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Keppel Pacific Oak US Reit posts Q3 DPU of 1.5 US cents

KEPPEL Pacific Oak US Reit (KORE), previously known as Keppel-KBS US Reit, on Tuesday posted a third-quarter distribution per unit (DPU) of 1.50 US cents, unchanged from the same period a year earlier.

Distributable income for the three months ended Sept 30 was US$12.4 million, up 31 per cent from the third quarter last year and 23.3 per cent higher than what the Reit had forecast. 

DPU however came in below forecast, due to the rights issue completed on Nov 26 last year, which resulted in a larger unit base.

Gross revenue rose 34 per cent to US$30.4 million from the same period a year earlier while net property income rose 36.2 per cent to US$18.5 million.

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This was due mainly to contributions from the Westpark portfolio and Maitland Promenade I, which were acquired less than a year ago.

Net asset value per unit was US$0.77 as at Sept 30, down from US$0.80 as at Dec 31 last year.

Aggregate leverage was 38.5 per cent as at Sept 30.

Portfolio committed occupancy was 93.8 per cent as at Sept 30. The weighted average lease expiry by cash rental income for KORE's portfolio and top 10 tenants was 4.1 years and 5.6 years respectively.

The Reit manager said: "The US economy continued to stand on firm ground, growing 2 per cent in the second quarter of 2019... In its September Office National Report, CoStar reported a vacancy rate of 9.7 per cent, the lowest US office vacancy in more than a decade, following a solid rebound in absorptions and strong leasing activity."

It added that the tech sector remains a key driver of leasing demand, with the strongest increases occurring in markets such as Seattle and Austin.

"Asking rent rose 6.6 per cent in Austin and 6.2 per cent in Seattle, ranking them first and third respectively in terms of 12-month asking rent growth. Seattle and Austin make up approximately 50 per cent of KORE's portfolio cash rental income," the Reit said. 

Last month, the Reit manager announced the proposed acquisition of One Twenty Five, a Class A office complex in Dallas, Texas. The purchase consideration is US$101.5 million and the acquisition was approved by unitholders at an extraordinary general meeting on Tuesday.

With One Twenty Five in its portfolio, KORE will have a total of 13 freehold properties.

KORE units closed flat at US$0.755 on Tuesday before the results were released.

KORE declares its distributions semi-annually. No distribution was declared for the third quarter.