UNITS of Keppel Reit : K71U -1.63%reached a 16-day low in early trading on Friday (Jul 28) after Keppel Corp said it will distribute the real estate investment trust&rsquo s units to mark its 55th anniversary.

 

On Thursday, Keppel Corp : BN4 +3.45%posted a net profit of S$3.6 billion for the six months ended Jun 30, far exceeding the S$498 million reported in the previous corresponding period.

 

The group said for every five Keppel Corp shares held, its shareholders would receive one Keppel Reit unit. They will also receive a total cash dividend of S$0.33 per share.

 

Keppel Corp&rsquo s urban development arm Keppel Land is the sponsor of Keppel Reit.

 

Following the announcement, Keppel Reit&rsquo s counter shed as much as 3.2 per cent or S$0.03 to hit S$0.89 as at 9.22 am. The last time Keppel Reit&rsquo s units closed near this level was on Jul 12.

 

By the midday trading break, Keppel Reit was down 1.6 per cent or S$0.015 to S$0.905. The counter was among the most heavily traded at the time, with 14.9 million units changing hands.

 

KEPPEL Reit&rsquo s distribution per unit (DPU) fell by 2.4 per cent to S$0.029 for the first half of the 2023 financial year ended Jun 30, down from S$0.0297 the year before, its manager said on Tuesday (Jul 25). 

 

Distributable income from operations fell 10.5 per cent to S$99 million and was lower due mainly to higher property expenses and borrowing. 

 

Profit before tax tumbled 60.4 per cent to S$82.3 million from S$208 million in H2 2022, as there was a net fair-value loss on investment properties, and the Reit had lower net property income from its assets in Australia and South Korea. 

 

As at Jun 30, Keppel Reit had a total portfolio value of approximately S$9.2 billion, comprising prime commercial assets in Singapore, Japan, South Korea and Australia.

 

The increase in net property income by 0.4 per cent to S$89.9 million came from contributions from Ocean Financial Centre and Keppel Bay Tower in Singapore, and KR Ginza II, a Tokyo office building it acquired last November, the manager said. 

 

&ldquo This was partially offset by lower net property income from the Australia properties and T Tower, due mainly to a weaker Australian dollar and Korean won respectively.&rdquo  

 

The DPU of S$0.029 will be paid on Sep 8. Based on each unit&rsquo s closing price of S$0.90 on Jun 30, Keppel Reit&rsquo s annualised distribution yield would come up to 6.4 per cent.

 

On Tuesday, Keppel Reit&rsquo s manager said portfolio occupancy stood at 94.9 per cent at the end of H1, with a weighted average lease expiry of 5.7 years. 

 

Committed occupancies for Ocean Financial Centre and One Raffles Quay were at 100 per cent that for Marina Bay Financial Centre and Keppel Bay Tower were above 98 per cent. This comes as leasing demand for prime office space remains steady, with average core Central Business District occupancy at 94.8 per cent in end June.

 

New and expansion leases committed to were distributed across various industry sectors, including technology, media and telecommunications, banking, insurance and financial services, and the government sector.

 

Approximately 854,700 square ft of space was committed in H1, and one of its properties in Sydney, Blue & William, achieved practical completion in April, the manager said. 

 

As at Jun 30, Keppel Reit&rsquo s aggregate leverage stood at 39.2 per cent, with 76 per cent of its borrowings on fixed rates. The Reit has no refinancing for the rest of this year. 

 

Looking ahead, the manager said delivering sustainable long-term total return to unitholders continues to be its key focus. It will look to improve the quality of its assets through strategic acquisitions and divestments, proactively manage its portfolio, and exercise prudence in capital management.