Keppel REIT achieves record full-year distributable income of $214m

See what made FY2013 so successful.

Keppel REIT Management Limited announced that it recorded its highest full-year distributable income of $214 million for FY2013 since its listing.

This is an increase of 6.0% y-o-y and represents a distribution yield of 6.6% based on Keppel REIT’s closing price of $1.185 on 31 December 2013.

The DPU of 1.97 cents for 4Q 2013 resulted in a DPU of 7.88 cents for FY2013, 1.4% higher than the DPU of 7.77 cents for FY2012.

In FY2013, Keppel REIT registered a 10.9% y-o-y increase for both the property income and net property income to $174.0 million and $138.3 million respectively. Keppel REIT attributed its strong showing to improved performance from Ocean Financial Centre and 77 King Street, and the additional income from the acquisition of 8 Exhibition Street in Melbourne.

Share of results of associates also increased 32.6% y-o-y to $62.1 million for FY2013 due to higher contributions from Marina Bay Financial Centre Phase 1 and One Raffles Quay.

Ms Ng Hsueh Ling, Chief Executive Officer of the Manager, said “We are pleased that the REIT has recorded its highest full year distributable income of $214 million for FY2013. This is the result of better performance of Marina Bay Financial Centre Phase 1, Ocean Financial Centre, One Raffles Quay and 77 King Street, together with additional income from our acquisitions of 8 Exhibition Street in Melbourne and Old Treasury Building in Perth. We have been proactive in our lease management and are pleased to conclude the financial year with all our Singapore assets of nearly 2.4 million sf of net lettable area fully committed, increasing our portfolio average occupancy to 99.8%.”

Keppel REIT's 2013 performance was also defined by prudent capital management and robust portfolio performance. The Manager has successfully completed the early refinancing of all loans due in 2014 and a further $60 million due in 2015. With that, Keppel REIT has no refinancing requirements for the next 22 months. Keppel REIT’s average all-in interest rate stood at 2.15% with a resilient weighted average term to expiry of borrowings of 3.6 years and a healthy interest coverage ratio of 5.5 times. The Manager has also fixed approximately 70% of total borrowings of $3,031 million to mitigate interest rate volatility.

Keppel REIT continued to improve its portfolio’s occupancy in 4Q 2013 as well with seven out of eight existing buildings being fully committed. This means that all five of its Singapore properties are fully committed, strengthening Keppel REIT’s overall portfolio average occupancy strengthened from 99.4% in 3Q 2013 to 99.8% in 4Q 2013. All retail spaces in Ocean Colours at Ocean Financial Centre have been committed in 4Q 2013 and F&B tenants such as Starbucks, Cedele, Paul’s Café, Woo’s Ricebox, Shinkansen and Fresh+ have commenced operations. Also, with the completion of the UPN, Ocean Financial Centre is linked directly to the Raffles Place Interchange MRT Station, as well as to Keppel REIT’s properties in Marina Bay.

In Australia, 8 Chifley Square, the new premium office building in Sydney’s CBD, was officially opened on 29 October 2013 and has achieved 95% occupancy. Active leasing management has strengthened the tenant base of Keppel REIT’s portfolio to a total of 263 tenants in 4Q2013. The top ten tenants accounted for 43% of Keppel REIT’s portfolio net lettable area and contributed a weighted average lease expiry (WALE) of nearly 9 years, while the WALE for the entire portfolio was 6.5 years.

Keppel REIT also reported improved asset valuations for its portfolio. Keppel REIT’s total portfolio of 10 property assets in Singapore and Australia grew 10.4% y-o-y to a total value of $7.2 billion based on independent valuations as at 31 December 2013. The growth in total asset valuation was due to the inclusion of the newly acquired 8 Exhibition Street in Melbourne and Old Treasury Building in Perth, and the higher capital values of properties in the
portfolio. The average capitalisation rate for the Singapore properties was maintained at 4% while the average capitalisation rate for the Australian properties was compressed slightly to 6.7%.

Looking ahead to 2014, the Manager said it will continue to focus on maintaining the strong occupancy for its portfolio of properties and proactively manage leases due for rent review and renewal. The Manager will also monitor interest rate and foreign exchange exposures so as to manage financial risks. At the same time, it will selectively pursue and review opportunities for strategic acquisitions and divestments to deliver long-term growth for Unitholders.

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