Keppel REIT (K71U) H2 2023 earnings summary

Executive summary

• FY2023 distributions were $218.7m, or 5.80 cents per Unit; portfolio occupancy reached 97.1% and WALE was 5.5 years.

• Portfolio value was $9.2b across 12 office assets in Singapore, Australia, South Korea and Japan; attributable NLA was 4.2m sf.

Financial highlights

• Property income rose 6.3% YoY to $233.1m and net property income (NPI) rose 3.7% to $182.4m.

• Profit after tax was $196.5m versus $448.4m; investment-property fair-value gain fell to $24.7m from $261.5m.

• Excluding investment-property fair-value changes, profit before fair-value changes was $183.4m, down 3.0% YoY; higher borrowing costs partly offset stronger property income.

• DPU was 5.808 cents versus 5.929 cents; distributions were $218.7m versus $220.9m, including a $20m Anniversary Distribution in FY2023.

• Attributable NPI, including rental support, rose 9.0% to $344.4m; 2 Blue Street rental support was $10.9m, equivalent to ~0.29 cents per Unit.

Outlook and guidance

• Return-to-office momentum and flight-to-quality are expected to support demand for high-quality office space; the strategy remains focused on asset enhancement, stable income and prudent capital management.

• One Raffles Quay enhancement works began in 1Q 2024, with completion expected by end-2024; Pinnacle Office Park lobby and terrace refurbishment was completed in January 2024.

• CBRE forecast Singapore Grade A CBD Core rents to grow 2–3% in 2024, with more meaningful growth expected in 2H as recovery gains traction.

• Management intends to use hedging when appropriate to manage funding costs and continues to pursue competitive refinancing and a well-spread debt maturity profile.