Keppel REIT (SGX:K71U)’s 1Q financials came in slightly above our, but were slightly below consensus estimates. Key highlights being the continued positive double-digit rent reversions driven by favourable demand-supply dynamics in the Singapore office market.
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Key concern, in our view, remains the dilutive DPU impact (FY26F) from equity fund raising done end- 2025 and expiry of anniversary distributions mid next year.
Minimally impacted from rising utility costs.
Minimally impacted from rising utility costs with utility expense for Singapore assets hedged at least until early 2028 and Australia office assets are on triple-net leases and as such, utility charges are passed through.
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Portfolio occupancy rose to 97.1%.
Portfolio occupancy rose 0.4ppt q-o-q to 97.1% driven mainly by occupancy increase across Singapore assets with demand stemming from the banking, insurance and financial services segments. About 51% of the leases signed (1Q) were new leases compared to 29% in FY25, indicating healthy new demand.
Portfolio rent reversions(1Q) surprised on upside at +17.2%, with Singapore portfolio registering ~10% rent reversions and a replacement tenant in Australia signing up at a significant higher rent. Rent reversion are likely to stay in high single-digits for FY26 with tight office demand supply dynamics in Singapore’s core central business district (CBD).
FY26 focus will be on organic growth.
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Above is an excerpt from a report by RHB Securities Research. Clients of RHB may be the first to access the full PDF report @ https://www.rhbtradesmart.com/.
