What’s Behind Keppel REIT’s Great Q1 2021 Results

Singapore office REIT Keppel REIT’s recent results was pretty good.

My friend asked me to look into whether something was amiss.

Here is an update of their Q1 2021 performance from their business updates:

Almost everything looks much better. Usually, when REIT have such a good performance, it is likely that they have purchase a new building, or a portfolio of buildings betweent the reporting period.

In Q1, Keppel’s Pinnacle Office Tower acquisition start adding contribution to the topline and bottomline.

Between this period, their Victoria Police Centre also started contributing. These would have added to the outperformance.

I decided to tabulate some of Keppel REIT’s financial performances the past quarters:

Q1 2020 was probably one of the weakest performances in recent memory. It would not be hard to do better than quarter.

Compared to the last quarter, Keppel REIT’s Q1 2021 results do not look as spectacular.

While top line expanded, we did not see any meaningful translation to the distributable income from Pinnacle Office Tower.

Here are some other Keppel REIT’s financial data:

All-in interest rate went down from 2.8% to 2.01% currently. This savings should help the REIT.

However, notice that committed occupany have been trending down. This is a short time period we are profiling but nevertheless, I wonder is demand waning for office properties.

Retention rate was meaningfully lower at 44% this quarter. I think this could probably be a one-off and this is where we want to see whether it bounce back.

Next quarter, we should also see contribution from the newly acquired Keppel Bay Tower. The new placement shares should dilute and balance out the contribution.

Keppel REIT currently trades closer to a 4.8% dividend yield on my Dividend Stock Tracker.

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