2H25 Keppel REIT's DPU was S$2.51 cents, -10.4% y-o-y. FY25 distribution -6.6% to S$5.23 cents. Organic and inorganic top-line growth, coupled with lower borrowing expenses, was offset by an enlarged unit base.
Stable operating metrics
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Overall, the enlarged number of units masked an otherwise stable underlying performance. HOLD given the balanced risk-reward profile.
Optimising performance
2H revenue and NPI of S$138.0m and S$107.7m rose 1.1% and 2.4% y-o-y. Growth was driven by higher occupancy at 2 Blue Street and higher contributions from OFC, partly offset by weaker overseas currencies. Borrowing expenses fell by 6.7%, primarily due to lower S$ base rates.
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However, the shift to 25% of management fees being paid in cash (vs. nil in FY24) caused distributable income to decline by 0.8% y-o-y. Combined with the enlarged unit base from recent preferential offering, this resulted in DPU falling 10.4% y-o-y.
The full-year drivers were similar. Portfolio occupancy was 96.7% (up from 96.3% in 3Q25), driven by occupancy gains in Singapore and Australia. Full-year rent reversion was +11.5%, moderating from earlier in the year (+13.2%). Additionally, Keppel REIT secured commitments to backfill non-renewals from anchor tenants in 8 Exhibition Street.
Managing gearing with strategic moves
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Above is an excerpt from a report by Maybank Research. Clients of Maybank Securities may be the first to access the full PDF report @ https://www.maybanktrade.com.sg/.
