Keppel REIT Annualised DPU Fall for 2015

Keppel REIT Logo

Keppel REIT announces its results for 4Q2015 on 18th January 2016. Although 4th quarter Distribution Per Unit (DPU) increased 11.26% to 1.68 cents as compared to 1.51 cents for the same period last year, the annualised DPU fell 5.85% to 6.8 cents as compared to 7.23 cents a year ago.

If we take the market closing price of S$0.93 on 31st December 2015, the yield for Keppel REIT will be 7.3%. This is pretty decent to me. At the point of writing this post, the closing price is S$0.89.

(S$ ‘000)
Property Income 42,795 43,337 (1.25)
Net Property Income 34,771 34,253 1.51
Distributable Amount 54,031 45,848 17.85
Distribution Per Unit (“DPU”) (cents) 1.68 1.51 11.26
Annualised DPU (cents) 6.8 7.23 (5.85)

Debt Maturity Profile

Keppel REIT completed almost 100% of refinancing requirements in 2016. It continues to maintain a well-staggered debt maturity profile with weighted average term to expiry at a healthy 3.7 years.

Weighted Average Lease Expiry

The top 10 tenants accounted for 43% of portfolio whereby the tenants have a long WALE of approximately 8 years and 6 years.

Keppel REIT Top 10 Tenants

Things to Note


Netflix is one of its new tenant.

Government of Western Australia

Government of Western Australia commenced its 25-year lease in November 2015. The effective return is 7.15%. It has a fixed annual rental escalation throughout lease term, with options for another 25 years.

Limited Office Supply After 2018

We are expecting limited office supply after 2018. Thus, we should be investing in Keppel REIT based on long term rather than short term.

Keppel REIT sold Australia Asset 77 King Street

Keppel REIT 77 King Street Sydney

Keppel REIT announces on 17th January 2016 that it has divested 100% of its interest in 77 King Street, Sydney, Australia  for A$160 million. The news came one day before Keppel REIT announces its financial results on 18th January 2016.

77 King Street is a freehold Grade A commercial building in Sydney’s Central Business District. 77 King Street comprises 18 levels of offices and two basement levels of retail space. Its tenants include Apple, Facebook and Capgemini.

According to the news released on Keppel REIT website, the sale was 40% of the original purchase price of A$116 million in year 2010. The buyer is ARE Noble Pty Ltd, a wholly-owned subsidiary of Invesco Asia Core Fund. The proceeds from the sale will be used to pay off existing debts and used for future investment opportunities.

With the divestment of 77 King Street, below is the updated portfolio of Keppel REIT.


  • Bugis Junction Towers
  • Marina Bay Financial Centre
  • One Raffles Quay
  • Ocean Financial Centre


  • 8 Chifley Square, Sydney
  • 8 Exhibition Street, Melbourne
  • 275 George Street, Brisbane
  • Office Tower on the Old Treasury Building site, Perth

Some positive points to note from 3Q2015 results (Keppel REIT announces DPU of 1.70 cents for 3Q2015).

They are:

  • 70% of total leases are not due for renewal till 2018 and beyond.
  • Positive rent reversion averaging 16% for office leases signed, renewed and reviewed year‐to‐date
  • 25‐year long lease in the fourth quarter of 2015 (“4Q 2015”) for Old Treasury Building site in Perth. The tenant is the Government of Western Australia (WA).

In my personal opinion and observation, as compared to year 2014, the full year DPU for Keppel REIT is expected to be lower in 2015.

Chief Operating Officer and Chief Financial Officer for Cambridge Industrial Trust Quits


Today, on 15th January 2016, Cambridge Industrial Trust announces the resignation of Mr David Mason who is the Chief Operating Officer and Chief Financial Officer for Cambridge Industrial Trust. He will remain in the company until April 2016 to facilitate a smooth transition.

The above news came sudden, a day after Cambridge Industrial Trust announces a fall in DPU (Cambridge Industrial Trust DPU Fall for 4QFY15). The news may or may not cause further fall in current closing share price of S$0.53, depending on investor’s confidence.

Cambridge Industrial Trust is currently, facing headwinds caused by vacancies and earnings weakness arising from property conversions from single-tenanted to multi-tenanted.