Keppel REIT (K71U) H1 2024 earnings summary

Executive summary

• Property income rose 8.9% year-over-year to $125.1 million, and net property income increased 7.7% to $96.8 million, driven by higher rentals, robust operational performance, and new contributions from 2 Blue Street and 255 George Street.

• Distributable income and DPU declined 1.9% and 3.4% year-over-year, mainly due to higher borrowing costs.

• Portfolio value reached $9.6 billion as of June 30, 2024, with 97% committed occupancy and a WALE of 4.6 years.

• Singapore portfolio maintained high occupancy at 98.9% and NPI grew 4.1% year-over-year; Australia and North Asia portfolios achieved higher NPI and full occupancy.

Financial highlights

• Net property income attributable to unitholders grew 8.0% year-over-year to $87.2 million.

• Borrowing costs surged 29.8% year-over-year to $41.3 million, reflecting higher interest rates.

• Adjusted NAV per unit as of June 30, 2024, was $1.27.

• Aggregate leverage increased to 41.3% following the 255 George Street acquisition.

• All-in interest rate was 3.31% per annum for H1 2024; adjusted interest coverage ratio at 2.8x.

Outlook and guidance

• Rental reversions in Singapore were 7.2% in Q2 2024; outlook for H2 is flat to slightly positive.

• Portfolio optimization, proactive leasing, and disciplined asset management are expected to support income stability and long-term capital appreciation.

• Most refinancing for 2024 completed; majority of 2025 borrowings mature in H1 2025.

• Management aims to reduce gearing below 40% in the medium term, with asset recycling as a key strategy.

• Interest rate guidance remains in the mid-3% range for the year.