Keppel REIT

For full-year 2025, property income increased 4.9% year-on-year and NPI increased 6.9% year-on-year. Share of results of associates and joint ventures increased 13.3% year-on-year. DI from operations decreased 1.1% year-on-year to $192.4 million, mainly because 25% of management fees were paid in cash; if management fees had been paid entirely in units, DI would have increased 6.3% year-on-year. Full-year DPU was $0.0523. Portfolio committed occupancy was 96.7%, rental reversion was 11.5% for the full year, and adjusted NAV per unit was $1.27. Year-end aggregate leverage was 47.9%, the weighted average cost of debt was 3.41%, and interest coverage was 2.6x. Management guided 2026 cost of debt to be between low 3% and 3.3%, with full contributions from Top Ryde City and MBFC Tower 3 starting in 2026.

The CEO framed 2025 as a year of portfolio expansion and operational strength, highlighting the December acquisitions of a 75% interest in Top Ryde City and an additional one-third interest in MBFC Tower 3. He said the strategic intent is to diversify into retail, deepen exposure to Singapore’s core CBD office market, and let the enlarged portfolio deliver more income resilience from 2026 onward. His tone was constructive and selective: focus on organic growth, cost reduction, and asset management in 2026, with acquisitions only considered if paired with divestments and attractive pricing.

The CFO emphasized stronger reported operating performance but noted that financing and capital structure effects weighed on headline distributable income. He cited full-year property income up 4.9%, NPI up 6.9%, DI from operations at $192.4 million, and DPU at $0.0523, while explaining that leverage was temporarily elevated at 47.9% because of equity bridge loans used for MBFC Tower 3; those bridge loans, about $890 million, were repaid in full on 20 January 2026 using preferential-offering proceeds. He also pointed to a 3.41% weighted average cost of debt for 2025, guided 2026 cost of debt to low 3% to 3.3%, and said fixed-rate borrowings were 53% of total debt, with sustainability-focused funding at 67% before the bridge-loan repayment.

Analysts focused on 2026 priorities, the possibility of buying Marina One or Keppel South Central, leasing momentum at 8 Exhibition Street, the 2 Blue Street guarantee roll-off, Australia asset valuations, debt repricing, and potential divestments or share buybacks. Management said 2026 is mainly about organic growth, lower funding costs, and asset management; acquisitions are not a first-half priority and would likely require divestments first. On leasing, the CEO said 8 Exhibition Street secured two long leases at more than double the outgoing rent on a gross and net basis, though income contribution will start only in 2027 and 2028 after incentives and fit-out periods. On capital allocation, management said divestments in Korea or Japan could be considered if pricing is right, and share buybacks could return if gearing falls further and divestments occur.