Keppel Pacific Oak US Reit posts 8.4% rise in Q3 distributable income

OFFICE-FOCUSED Keppel Pacific Oak US Reit (KORE) said its third-quarter distributable income rose 8.4 per cent to US$15.9 million on the back of recent acquisitions and stronger performance from its portfolio.

The acquisitions of Bridge Crossing in Nashville, Tennessee, and 105 Edgeview in Denver, Colorado, were completed in August. Both office buildings have 100-per-cent occupancy.

Net property income (NPI) rose 5.6 per cent to US$21.7 million as gross revenue increased 4.5 per cent to US$36 million for the three months to Sep 30.

KORE's aggregate leverage stood at 37.7 per cent, with no long-term refinancing requirements until November 2022, the manager said in a business update. The weighted average term to maturity of its debt was 2.5 years.

Portfolio weighted average lease expiry by cash rental income was 3.4 years, while committed occupancy stood at 91.8 per cent as at the end of September.

Rental reversion for the nine months ended Sep 30 was 8.3 per cent.

The manager said KORE's buildings and business campuses in the tech hubs of Seattle, Austin and Denver contribute 62 per cent of NPI (including non-cash items).

It believes the strategic exposure to tech hubs and tech-tenancy provides income resilience as businesses accelerate their digital-transformation strategies.

About 43 per cent of the portfolio by net lettable area comprises tenants from the "growing and defensive sectors" of healthcare and technology, advertising, media and information.

KORE's top 10 tenants, the majority of which are established tech companies, contribute 22 per cent of cash rental income, the manager added. It said the office market space is seeing employees ease back into working in the office; demand for office space hit a 15-month high in August.

The counter closed at US$0.795 on Oct 27, down 0.63 per cent or US$0.005.