K-Reit's distributable income up 173% to $14.2m in Q2

July 29, 2008
K-Reit's distributable income up 173% to $14.2m in Q2
By UMA SHANKARI

K-REIT Asia said yesterday its second-quarter distributable income
rose 173 per cent to $14.2 million, from $5.2 million a year ago.

The better showing was mainly due to income from its one-third stake
in One Raffles Quay, which was absent in Q2 2007. Distribution per
unit rose 1.9 per cent to 2.18 cents, from 2.14 cents in Q2 2007.

Net property income for the three months ended June 30, 2008 rose 26
per cent to $9.2 million, from $7.3 million the year before.

K-Reit also saw better rental income, with higher rents achieved for
new and renewed leases, as well as improved occupancy. The average
gross rental rate for investment property held directly by K-Reit
rose to $5.66 per sq ft in June 2008, from $4.28 psf a year earlier.

For the first half of 2008, distributable income rose 169.8 per cent
to $25.6 million, from $9.5 million in 2007. DPU for the first six
months of the year rose 0.8 per cent to 3.94 cents, from 3.91 cents
in 2007.

The trust also reduced its leverage to 27.7 per cent at June 30,
2008, from 53.9 per cent at Dec 31, 2007. Based on a 60 per cent
aggregate leverage limit, this provides K-Reit with an additional
debt headroom of $680 million to fund acquisitions and for working
capital. Based on K-Reit's existing portfolio, there will be no debt
re-financing requirement until 2011, the trust said.

For the longer term, the trust's manager is establishing a medium-
term note programme to allow the Reit to swiftly tap the debt capital
market.

K-Reit is upbeat about its prospects, even though the global economy
is slowing. Some 35.4 per cent of its tenants are from the banking,
insurance and financial services sectors. Most of these tenants have
lease terms of six years or more, and 'provide very stable income
going forward', said Tan Swee Yiow, chief executive of the trust's
manager.

Mr Tan pointed out that despite the weaker external environment,
Singapore's office rents rose slightly in Q2 2008, reflecting the
tight supply of space.

'Office rents will be supported by continued demand for prime office
space as Singapore transforms itself into a global city and with spin-
off multiplier effects from the two integrated resorts currently
under construction,' K-Reit said in a filing to the Singapore
Exchange.

K-Reit's stock closed unchanged at $1.40 yesterday. The stock has
shed 29.6 per cent since the start of the year.