The lack of income from a recently sold property hit Keppel Reit (K- Reit) in the second quarter.
Net property income declined 6.5 per cent year on year to $32.5 million for the three months to June 30, largely due to the absence of contributions from 77 King Street, which the Reit offloaded in late January.
But its share of results from associates rose 0.8 per cent to $20.1 million, on the back of better results at One Raffles Quay. Income from joint ventures shot up 105.8 per cent to $8.3 million, thanks to higher contributions from the David Malcolm Justice Centre in Perth.
Income available for distribution fell 4.2 per cent to $52.5 million, while distribution per unit (DPU) was 6.4 per cent lower at 1.61 cents.
The annualised yield was 6.3 per cent based on a DPU of 3.29 cents for the first half year and the counter's closing price of $1.05 on June 30. That compares with a yield of 7.3 per cent a year earlier.
The Reit manager noted that this is still attractive for unit holders when compared with dividend yield of 5.9 per cent for the FTSE Straits Times Reit Index and a 4.6 per cent yield for the FTSE Straits Times Real Estate Index.
AT A GLANCE
NET PROPERTY INCOME: $32.5 million (-6.5%)
INCOME AVAILABLE FOR DISTRIBUTION: $52.5 million (-4.2%)
DISTRIBUTION PER UNIT: 1.61 cents (-6.4%)
It noted that almost all the leases expiring this year have been renewed with just 0.6 per cent of its leases due for renewal in the second half of this year.
Active leasing efforts have also reduced the proportion of leases expiring next year and in 2018. About 9.5 per cent of leases expire next year while 5.5 per cent expire in 2018.
Portfolio occupancy was 99.7 per cent in the second quarter. Its properties continue to command above- market rents, with average committed rent of $10.10 per sq ft for new, renewal and forward renewal leases in the quarter, the manager said.
Keppel Reit has 11 office towers in eight assets in Singapore and Australia. While the Australian office market continued to see positive net absorption in the first quarter, the Singapore office market will remain challenging over the next two years due to impending new supply, the manager said.
Its units closed down 1.5 cents to $1.08 yesterday. It posted its results after markets closed.