K-Reit Asia’s results lifted by acquisitions

Net property income up 28% to $13.9m in Q1; distribution per unit at 1.33 cts

RECENT acquisitions have boosted K-Reit Asia’s financial results for the first quarter ended March 31, 2010.

K-Reit yesterday posted a net property income of $13.9 million – 28 per cent higher than a year ago. The trust received more rental income from the six strata floors in Prudential Tower which it bought late last year, and from the 50 per cent stake in 275 George Street in Brisbane which it purchased early this year.

As a result, distributable income to unitholders rose. It was $17.8 million in Q1, up 14 per cent from the same period last year.

Distribution per unit (DPU) in Q1 was 1.33 cents, or 5.39 cents on an annualised basis. The annualised distribution yield is 4.9 per cent based on K-Reit’s closing unit price of $1.10 on March 31.

DPU in Q1 fell 44 per cent from the 2.38 cents a year ago as the unit base expanded from a $620 million rights issue in November. Adjusting for the cash call, DPU in Q1 2009 would have been 1.18 cents, leading to a year-on-year growth of 13 per cent.

Several performance indicators for K-Reit have improved in the past year. Its portfolio occupancy rate as at end-March was 96 per cent, up slightly from 95.8 per cent year-on-year. The average gross rental rate rose to $8.30 from $8.06 over the same period.

K-Reit’s leverage ratio dropped to 25.2 per cent at end-March from 27.7 per cent a quarter ago. It will fall further to 15.2 per cent this month when the trust uses some proceeds from the rights issue to partially repay a revolving term loan.

K-Reit’s portfolio size as at end-March was $2.3 billion, up from $2.1 billion as at end-December last year due to acquisitions. The trust is eyeing further growth as business sentiments improve and the office sector stabilises.

K-Reit said in its financial statement that it ‘intends to pursue opportunities for strategic acquisitions in Singapore and across Asia’. It will also identify potential asset enhancement initiatives for its properties.

The counter lost two cents yesterday to close at $1.13.

Source: Business Times, 20 Apr 2010