Higher Occupancy Level Drives KPREIT Q1 Earnings Growth

• Higher occupancy supported by recovery in operating territories bolstered KPREIT’s profitability. The company reported a 14.9% y-o-y increase in net profit for Q1 2022. 
• This was mainly supported by a 12.4% rise in rental income due to higher occupancy levels at its properties in Jamaica and the Cayman Islands, as well as increases in rents for some of its properties. The Group achieved near 100% occupancy by the end of the reporting period and continues to benefit from a solid tenant base of primarily entities that offer financial, warehousing and logistics, manufacturing, and government services. 
• In spite of higher operating expenses (+18.5%), the higher revenues had a net positive effect, which resulted in a 2.1p.p rise in the net operating margin. 
• We expect KPREIT’s financial performance to continue to improve as the company uses proceeds from its APO to reduce debt expenses and build new properties to generate more rental income. 
• KPREIT’s stock price has declined by 3.1% since the start of the calendar year to $8.72. The stock currently trades at a P/E of 11.9x, which is below the Main Market Real Estate Sector Average of 17.9x. The stock is however currently trading above its net asset value of $7.57.

(Source: Company Financials and NCBCM Research)