Keppel Pacific Oak US REIT's 2H FY24 Result Review

$KepPacOakReitUSD(CMOU.SI)$

Basic Profile & Key Statistics

Key Indicators

Performance Highlight

Gross revenue for 2H 2024 declined YoY, mainly due to lower non-cash rental income, higher vacancies, and reduced one-off termination fees, partially offset by higher recoveries income. Increased property expenses from maintenance, management fees, and leasing costs led to a 14.1% drop in NPI (7.9% lower after adjusting for non-cash items). Coupled with higher finance costs, income available for distribution also declined.

Rental Reversion

Rental reversion for 4Q 2024 was positive at 1.7%, while FY2024 recorded a negative rental reversion of 0.5%.

Related Parties Shareholding

• REIT Sponsor's Shareholding: Less Favorable

• REIT Manager's Shareholding: Moderate

• Directors of REIT Manager's Shareholding: Favorable

Lease Profile

• Committed Occupancy: Less Favorable

• Highest Annual Lease Expiry in 4 Years: Favorable

• WALE: Moderate

• Weighted Average Land Lease Expiry: Favorable

Debt Profile

• Adjusted Interest Coverage Ratio: Moderate

• Cost of Debt: Moderate

• Gearing Ratio: Less Favorable

• Fixed Rate Debt Proportion: Moderate

• Unsecured Debt Proportion: Favorable

• Highest Annual Debt Maturity in 4 Years: Moderate

• WADM: Moderate

Diversification Profile

• Top Geographical Weightage: Favorable

• Top Property Weightage: Favorable

• Top 5 Properties' Weightage: Moderate

• Top Tenant Weightage: Moderate

• Top 10 Tenants' Weightage: Favorable

Key Financial Metrics

• Property Yield: Moderate

• Operating Distributable Income over Manager's Fees: Favorable

• Operating Distributable Income on Capital: Favorable

• Operating Distributable Income Margin: Less Favorable

• Operating Distribution Proportion: Less Favorable

DPU Breakdown

• TTM Distribution Breakdown:100% being Retained

Trends (Up to 10 Years)

• Uptrend: Top 10 Tenants' Weightage

• Slight Uptrend: None

• Flat: Committed Occupancy, Operating Distributable Income over Manager's Fees

• Slight Downtrend: None

• Downtrend: DPU from Operations, NAV per Unit, Adjusted Interest Coverage Ratio, Top 5 Properties' Weightage, Property Yield, Operating Distributable Income on Capital, Operating Distributable Income Margin, Operating Distribution Proportion

Price Range & Relative Valuation Metrics

• Dividend Yield: Below -2SD for 1y, 3y, 5y & 10y

• P/NAV: Average for 1y & 3y; Below -1SD for 5y & 10y

Author's Opinion

Compared to the previous half-year, gross revenue and NPI have declined, but income available for distribution remains stable. On the debt front, 9.7% is set to mature in 4Q 2025.

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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 own findings and should not be considered as 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 decision.