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Keppel Pacific Oak US REIT beats IPO forecast by 27% with 4Q DPU of 1.51 US cents

Uma Devi
Uma Devi • 3 min read
Keppel Pacific Oak US REIT beats IPO forecast by 27% with 4Q DPU of 1.51 US cents
SINGAPORE (Jan 21): Keppel Pacific Oak US REIT (KORE) reported a distribution per unit (DPU) of 1.51 US cents for 4Q19 ended December, some 26.9% higher than its forecasted DPU of 1.19 US cents. 
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SINGAPORE (Jan 21): Keppel Pacific Oak US REIT (KORE) reported a distribution per unit (DPU) of 1.51 US cents for 4Q19 ended December, some 26.9% higher than its forecasted DPU of 1.19 US cents.

This was also some 23.8% higher than DPU of 1.22 US cents in 4Q18.

This brings KORE’s DPU for FY19 to 6.01 US cents, 26% higher than the forecasted DPU of 4.77 US cents and 31.2% higher than FY18’s DPU of 4.58 US cents.

Gross revenue for the quarter came in at US$33.8 million, 40.1% higher than the forecasted figure of US$24.1 million. This came on the back of contributions from the REIT’s newly acquired assets, namely The Westpark Portfolio, Maitland Promenade I and One Twenty Five, as well as better than expected performance from its initial IPO portfolio.

Property expenses for the quarter totalled US$13.7 million, 36.5% higher than the forecasted US$10.0 million. This was attributable mainly the REIT’s enlarged portfolio.

Consequently, income available for distribution outperformed forecasts by 35.5%, coming in at US$13.6 million.

KORE’s finance expenses came in 47.3% higher than forecasted at US$16.1 million. This was due to a 42.6% increase in interest expense to US$3.8 million due to expenses incurred on the additional loans taken up to partially finance its recent acquisitions.

As at end-December, cash and cash equivalents stood at US$38.2 million.

KORE had positive portfolio rental reversion of 14.3% in 2019 as a result of sustained rent increases. These were driven by positive office demand and expansion of its tenants in Seattle and Austin.

As at 31 December 2019, the weighted average lease expiry (WALE) by cash rental income (CRI) for KORE’s portfolio and top 10 tenants stood at 4.2 years and 5.6 years respectively.

In its outlook statement, KORE says that it would continue to leverage on its strategic exposure to fast-expanding tech hubs and its unique value proposition of having office towers and business campus style properties that are in demand.

“The Manager will also continue its strategy of pursuing value accretive acquisitions in first choice submarkets in key US growth markets with strong visible organic growth opportunities supported by positive rental reversion opportunities,” says KORE.

“The Manager’s continued prudent approach towards capital management and its proactive leasing efforts will also see KORE capture rental escalations and positive rental reversions as leases expire,” adds KORE.

Units in KORE closed two US cents lower, or 2.6% down, at 76 US cents on Tuesday prior to the results announcement.

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