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REITs investment & personal finance


Monday, April 25, 2022

Keppel Pacific Oak US REIT Review @ 25 April 2022

Basic Profile & Key Statistics
  • Main Sector(s): Office
  • Country(s) with Assets: United States
  • No. of Properties (exclude development/associate/fund): 15

Performance Highlight

Gross revenue, NPI and distributable income improved yoy due to contribution from Bridge Crossing and 105 Edgeview which were acquired in August 2021.

Rental Reversion
Rental reversion for 1Q 22 is at 2.4%. 

Sensitivity to Interest Rate
For every 0.5% increase in interest rate, DPU will be declined by 0.062 cents, close to 1% dip.
    

Related Parties Shareholding

  • REIT sponsor's shareholding: Below median for more than 20%
  • REIT manager's shareholding: ± 10% from median
  • Directors of REIT manager's shareholding: Above median for more than 20%

Lease Profile

  • Occupancy: ± 5% from median
  • WALE: Below median for more than 10%
  • Highest lease expiry within 5 years: Below median for more than 20%; Falls in 2023
  • Weighted Average Land Lease Expiry: All properties are freehold

Debt Profile

  • Gearing ratio: ± 10% from median
  • Cost of debt: Above median for more than 20%
  • Fixed rate debt %: Above median for more than 10%
  • Unsecured debt %: All debts are unsecured debt.
  • WADM: ± 10% from median
  • Highest debt maturity within 5 years: ± 10% from median; Falls in 2025
  • Interest coverage ratio: Above median for more than 10%

Diversification Profile

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

Key Financial Metrics

  • Property yield: Above median for more than 20%
  • Management fees over distribution: Below median for more than 20%; $ 9.80 distribution for every dollar paid 
  • Distribution on capital: Above median for more than 20%
  • Distribution margin: ± 10% from median

Trends

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

Relative Valuation

  • P/NAV: Below average for 1y; Average for 3y & 5y
  • Dividend Yield: Above average for 1y; Average for 3y & 5y

Author's Opinion

FavorableLess Favorable
High Directors of REIT Manager's ShareholdingLow REIT Sponsor's Shareholding
Well Spread Debt MaturityShort WALE
100% Freehold PropertiesHigh Gearing Ratio
High Fixed Rate Debt %High Cost of Debt
100% Unsecured DebtInterest Coverage Ratio Downtrend
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 
Distribution Margin Uptrend

The upcoming 1H 2022 performance should be better due to the full half yearly contribution from Bridge Crossing and 105 Edgeview which were acquired in August 2021. At this moment, the in-place rent is 8.9% below asking rents, which provides an organic growth opportunity.


You could also refer below for more information:

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.

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