Keppel Pacific Oak US REIT's 2H FY23 Result Review

Basic Profile & Key Statistics

Key Indicators

Performance Highlight

Despite improvements in gross revenue and NPI, income available for distribution declined due to higher interest costs. 

Rental Reversion

Rental revision for 4Q is at -4.4%, and the full-year rental reversion is at -1.8%.

Related Parties Shareholding

The directors of the REIT manager hold a relatively high proportion of shares whereas the sponsor holds a relatively low proportion of shares.

Lease Profile

The lease expiry is well spread, and all properties are freehold. However, the committed occupancy rate is currently relatively low.

Debt Profile

Debt maturity is well spread, and all debts are unsecured. However, the gearing ratio is relatively high.

Diversification Profile

Overall, the portfolio is well diversified.

Key Financial Metrics

The manager's management fee is relatively low compared to operating distributable income. Operating distributable income on capital and operating distribution proportion are on the high side. However, the operating distributable income margin is low.

DPU Breakdown

• TTM Distributable Income Breakdown:
• 100% from Operation
• TTM DPU = 50% of Distributable Income

Trends

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

Relative Valuation

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

Author's Opinion

Gross revenue and NPI have declined as compared to the previous quarter. Nonetheless, distributable income remains similar to the previous quarter. As widely known, the manager has announced a recapitalization plan and suspended distribution through 2H 2025. The aim is to maintain leverage and interest coverage ratio within MAS requirements and bank debt covenants. KORE expects to resume distribution in FY2026.

Below are some snapshots from the presentation:

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.