Keppel REIT (formerly: K-Reit Asia)

[cfa]

K reit just got a bank loan of S$125m .

http://infopub.sgx.com/Apps?A=COW_Corpor...&F=1023627

[tonylim]

The IR manager Mr. Dale Lai replied my questions as below.




Dear xxxxxx,



8 Chifley Square has already TOP in August and tenants have already started to move in. In fact, the anchor tenant, Corrs Chambers Westgarth, has already started operations there. Currently, the other tenants are still in the process of moving in.



As for the financing of the Old Treasury Building project in Perth, we have already received full loan commitments from the banks. As such, there is no requirement for any more placement of units for the financing of the project.



I hope this answers your questions. Thank you.



Regards,

Dale Lai

[valueinvestor]

They have first class office buildings , tenants and sponsor , but why are investors having no faith in the management ?

[Some-one]

They have first class office buildings , tenants and sponsor , but why are investors having no faith in the management ?

Their leverage is pretty high and with their assets mostly coming from its building's valuation, all the cooling measures may dampen the valuation resulting in lower asset values. Furthermore, QE tapering which might happens next year may increase the interest rate. In fact, a lot of REITS are falling recently.

[valueinvestor]

The gearing is high but the dividend cover is also very high at 4.8 X . The manager had also very proactive in refinancing some debts prematurely with very favorable interest rate, no refinancing of debt till year 2015. With interest coverage at 4.8 X , servicing of debt is not a problem at all.

[bobby64]

Hi all,

Eden Advisors have done some coverage on Keppel Reit too. Take a look and hope it helps summarize the investment merits and risks.

Happy investing!

Regards,
Bobby

[Stocker]

Rather impressive that all the 5 offices are fully tenanted , achieved 100% occupancy rate.
Just wonder what is the rental rate of the F & B outlets there ?
Total 8,600 Sq F. Assuming it is S$25.00 PSF , that will bring in additional revenues of S$2.58 m a year besides the revenues from the car parks.

[valueinvestor]

Cannot be 25 , maximum 18 /sqf.

[Shrivathsa]

To my uninitiated eye, it seems like a good investment yielding around 8.3% in the long term. 6.66% on distribution and around 1.6% on growth. I assume that the NAV can be discounted by 12% due to its Australia exposure, is there anything else I am missing out on ?

[Retired@52]

To my uninitiated eye, it seems like a good investment yielding around 8.3% in the long term. 6.66% on distribution and around 1.6% on growth. I assume that the NAV can be discounted by 12% due to its Australia exposure, is there anything else I am missing out on ?

Keppel REITs' Fundamentals:

1) Last 3 years’ Net Profits:
2011 ~ $290M
2012 ~ $330M
2013 ~ $353M

2) Last 3 Years’ Dividend:
2011 ~ $0.071
2012 ~ $0.0825
2013 ~ $0.0788

3) Last 3 years’ NAV:
2011 ~ $1.28
2012 ~ $1.29
2013 ~ $1.40

4)The Estimated Current Yield:
Add up last 3 years’ Dividends divide by 3 then divide by Current price
($0.071 + $0.0825 + $0.0788) divide by 3 then divide by $1.155 = 6.70%

The adjusted historic high on 12.03.07 was $2.701 per share
The adjusted historic low on 12.03.09 was $0.397
The Current share price is $1.155

E&O (17-03-14)