Keppel Reit's Q1 DPU falls 14% on Prudential Tower selloff, lower rent support

Keppel Reit on Monday posted a distribution per unit (DPU) of 1.70 Singapore cents for its first quarter ended March 31, 2015.

This was a 13.7 per cent drop from the 1.97 cents it paid in the corresponding quarter a year ago.

Net property income fell 12.4 per cent to S$34.6 million, while total property income fell 9.4 per cent to S$42.4 million.

The Reit blamed the divestment of Prudential Tower, which was completed on September 26, 2014. It had said at the time that much of the divestment proceeds will be used to repay existing debt, with the remainder for working capital purposes or acquisition opportunities.

In September 2014, it bought a one-third stake in Marina Bay Financial Centre (MBFC) Tower 3 from its sponsor Keppel Land for a whopping S$1.2 billion.

In its latest quarter, Keppel Reit also saw lower rental support, including the expiry of rental support from its 87.5 per cent stake in Ocean Financial Centre and an absence of rental support for MBFC Phase One. (Phase One consists of office towers 1 and 2, Marina Bay Residences and Phase 1 of Marina Bay Link Mall.)

This, compounded with lower interest income, higher borrowing costs, higher management fees and trust expenses, all ate into distributions to unitholders.