’s average expiring rents of S$11.55/11.06/11.11 psf pm in 2023/2024/2025.
- Keppel REIT is hoping to achieve single-digit positive rental reversions in Singapore in 2H23, as market rental outlook appears flattish from here.
Aggregate leverage increased to 39.2% with higher cost of debt and 76% of borrowings on fixed rates
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