Keppel Pacific Oak US Reit H2 DPU up 4% to 3.13 US cents

KEPPEL Pacific Oak US Reit (KORE) posted a distribution per unit (DPU) of 3.13 US cents for the second half of its fiscal year ended December, up 4 per cent from 3.01 US cents in the corresponding period last year.

This lifts the Reit's DPU for FY 2020 to 6.23 US cents, some 3.7 per cent higher than 6.01 US cents in FY2019.

Distributable income for the period rose 13.4 per cent year on year to US$29.5 million from US$26.0 million last year.

The Reit said the increase was driven primarily by contributions from its property One Twenty Five in Dallas, Texas, which was acquired in November 2019, as well as from its proactive efforts to drive leasing, built-in rental escalations and positive rental reversion across the its portfolio.

Gross revenue for H2 increased by 7.7 per cent to US$69.1 million from US$64.2 million in the year-ago period. Again, KORE said this was due to the One Twenty Five property, which contributed six months' worth of revenue to H2, up from two months in the corresponding period last year.

KORE added that recoveries income was also higher as a result of higher recoverable property expenses.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

Property expenses for the period rose 9.4 per cent to US$28.0 million from US$25.6 million last year, due to higher expenses incurred from One Twenty Five, as well as higher year-o-year property taxes and other property expenses for the Reit's existing portfolio.

Consequently, net property income for H2 rose by 6.6 per cent to US$41.1 million from US$38.6 million in H2 FY 2019.

In FY 2020, KORE committed approximately 367,000 sq ft of office space, equivalent to about 7.8 per cent of its total portfolio by net lettable area (NLA).

Committed occupancy of the its portfolio stood at 92.3 per cent as at end-December 2020, and its rental reversion for FY 2020 was 10.2 per cent.

The weighted average lease expiry by cash rental income (CRI) for KORE's portfolio was 3.8 years. The Reit added that its tenant concentration risk remains low, with the top 10 tenants accounting for only 20.2 per cent of CRI.

In its outlook statement, KORE's manager said its suburban office buildings and business campuses are well positioned to benefit from this potential shift away from downtown and central business district locations, given that businesses are re-evaluating their space needs.

The manager added that the Reit's exposure to historically fast-expanding tech hubs provides further income resilience, as businesses accelerate their digital-transformation strategies driven by the pandemic.

Units in KORE closed at 71 US cents on Wednesday, up 0.7 per cent or 0.5 US cent.