KORE reports 11% increase in Q1 distributable income

OFFICE-FOCUSED Keppel Pacific Oak US Reit (KORE) : CMOU 0% said its first-quarter distributable income rose 10.9 per cent to US$16.6 million, up from US$14.9 million in the same period the year before.

In its Q1 FY2022 business update released on Tuesday (Apr 19), the real estate investment trust’s (Reit) manager also reported that gross revenue rose 6.9 per cent to US$37 million, up from US$34.6 million a year earlier.

Net property income (NPI) rose 6.7 per cent to US$21.7 million, up from US$20.4 million a year ago. NPI excluding non-cash straight-line rent, lease incentives and amortisation of leasing commissions rose 7.1 per cent to US$22 million.

KORE’s manager attributed this to the acquisitions of Bridge Crossing in Nashville and 105 Edgeview in Denver in August 2021. As at Mar 31, 2022, KORE has a portfolio committed occupancy of 91.7 per cent.

Additionally, it noted that its balance sheet remains strong, with an aggregate leverage of 37.5 per cent and no long-term refinancing requirements until November 2023. As at Mar 31, 2022, cash and undrawn facilities stood at US$85.1 million.

As for the Reit’s exposure to a potential rise in interest rates this year, the Reit manager said that every 50 basis points increase in the London Inter-Bank Offered Rate or Secured Overnight Financing Rate would translate to a decrease of 0.062 US cents in distributions per unit per annum.

The manager also expressed optimism in suburban markets in the US, as more companies appear to be expanding their footprints.

Sun belt markets such as Austin, Houston and Dallas in the state of Texas appear to be leading the return to the workplace as compared to other gateway cities.

The Kastle Systems back to work barometer showed that Austin’s workplace occupancy stood at 62.4 per cent, while Chicago and Philadelphia stood at 37.8 per cent each.

KORE’s properties in these areas include its Bellaire Park property in Houston and One Twenty Five property in Dallas. Both have project rental growth of 1.9 per cent and 3.1 per cent respectively.

Units of KORE closed up 1.4 per cent or US$0.01 at US$0.745 on Tuesday before the business update was made.