Keppel REIT Review @ 2 May 2022

Basic Profile & Key Statistics

• Main Sector(s): Office
• Country(s) with Assets: Singapore, Australia & South Korea
• No. of Properties (exclude development/associate/fund): 10

Performance Highlight

Property Income, NPI and distributable income from operations have improved yoy due to the acquisition of Keppel Bay Tower in May 2021 but partially offset by the divestment of 275 George Street in July 2021. No explanation for the decline of the share of results of associates and joint ventures though.

Rental Reversion

The average signing rent in 1Q was $11.15 psf per month, higher than the average expiring rent in 2022.

Sensitivity to Interest Rate

For every 0.5% increase in interest, DPU would declined by 2.4%.

Related Parties Shareholding

• REIT sponsor's shareholding: Above median for more than 20%
• REIT manager's shareholding: Above median for more than 20%
• Directors of REIT manager's shareholding: Below median for more than 20%

Lease Profile

• Occupancy: ± 5% from median
• WALE: Above median for more than 20%
• Highest lease expiry within 5 years: Below median for more than 20%; Falls in 2026
• Weighted Average Land Lease Expiry: Above median for more than 20%

Debt Profile

• Gearing ratio: ± 10% from median
• Gearing ratio includes perps: ± 10% from median
• Cost of debt: Below median for more than 20%
• Fixed rate debt %: ± 10% from median
• Unsecured debt %: ± 10% from median
• WADM: Above median for more than 10%
• Highest debt maturity within 5 years: Below median for more than 20%; Falls in 2024
• Interest coverage ratio: Below median for more than 10%

Diversification Profile

• Top geographical contribution: Above median for more than 20%
• Top property contribution: Above median for more than 20%
• Top 5 properties' contribution: Above median for more than 20%
• Top tenant contribution: Below median for more than 20%
• Top 10 tenants' contribution: ± 10% from median

Key Financial Metrics

• Property yield: Below median for more than 10%
• Management fees over distribution: Above median for more than 20%; $4.18 distribution for every dollar paid 
• Distribution on capital: Below median for more than 20%
• Distribution margin: Above median for more than 20%

Trends

• Uptrend: Interest Coverage Ratio, Property Yield
• Slight Uptrend: Distribution on Capital
• Flat: DPU
• Slight Downtrend: NAV per Unit, Distribution Margin

Relative Valuation

• P/NAV: Above +1SD for 1y, 3y & 5y
• Dividend Yield: Below -1SD for 1y; Average for 3y & 5y

Author's Opinion

Favorable	Less Favorable
High REIT Sponsor's Shareholding	Low Directors of REIT Manager's Shareholding
High REIT Manager's Shareholding	Low Interest Coverage Ratio
Long WALE	High Top Geographical Contribution
Well Spread Lease Expiry	High Top Property & Top 5 Properties Contributions
Long Weighted Average Land Lease Expiry	Low Property Yield
Low Cost of Debt	Non-Competitive Management Fees
Long WADM	Low Distribution on Capital
Well Spread Debt Maturity
Low Top Tenant Contribution
High Distribution Margin
Interest Coverage Ratio Uptrend
Property Yield Uptrend

The performance is similar to the previous quarter with a slight improvement in the distributable income from operations. The debt profile has improved where debt maturity is more well spread, the cost of debt is reduced and fixed-rate debt % has increased.

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SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview and Detail of Singapore REIT

REIT Analysis - List of previous REIT analysis posts

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*Disclaimer: Materials in this blog are based on my research and opinion which I don't guarantee accuracy, completeness, and reliability. It should not be taken as financial advice or a statement of fact. I shall not be held liable for errors, omissions and loss or damage as a result of the use of the material in this blog. Under no circumstances does the information presented on this blog represent a buy, sell, or hold recommendation on any security, please always do your own due diligence before any decision is made.