KepPacOak released its 1H2023 results. A summary is as follows:
(i) No downward valuation of properties announced
(ii) Leverage ratio of 38.4% with cost of debt at 3.89%
(iii) Announced Dividends of US 2.5 cents, which gives a dividend yield of 15% as of now.
Summary
While portfolio occupancy fell to 90.8%, the overall increase in rents has allowed the REIT to report a stronger revenue (growth of +2%). Due to this, I don't expect KepPacOak portfolio value to fall much. The year end reported decline will be due to a higher terminal value used admist the rising interest rate environment. Other than that, no other factors will lead to a valuation decline at year end.
Therefore I do not expect the REIT to breach the 50% MAS regulatory mark.
While they have announced a 2.5 cents dividends for 1H, i expect a slightly lower dividends at 2 US cents for 2H. This is because 2H will witness the full impact of SOFR which rose by 1% over the past 6 months.
At 4.5 US cents dividend, the REIT is rewarding shareholders a 13% dividends yield consistently in this environment and barring a major tenant leaving. This is based on current share price and is double the amount Singapore reits offer investors (6.3%)
This is a good REIT to own, rather stable with a relatively healthy leverage ratio and is now giving out high dividends.
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