Keppel REIT distributable income up 78.7% to $201.9m in FY12

Portfolio occupancy strengthened to beat CBD average.

In a release, Keppel REIT announced that its distributable income for FY2012 increased 78.7% y-o-y to $201.9 million due mainly to income contribution from the interest in Ocean Financial Centre (OFC) as well as better performance from Prudential Tower, 275 George Street and 77 King Street.

Property Income and NPI for FY2012 more than doubled by 101.2% and 102.2% to $156.9 million and $124.7 million respectively.

Keppel REIT has also delivered 65.4% Total Unitholders’ Return in FY2012 and achieved four consecutive quarters of DPU growth for FY2012. The DPU for 4Q 2012 rose to 1.97 cents, bringing the DPU for FY2012 to 7.77 cents, 8.5% higher than the 7.16 cents DPU Forecast.

Since 1 October 2012, Keppel REIT has paid out its distributable income on a quarterly basis. Unitholders can expect to receive quarterly distributions every February, May, August and November of each year. The DPU for 4Q 2012 will be distributed on 27 February 2013.

Income available for distribution for FY2012 increased 78.7% y-o-y to $201.9 million. Over the same period, property income increased 101.2% while NPI increased 102.2%. The increases were due mainly to the income contribution from the 87.5% and 12.4% interests in OFC, which were acquired in December 2011 and June 2012 respectively as well as better performance from Prudential Tower, 275 George Street and 77 King Street.

Share of results of associates also increased 25.3% to $46.8 million for FY2012 as a result of positive rent reversions at One Raffles Quay, improved occupancy at Marina Bay Financial Centre Phase 1 (MBFC Phase 1) and the conversion of the holding structure of MBFC Phase 1 into a limited liability
partnership (LLP). The conversion to a LLP structure in June 2012 enabled income contribution from MBFC Phase 1 to be passed on to Unitholders on a tax transparent basis.

Keppel REIT continued to strengthen its occupancy across its properties in 2012. Its total property portfolio average committed occupancy stood at 98.5% as at end-December 2012. Four properties enjoyed full occupancy, namely Bugis Junction Towers, One Raffles Quay, Prudential Tower and 275 George Street. OFC, 77 King Street, and MBFC Phase 1 also registered higher committed occupancy rates of 95.9%, 97.4%, and 99.9% respectively. Keppel REIT’s Singapore portfolio average committed occupancy stood at 98.5%, significantly higher than the average Singapore core CBD office occupancy rate of 92.2%.

There were a total of 218 tenants across Keppel REIT’s existing 2.7 million sf of quality office space. The weighted average lease expiry (“WALE”) remained at healthy levels of 7.2 years and 5.9 years for its top ten tenants (by net lettable area) and entire portfolio respectively. On 5 December 2012, the Manager successfully refinanced OFC construction loans of $598 million to lengthen the weighted average debt maturity profile to 3.1 years. Keppel REIT’s all-in interest rate for FY2012 stood at 2.02%. The borrowings are diversified across 13 different lenders. The aggregate leverage level reduced to 42.9% on the back of positive revaluation of all the buildings in the portfolio.