Keppel Pacific Oak US Reit posts 16.1% rise in distributable income for Q1

KEPPEL Pacific Oak US Reit (KORE) on Monday posted a 16.1 per cent increase in its distributable income to US$14.4 million for the first quarter this year, up from US$12.4 million a year ago.

Net property income grew 15.4 per cent to US$21 million from US$18.2 million, as gross revenue climbed 20.1 per cent to US$35.3 million, from US$29.4 million for the year-ago period.

These were largely due to contributions from the real estate investment trust's (Reit) One Twenty Five asset in Dallas, Texas, which was acquired in November 2019, as well as positive rental reversions from leasing done last year, KORE noted.

The Reit has adopted half-yearly announcement of its financial statements, and published these figures as part of its key business and operational updates for Q1. Its next financial results announcement will be for the half-year ended June 30, 2020.

For the first three months this year, the Reit manager leased 104,000 square feet of space, mainly in Seattle, Atlanta and Houston. This was equivalent to about 2.2 per cent of KORE's total portfolio, bringing its portfolio committed occupancy by net lettable area to 94 per cent, as at March 31, 2020.

As part of its leasing updates, KORE noted that all buildings will remain open to tenants operating during Covid-19. It added that it will continue to monitor the situation actively and that it has implemented protocols that prioritises the safety of its employees and the communities involved.

KORE's overall portfolio recorded a positive rental reversion of 12 per cent for Q1. In addition, the Reit has 6 per cent of leases due for renewal for the rest of the year.

As at March 31, 2020, the weighted average term to maturity of KORE's debt was 2.9 years, with an all-in average cost of debt of 3.53 per cent per annum. Aggregate leverage and interest coverage ratios were 36.9 per cent and 4.2 times respectively.

Separately, KORE added that the finalisation of tax regulations in the US will see savings for the Reit and its unitholders.

With effect from April 16, 2020, KORE has reverted to a structure which does not involve Barbados entities, largely following the structure it used when it was first listed. According to KORE, had the restructuring been completed on Jan 1, 2019, its distributable income of US$50.8 million for FY2019 would have increased by about 1.5 per cent.

As at 1.18pm on Tuesday, units in KORE were trading at US$0.56, down US$0.02 or 3.5 per cent.