OFFICE trust K-Reit Asia said yesterday that its third-quarter distributable income rose 18 per cent on the back of positive rental reversions.
Distributable income for the three months ended Sept 30 rose to $18 million, from $15.2 million a year ago. Distribution per unit (DPU) accordingly rose to 2.69 cents from 2.34 cents.
The trust, which is a unit of Keppel Land, also reported a 29 per cent rise in net property income to $12.3 million, from Q3 2008’s $9.5 million.
K-Reit’s portfolio – which includes Bugis Junction Towers and a one- third stake in One Raffles Quay – attained 94.9 per cent committed occupancy as at end-September; the trust reported the same occupancy rate at end-June.
The average gross rental rate for K-Reit’s portfolio was $7.91 per square foot (psf) in September, down slightly from $8.13 psf in September 2008.
Looking ahead, the trust said that it was well positioned to capitalise on economic stabilisation due to its ‘high-quality asset portfolio, strong tenancy profile and broad tenant diversity’.
K-Reit also pointed out that, based on committed leases as at end-September, gross rental income for FY2009 already exceeds that for FY2008.
K-Reit on Sept 30 proposed a one-for-one rights issue to raise $620 million. The stock fell since most investors and analysts were taken by surprise as K-Reit’s gearing was already comparatively lower than its peers’. The company had also conducted a rights issue in January 2008 to raise $551.7 million, which had cut its aggregate leverage then. Upon completion of the latest rights issue exercise, K-Reit’s aggregate leverage is expected to decrease from 33 per cent to 9.1 per cent.
The trust also did a revaluation of its portfolio as part of the proposed rights issue, and saw its portfolio value fall from $2.1 billion at the end of December 2008 to $1.97 billion at the end of September 2009.
‘Going forward, with the added financial flexibility upon completion of the proposed rights issue, the manager intends to pursue opportunities for strategic acquisitions in Singapore and across Asia,’ K-Reit said in its statement yesterday. ‘The manager will also continue to focus on tenant retention, attract new tenants and seek to manage K-Reit Asia’s assets and operating cost structure more efficiently.’
K-Reit shares closed unchanged at $1.12 yesterday.
Source: Business Times, 14 Oct 2009
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