KEPPEL real estate investment trust (Reit) has posted a 5 per cent increase in property income to S$172.6 million for its first nine months ended Sep 30, 2023, up from S$164.4 million in the corresponding period of the previous year.

The improved performance was supported by higher rentals and increased portfolio occupancy, its manager said in its key business and operational update for the third quarter of 2023 on Tuesday (Oct 17).

Distributable income from operations, however, fell 10.1 per cent to S$148.6 million for 9M 2023, due to higher borrowing costs, higher property tax and utility costs. These were partially offset by the higher property income and rental support, said Keppel Reit.

Net property income attributable to unit holders went up 0.3 per cent to S$120.4 million from the previous year. 

The Reit’s portfolio weighted average lease expiry remains at 5.6 years, with approximately 1,103,800 square feet (attributable area of 561,900 square feet) in leases committed in 9M 2023.

Committed occupancies for the portfolio rose to 95.9 per cent in Q3, up from 94.9 per cent in the second quarter, added its manager.

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The Reit said its weighted average signing rent for its office leases in Singapore rose from S$12.35 per square feet per month (psf pm) in H1 2023 to S$12.43 psf pm in 9M 2023. Its Singapore office portfolio comprises Ocean Financial Centre, Marina Bay Financial Centre, One Raffles Quay and Keppel Bay Tower.

As at the end of September, Keppel Reit’s aggregate leverage stood at 39.5 per cent, with 76 per cent borrowings on fixed rates. 

The manager said no major refinancing is required for the rest of this year, and the majority of debt due next year will mature in Q2 2024. Refinancing discussions with the lenders have been initiated.

The Reit has approximately S$1 billion in available borrowing facilities to meet its short to medium-term funding requirements, it said.

Keppel Reit said it remains focused on delivering sustainable long-term total returns to its unit holders, and that its manager would continue to proactively manage the portfolio and be prudent in managing capital.

Units of Keppel Reit closed flat at S$0.84 on Tuesday, before the business update.