On 3 May 2024, Keppel Infrastructure Trust (“KIT”) announced their 2024 first quarter business update. Their distributable income for the quarter is sufficient to sustain their dividend payout. However, it has decreased significantly compared to the same period in the previous financial year. Without excess buffer from distributable income, this caused gearing to increase unfavorably as their balance sheet cash decreased with the payout in February 2024.

This is something investors will need to keep in mind as the reason KIT is able to distribute dividends that are not supported by earnings per unit is because distributable income adjusts for non-cash items. This is nothing new as other trusts such as NetLink NBN Trust (SGX: CJLU) and CapitaLand China Trust (SGX: AU8U) also do the same thing. For KIT, the total cash generated from operating activities in their FY2023 statement of cash flows amounted to SGD292 million, which is more