Keppel REIT reports rise in property income despite higher borrowing costs and announces anniversary distribution

Keppel REIT has also released its 1Q 2023 operational update.
Property income rose 5.9% year on year to S$57.7 million with net property income (NPI) inching up 1.3% year on year to S$40.5 million.
The better performance came about from higher NPI recorded across the majority of the REIT’s properties in 1Q 2023.
However, borrowing costs spiked up 27.3% year on year to S$15.4 million, resulting in distributable income falling by 6.7% year on year to S$50.2 million.
The manager of Keppel REIT has declared an anniversary distribution of S$20 million annually to celebrate the REIT’s 20th anniversary in 2026; hence the REIT has an additional S$5 million of distributable income for 1Q 2023.
After accounting for this additional distribution, distributable income inched up 2.6% year on year to S$55.2 million.
Keppel REIT’s portfolio occupancy level remained healthy at 96.3% as of 31 March 2023 with aggregate leverage at 38.7%.
The REIT’s cost of debt has surged from 2.29% in the previous quarter to 2.86% in the current quarter.
To be sure, 75% of its borrowings are on fixed rates which will help to mitigate higher finance costs.
Furthermore, the REIT’s project in Sydney, Blue & William, achieved practical completion on 3 April and will start contributing to the REIT’s income from 2Q 2023 onwards.