Keppel-KBS US REIT reports higher net property income amid rental growth

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Keppel-KBS US REIT reported on Tuesday that its net property income for the second quarter beat the forecasts from its IPO outlook.

It reported second quarter net property income of US$13.79 million, compared with a forecast of US$13.59 million, which was derived from one quarter of the 2018 forecast.

“This higher net property income was supported by overall rental growth, lower property expenses, and a one-off compensation income recognised in the first quarter of 2018 arising from an early lease termination at Westmoor Center in Denver, Colorado,” the filing said. “The space was taken up in July 2018 by an existing tenant who was expanding its space, and cash rental contribution will commence in December 2018.”

The distribution per unit (DPU) for the quarter was 3.82 U.S. cents, above the IPO forecast of 3.80 U.S. cents, translating to a annualized distribution yield of 6.77 percent, the REIT manager said in an SGX filing after the market close on Tuesday.

The REIT manager issued a positive outlook statement.

“The REIT, with assets located in key growth markets in the West Coast, Central, and East Coast, is well-placed to benefit from organic growth, largely from improved occupancies and built-in rental escalations in its portfolio,” it said. “Office demand in these markets is underpinned by strong and defensive sectors such as technology, education and healthcare.”

It added that the manager was actively pursuing potential acquisitions in key growth markets where the REIT has a presence as well as other U.S. cities with similar growth profiles.

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