Keppel REIT - Maybank Research 2024-08-02: Navigating Crosswinds; Watch On Gearing

• Keppel REIT (SGX:K71U) reported 1H DPU of S$2.8 cents, -3.4% h-o-h/ y-o-y. Top line growth was offset by finance expenses.

Growing occupancy, Watch on gearing;

• Occupancy grew across geographies while positive rent reversion was a healthy high single-digit. Gearing and borrowing cost rose following the Sydney acquisition.
• - Read this at SGinvestors.io -
• We factor in Australia M&A in our forecasts and maintain BUY and keep our DDM-based Keppel REIT target price.

Resilient portfolio

• Keppel REIT's 1H24 revenue and NPI rose 8.9% and 7.7% y-o-y, respectively. Growth was led by higher occupancy in Ocean Financial Centre and KR Ginza II, as well as contribution from newly completed property (2 Blue Street) and acquired asset (255 George Street). This was partly offset by lower contribution from other Australian assets due to higher taxes and weaker AUD. However, higher borrowing costs eroded the NPI growth, resulting in DPU declines.
• - Read this at SGinvestors.io -
• FIs, TMT and legal represented the top three sources of leasing demand for 1H.
• Keppel REIT's mid-year portfolio value increased by 3.3% y-o-y (same store -0.2%) due to acquisition of 255 George Street. SG assets rose in value by 0.6% h-o-h while same-store value for Australia assets fell 4.5% h-o-h in local ccy.

Higher gearing, focus on portfolio optimization

• Read more at SGinvestors.io.

Krishna Guha Maybank Research | https://www.maybank-ke.com.sg/ 2024-08-02 SGinvestors.io

---