K-REIT – BT

K-Reit post-rights Q4 DPU falls

K-REIT Asia yesterday posted improved results for the fourth quarter ended Dec 31, 2011, on the back of higher contributions from associates and higher interest income. Property income for the office Reit was $22.6 million in Q4, up $1.3 million or 5.9 per cent from a year earlier.

This was mainly due to higher property income from its Australian properties, Bugis Junction Towers and contributions from Ocean Financial Centre (OFC). However, this was slightly offset by a $6 million loss in property income resulting from the sale of Keppel Towers and GE Tower. Net property income rose 1.4 per cent over the same period to $17.8 million.

Distributable income to unitholders for the period jumped 54 per cent year on year to $35.7 million from $23.2 million a year earlier. This translates to a distribution per unit (DPU) of 1.4 cents for Q4, based on an enlarged post-rights share base. DPU in Q4 2010 was 1.71 cents.

For the full year ended Dec 31, K-Reit’s net property income was $61.7 million, down 8.4 per cent from the previous year.

Share of results of associates, however, almost quadrupled to $37.4 million from $9.7 million a year ago. Distributable income also rose 32 per cent to $113 million, representing a DPU of 7.08 cents for the full year ended Dec 31, up 11.1 per cent year on year.

Based on K-Reit’s closing price of $0.83 as at Dec 30, the last trading day of 2011, the distribution yield for the year was 8.5 per cent.

The counter ended trading yesterday at $0.895, up 2.3 per cent or two cents.

K-Reit’s Singapore portfolio occupancy of 93.9 per cent outperformed that of the core central business district of 91.2 per cent.

The Reit has about 2.2 per cent of net lettable area due for rent review and renewal in 2012. However, it has given its assurance that that with a portfolio-weighted, average lease expiry of 6.7 years and healthy capital levels, it is in ‘good stead’ to weather the economic slowdown in 2012.

Commenting on the uptake of one of the Reit’s latest assets, OFC, Ng Hsueh Ling, the CEO of K-Reit Asia Management, said she hoped to achieve 100 per cent occupancy in the building by June next year. Currently, the asset’s committed occupancy is about 85 per cent.

K-Reit’s aggregate leverage at Dec 31 was 41.6 per cent based on borrowings of about $2.5 billion.

Looking ahead, Ms Ng said she would be ‘quite comfortable’ with gearing in the range of 40 to 41 per cent, including debt at the associate level.