Keppel REIT - OCBC Investment 2024-04-24: Strong Rental Reversions But Borrowing Costs To Remain Elevated

• Keppel REIT (SGX:K71U)’s 1H24 property income and net property income (NPI) increased 6.3% and 7.2% y-o-y to S$61.3m and S$48.2m, respectively, while its NPI attributable to unitholders rose 7.1% to S$43.4m.

Distributable income from operations was flat y-o-y at S$50.2m in 1Q24; actual DI also unchanged y-o-y at S$55.2m

• - Read this at SGinvestors.io -
• Including an anniversary distribution of S$5.0m, actual distributable income stood at S$55.2m, which was also unchanged on a y-o-y basis. This was within our expectations, as Keppel REIT's 1Q24 distributable income constituted 24.9% of our initial forecast.

Another quarter of strong positive rental reversions

• - Read this at SGinvestors.io -
• Keppel REIT achieved another quarter of solid rental reversions, which came in at +10.9% on an overall portfolio basis in 1Q24, an acceleration compared to FY23’s +9.9% rental uplift. This can be broken down into +10.1% in Singapore and +16.4% in Australia.
• Average signing rents for Keppel REIT’s Singapore office leases in 1Q24 were S$12.30 per square foot per month (psf pm), sustaining above CBRE Research’s core CBD Grade A office market rent of S$11.95 psf pm during the same period.
• Management of Keppel REIT sounded upbeat on its leasing outlook, and raised its guidance for a high-single digit positive rental reversion for its FY24 office lease renewals in Singapore, versus mid-to high-single digit previously.

Aggregate leverage ratio is poised to increase above 40% post-completion of proposed acquisition in Sydney, Australia

• Read more at SGinvestors.io.

OCBC Research Team OCBC Investment Research | https://www.iocbc.com/ 2024-04-24 SGinvestors.io

---