Keppel REIT: Business Update in Line With Expectations; Units Undervalued

The higher interest rate environment is starting to negatively affect Keppel REIT as its distributable income from operations fell 6.7% year on year to SGD 50.2 million despite a 1.8% increase in net property income in first quarter 2023. Nevertheless, the trust’s operating metrics remain strong, with a high tenant retention ratio of 98% and a positive 9.3% rental reversion for the portfolio. The trust’s portfolio occupancy rate was 96.3%, same as last quarter, while its weighted average lease expiry remains long at 5.8 years.