Keppel Land’s revenue for 1Q 2015 decreased by $6.5 million, or 2.3%, to $278.4 million compared with 1Q 2014, due mainly to lower revenue by the property trading segment.
The lower revenue from the property trading segment was largely a result of absence of revenue from The Lakefront Residences in Singapore as the project obtained temporary occupation permit (TOP) in May 2014 and lower revenue from Plot 2-2 of The Springdale in Shanghai which was completed in March 2014.
These decreases were partly mitigated by higher revenue from The Luxurie in Singapore and Phases 4 and 5 of 8 Park Avenue in Shanghai, as well as new revenue streams from Phase 1 of Seasons Residence in Shanghai and Phase 1 of Park Avenue Heights in Chengdu, which were both completed in December 2014. At pre-tax level, Keppel Land’s profit decreased by $22.7 million, or 20.2%, over that for the same quarter last year. After accounting for taxes and non-controlling interests’ share of profits, the Company’s net profit was $72.6 million, a decrease of 17.2% from the $87.7 million reported in 1Q 2014.
The decrease is also attributable to the absence of contributions from Equity Plaza and Marina Bay Financial Centre Tower 3 following the divestment in 2014. There was also higher net interest expense incurred for 1Q 2015 as a result of higher borrowings and lower capitalisation of interest expenses by the project development companies.
Earnings from overseas represented about 36.8% of the Keppel Land’s net profit compared with 30.4%for 1Q 2014.
Earnings per share for 1Q 2015 was 4.7 cents, down from 5.7 cents the previous year, while net asset value per share rose to $5.11 as at 31 March 2015, up from $4.95 as at 31 Dec 2014.
MODERATE HOME SALES IN WEAK MARKET
According to the Urban Redevelopment Authority’s flash estimates, Singapore’s private residential prices fell further by 1.1% in 1Q 2015 after a 1% decline in 4Q 2014. About 1,380 new private residential units were sold in 1Q 2015, lower compared with the 1,744 units sold in 1Q 2014.
In Singapore, Keppel Land sold more than 30 residential units in 1Q 2015, compared with about 50 units sold in the same period last year.
Overseas, the Company sold about 690 units in 1Q 2015, mainly from China and Vietnam. Sales were mainly from Seasons Park in Tianjin and Central Park City in Wuxi, China, as well as Estella Heights in Ho Chi Minh City, Vietnam.
During the quarter, Keppel Land continued to make acquisitions in the key countries it is focused on in Asia, as well as make opportunistic investments in global gateway cities.
In China, Keppel Land extended its strategic alliance with China Vanke to develop a 16.7-ha prime residential site in Chengdu.
This is the Company’s sixth project in the city and will further enhance its market presence.
In Indonesia, Keppel Land went on to acquire a second residential site in West Jakarta after the purchase of the first site in the same vicinity in 2014, strengthening its position in the capital city.
Outside Asia, Keppel Land acquired a freehold office building in central London in the UK. The investment will be managed by Alpha Investment Partners (Alpha), the Company’s private equity property fund management vehicle.
Keppel REIT achieved 100% committed occupancy at nine of its 11 properties in Singapore and Australia, bringing its overall portfolio occupancy to 99.3% as at end-March 2015.
Two of Alpha’s funds, Alpha Core Plus Real Estate Fund and AIB Alpha Japan Fund, divested two commercial buildings, namely Shiodome Plaza and Otowa East, in Tokyo, Japan, in 1Q 2015.
Total assets under management by Keppel REIT and Alpha, when fully leveraged and invested, stood at$18.7 billion as at end-March 2015.
The Company will remain focused on Asia, with Singapore and China as its core markets and Indonesia and Vietnam as its growth markets, while seeking opportunities in key global cities with strong potential for good returns.