Prime US Reit H1 DPU down 5.4% on higher expenses

PRIME US Reit, which has a portfolio of office properties in the US, posted a distribution per unit of 3.33 US cents for the six months ended June. This is 5.4 per cent lower than a year ago, which it attributed to its being weighed by higher property expenses, the Reit manager said on Tuesday.

Taking into account the private placement launched on June 24, Prime US Reit announced a cumulative distribution of US 3.42 cents for the period from Jan 1 to July 5.

The Reit's H1 gross revenue inched up 1.2 per cent to US$72.1 million, boosted by half-year contributions from Park Tower, which was acquired in February last year. However, net property income fell 2.3 per cent to US$46.3 million, weighed by higher property expenses, such as increase in property taxes for 101 South Hanley.

Overall, distributable income stood at US$35.4 million, down 1.3 per cent. The Reit had a gearing of 34.4 per cent as of end-June, while interest coverage was 5.8 times.

Prime US Reit achieved a portfolio occupancy of 91.7 per cent in H1, with a weighted average lease expiry of 4.1 years. Rent collections stood at 99.6 per cent in Q2 this year. That quarter, it executed over 52,000 sq ft of mainly long-term leases, at positive rental reversion of 10.5 per cent.

The Reit signed new leases with financial services and government tenants such as Deloitte, the Commission on State Mandates, EDJ Leasing and FCI Lender Services.

The focus is now on renewing leases and executing new ones to address remaining expiries this year, the Reit manager said in Tuesday's filing. It added that there is "ample debt headroom" of US$458.5 million and US$200 million of undrawn facilities.

The manager is also optimistic about macroeconomic conditions with "vaccination rates rising and increased consumer activity". The acquisitions of One Town Center and Sorrento Towers are also expected to contribute positively to portfolio performance in H2.

Barbara Cambon, chief executive of the Reit manager, said: "We believe non-gateway markets will continue to provide superior risk-adjusted returns, and the extension of our presence into key growth markets and sectors presents significant future growth opportunities for us."

She added that Prime US Reit aims for inclusion in the FTSE EPRA NAREIT index.

Units of Prime US Reit closed flat at US$0.84 on Tuesday.