Author: reitscompass   |   Latest post: Thu, 29 Oct 2020, 1:26 PM


Is Keppel Pacific Oak US REIT's 7.9% Yield Compelling?

Author:   |    Publish date:

Key Highlights:

  • Keppel Pacific Oak US REIT (SGX: CMOU) has announced a flat 3Q19 DPU of US1.5¢

  • The tech sector drives double-digit rental reversion


1. Flat DPUs on top of increasing net property income

Net property income went up 36.2% to US$18.5m, driven by the newly acquired The Westpark Portfolio and Maitland Promenade I. However, the distribution per unit (DPU) remains flat due to the share dilution by a 31% enlarged share base after the exercise of right issues recently. The current dividend yield is 7.9%.

The leasing momentum remains strong, mainly boosted by the tech and professional service sectors. The rental reversion was pushed up 13% year-till-date, with a stable occupancy rate of 93.8%.


2. Debt financing remains stable

Aggregate leverage went up slightly to 38.5%. The average interest cost remains steady at 3.74%. The downside risk is limited, with 82.7% of debt are on fixed rates.

3. Growth catalyst

With the recovery of US economy, Keppel Pacific Oak US REIT will continue to enjoy strong leasing momentum and rental reversion. The unemployment rate last quarter was the lowest in the past 50 years and the office vacancy rate also fell to a decade-low of 9.7%. The tech sector continued to be a significant driver of office rent growth.

Besides organic portfolio growth through asset acquisition, the management of the Keppel Pacific Oak US REIT will continue to exercise prudent capital management to deliver stable distributions. Its recent acquisition of One Twenty Five office complex in Dallas will be DPU accretive.



With a portfolio of US assets, Keppel Pacific Oak US REIT is one of the beneficiaries on the recovery of the US economy and the booming of the tech sector. The stock price has been quite volatile since its IPO in 2017. While the fundamental is attractive, with growth catalysts moving forward, we prefer to put Keppel Pacific Oak US REIT under the watchlist until the price is stabilised.
This post was originally posted on my blog.
Are you looking for a REIT portfolio that beat the market performance, get exclusive access to our model portfolio. Get Started Today »
Share this

  Be the first to like this.

I3 Messenger
Individual or Group chat with anyone on I3investor

81  193  137  692 

Top 10 Active Counters
 Jiutian Chemical 0.082-0.001 
 QT Vascular 0.010.00 
 Sembcorp Marine 0.12-0.003 
 Genting Sing 0.645-0.02 
 SingTel 2.03-0.01 
 Ascendas Reit 2.88-0.12 
 CapitaMall Trust 1.73-0.03 
 AusGroup^ 0.017-0.002 
 Frasers L&I Tr 1.23-0.02 
 YZJ Shipbldg SGD 0.920.00