REIT-TIREMENT - REITs Investing & Personal Finance

REITs investing & personal finance

Friday, April 21, 2023

Keppel REIT Review @ 21 April 2023

Basic Profile & Key Statistics
  • Main Sector(s): Office
  • Country(s) with Assets: Singapore, Australia, South Korea & Japan
  • No. of Properties (exclude development/associate/fund): 12

Key Indicators

Performance Highlight
Property income and NPI improved YoY due to higher rental and higher occupancy. However, distributable income excluding anniversary distribution has declined mainly due to higher borrowing costs and lower interest income. Including anniversary distribution, distributable income is 2.6% higher YoY.

Rental Reversion
The average signing rent in 1Q 23 was S$ 12.05 psf, which is higher than those expiring in 2023, 2024 and 2025.

Blue & William achieved practical completion on 3rd April and started contributing income.

Related Parties Shareholding
  • REIT sponsor's shareholding: Above median by 20% or more
  • REIT manager's shareholding: Above median by 20% or more
  • Directors of REIT manager's shareholding: Below median by 20% or more

Lease Profile

  • Occupancy: ± 5% from median
  • WALE: Above median by 20% or more
  • Highest lease expiry within 5 years: ± 10% from median; Falls in 2026
  • Weighted Average Land Lease Expiry: Above median by 10% or more

Debt Profile

  • Gearing ratio: ± 10% from median
  • Gearing ratio includes perps: ± 10% from median
  • Cost of debt: ± 10% from median
  • Fixed rate debt %: ± 10% from median
  • Unsecured debt %: ± 10% from median
  • WADM: ± 10% from median
  • Highest debt maturity within 5 years: Below median by 20% or more; Falls in 2024
  • Interest coverage ratio: Below median by 10% or more

Diversification Profile

  • Top geographical contribution: Above median by 20% or more
  • Top property contribution: Above median by 20% or more
  • Top 5 properties' contribution: Above median by 20% or more
  • Top tenant contribution: Below median by 10% or more
  • Top 10 tenants' contribution: ± 10% from median

Key Financial Metrics

  • Property yield: Below median by 20% or more
  • Management fees over operating distributable income: Above median by 20% or more; $2.89 distribution for every dollar paid 
  • Operating distributable income on capital: Below median by 20% or more
  • Operating distributable income margin: ± 10% from median
  • Operating distribution proportion: Below median by 20% or more

DPU Breakdown

  • TTM DPU Breakdown
    • 68.8% from Operation 
    • 23.8% from Management Fees Paid in Units
    • 0.6% from Income Support
    • 6.8% from Divestment Proceeds


  • Uptrend: DPU from Operation, Property Yield, Operating Distributable Income on Capital
  • Slight Uptrend: Interest Coverage Ratio
  • Slight Downtrend: NAV per Unit, Occupancy
  • Downtrend: Operating Distributable Income Margin

Relative Valuation

  • P/NAV: Below -1SD for 1Y & 3y; Below -2SD for 5y
  • Dividend Yield: Above +1SD for 1y; Above +2SD for 3y & 5y

Author's Opinion

 Favorable  Less Favorable
High REIT Sponsor's ShareholdingLow Directors of REIT Manager's Shareholding
High REIT Manager's ShareholdingLow Interest Coverage Ratio
Long WALEHigh Top Geographical Contribution
Long Weighted Average Land Lease ExpiryHigh Top Property & Top 5 properties' Contributions
Well Spread Debt MaturityLow Property Yield
Low Top Tenant ContributionNon-Competitive Management Fees
DPU from Operation UptrendLow Operating Distributable Income on Capital
Property Yield UptrendLow Operating Distribution Proportion
Operating Distributable Income on Capital UptrendOperating Distributable Income Margin Downtrend

Overall, the performance has been affected by increasing interest rates. However, distributable income is higher after factoring in anniversary distribution. There is only 4% of borrowing maturing this year and the majority is in 4Q 2023. Coupled with the 75% fixed rate, the impact of any further interest increase would be minimal. Moving forward, Blue & William would start contributing income and the developer would provide a 3 years rental guarantee on unlet space.

For more information, check out:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview and details of Singapore REIT

REIT Review - List of previous REIT review posts

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*Disclaimer: The information presented on this blog is for educational and informational purposes only. The materials, including research and opinions, are based solely on my findings and should not be considered professional financial advice or a definitive statement of fact. I cannot guarantee the accuracy, completeness, or reliability of the information provided. I shall not be held liable for any errors, omissions, or losses that may occur as a result of using the information presented on this blog. It should be noted that the information presented on this blog does not constitute a buy, sell, or hold recommendation for any security. It is crucial to conduct your own thorough research and due diligence before making any investment decisions.

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