Keppel Pacific Oak US REIT - RHB Research 2025-02-05: Showing Resilience; BUY

• Keppel Pacific Oak US REIT’s 2H/FY24 financials were in line. Portfolio valuation remained stable y-o-y (excluding capex), slightly better than our expectations – we believe its valuation has bottomed.
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• Key catalysts will be the gradual decline of interest rates and resumption of dividends in FY26.

Portfolio occupancy improved q-o-q

• Portfolio occupancy improved q-o-q to 90% (3Q: 88.7%), mainly from expansion demand at Bellevue Technology Center and the signing of a new healthcare tenant at Maitland Promenade. Occupancy though is expected to slightly decline (~2ppt) in the upcoming quarters due to known tenant vacates at The Plaza buildings and Westmoor Center, which we expect to be backfilled by end of the year.
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• Rent reversion was -0.5% for FY24 (4Q: +1.7%) mainly affected by renewals at The Plaza buildings and Westmoor Center which were signed at lower rents. We expect rent reversion to be flattish for FY25.

FY24 distributable income fell 9% y-o-y

• Read more at SGinvestors.io.

Vijay Natarajan RHB Securities Research | https://www.rhbgroup.com/ 2025-02-05 SGinvestors.io

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