Keppel-KBS US REIT 4Q18 net property income beats IPO forecast

U.S. one-dollar and five-dollar currency notes; taken September 2018.U.S. one-dollar and five-dollar currency notes; taken September 2018.

Keppel-KBS US REIT reported on Thursday fourth quarter net property income of US$14.64 million, which was 7.7 percent above the US$13.59 million forecast from its IPO prospectus.

The REIT was constituted on 22 September 2017 and listed on 9 November 2017, and there were no year-earlier comparisons.

Gross revenue for the quarter ended 31 December was US$24.50 million, the REIT said in a filing to SGX after the market close on Thursday.

The forecast beat was due to the contribution from the newly acquired Westpark portfolio in Seattle and on the portfolio’s stable operational performance, Keppel-KBS US REIT Management, the REIT manager, said. Excluding the Westpark portfolio, distributable income was in line with forecasts, it said.

“Driving this stable operational performance are strong leasing momentum and positive rental reversions as a result of rising office rents in majority of the office markets where the REIT operates, offset by lower recoveries income,” which is reimbursements from tenants for certain property expenses, the filing said.

The distribution per unit (DPU) was 1.25 U.S. cents for the quarter, below the forecast of 1.50 U.S. cents, it said.

The DPU missed forecasts due to a rights issue to raise proceeds of around US$93.1 million to partially fund the Westpark portfolio acquisition, it said.

For the period from the listing date through 31 December, net property income was US$64.35 million on revenue of US$105.92 million, it said. DPU for the period was 6.22 U.S. cents, it said.

As of 31 December, the portfolio’s committed occupancy was 91.6 percent due to higher committed occupancies at some of the properties and the addition of the Westpark portfolio, the REIT manager said.

Keppel-KBS US REIT’s portfolio has 12 office properties in seven U.S. markets: Seattle, Washington; Sacramento, California; Denver, Colorado; Austin, Texas; Houston, Texas; Atlanta, Georgia; and Orlando, Florida.

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