Keppel Pacific Oak US REIT Review @ 19 Apr 2021

Basic Profile & Key Statistics

Keppel Pacific Oak US REIT (KORE) is a pure office REIT that owns 13 properties in U.S. 

Performance Review

Gross revenue decreased YoY by 2.1%, while adjusted NPI and distributable income increased YoY by 2.7% and 3.6% respectively. The distributable income is equivalent to 1.57 ~ 1.58 cents of DPU.

Rental reversion is at +5.7% driven by growth in Seattle and Austin.

Related Parties Shareholding

• REIT sponsor's shareholding is low at 7.95%
• REIT manager's shareholding is high at 1.16%
• Directors of REIT manager's shareholding is high at 0.96%

Lease Profile

• Occupancy is slightly low at 91.6%
• WALE is slightly short at 3.7 years
• Highest lease expiry within 5 years is low at 17% which falls in 2023
• All properties are freehold

Debt Profile

• Gearing ratio is moderate at 37.5%
• Cost of debt is moderate at 2.82 %
• Fixed rate debt % is high at 84.7%
• All debts are unsecured debts
• WADM is slightly short at 2.7 years 
• Highest debt maturity within 5 years is slightly low at 28.6% which falls in 2022
• Interest coverage ratio is high at 4.8 times

Diversification Profile

• Top geographical contribution is low at 38.5%
• Top property contribution is low at 16.9%
• Top 5 properties contribution is moderate at 61.9%
• Top tenant contribution is low at 3.3% 
• Top 10 tenants contribution is low at 19.9% 

Key Financial Metrics

• Property yield is high at 6.4%
• Management fees over distribution is low at 11.3% in which unitholders receive US$ 8.85 for every dollar paid 
• Distribution on capital is high at 4.7%
• Distribution margin is slightly low at 42.6%

Trends

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

Relative Valuation

• Dividend Yield - Past 4 quarters DPU @ 6.26 cents / average yield @ 8.23% = US$ 0.76
• Price/NAV - NAV @ US$ 0.82 x average P/NAV @ 0.89 = US$ 0.73

Author's Opinion

Favorable	Less Favorable
High Manager's Shareholding	Low Sponsor's Shareholding
High Directors of REIT Manager's Shareholding	Interest Coverage Ratio Downtrend
Well Spread Lease Expiry
All Freehold Properties
High Fixed Rate Debt %
100% Unsecured Debt
High Interest Coverage Ratio
Low Top Geographical Contribution
Low Top Property Contribution
Low Top Tenant & Top 10 Tenants Contributions
High Property Yield
Competitive Management Fees
High Distribution on Capital
DPU Uptrend

From the above, KORE fundamental remains resilient. Although the COVID-19 vaccination is raising confidence in employers for returning to the workplace, KORE has projected the rental growth to be negative to be between -5.3% to -0.9%, with the properties in Seattle are expected to be impacted most.

For more information, you could refer to:

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 as well as 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.