KEPPEL REIT H1 2015 RESULTS

Keppel REIT just announced its H1 2015 results:

Revenue decreased 9.3%
Profit decreased 4.8%
Distribution Income S$0.0172
Distribution decreased 9.5% y-o-y
Current Ratio 0.69
Gearing Ratio 0.36
Net Asset Value per Unit $1.17 (excluding Distributable Income)
Number of Units increased by 386 million in a year

The results were unimpressive and it goes to show that Keppel REIT still needs to get its finacials into order, particularly by improving its Current Ratio,

Meanwhile, it has completed 100% refinancing requirements for 2015 and early refinanced about 70% of loans due in 2016 as well as commenced early refinancing for loans due in 2017. This of course has lengthened the weighted average term to maturity to 3.9 years (increase of 0.8 years). Interest rate remained steady at 2.5%.

It seems that the lower AUD too is impacting its profitability. To this extent, Keppel REIT has also hedged almost 100% of Distributable Income from Australia for the remaining 2015 to mitigate currency fluctuations.

Keppel REIT will also embarking on a maiden Distribution Reinvestment Plan for the Q2 distribution to strengthen the balance sheet and converse cash.

Achieved rental reversion of 18% on the average for H1 2015.

I maintain my HOLD rating. Although the current Unit Price (S$1.12) remains below it NAVPU, the weak earnings and financials do not lend the support required to get a BUY rating.

My disclosure: I am long Keppel REIT.