Keppel REIT units may fall on Tuesday after its fourth-quarter earnings missed expectations, despite a top up to the distribution per unit (DPU) from capital, Nomura said in a note on Monday.
Nomura pointed to the full-year DPU of 5.56 Singapore cents, down 2.5 percent on-year, and coming in at only 96 percent of its forecast for 5.8 Singapore cents.
It noted that 0.09 Singapore cents was a distribution from capital as part of the divestment gain from the sale of a 20 percent stake in Ocean Financial Centre in the fourth quarter of last year. That was the first capital distribution since the third quarter of 2016, it said.
“The miss to our numbers is principally on account of lower-than-expected income contribution from associates,” the investment bank said in a note on Monday.
Keppel REIT reported on Monday its net property income for the fourth quarter fell 15.8 percent on-year to S$30.53 million on lower property income from Ocean Financial Centre, 275 George Street and 8 Exhibition Street, partially offset by higher property income from Bugis Junction Towers.
But Nomura also pointed to developments it liked, including that the average signing rents for the REIT’s Singapore office leases were still trending higher in the fourth quarter and that the average rental reversion growth of 12.9 percent in the full year was better than its forecast of 10 percent.
Nomura rates the units at Neutral with a S$1.20 target price.
Keppel REIT units ended Monday at S$1.18.