Prime US Reit posts H2 DPU of 3.42 US cents

A RECENTLY-ADDED property and a pick-up in leasing momentum have buoyed office-focused Prime US Reit results amid the pandemic. The Reit posted a distribution per unit (DPU) of 3.42 US cents for H2 ended December 2020. This is 8.4 per cent higher than the comparable period in 2019, from its July 19 listing date to the year-end.

Prime US Reit's portfolio was "highly resilient" in FY2020, said its manager, with full-year DPU coming in at 6.94 US cents, 3.6 per cent higher than its IPO forecast.

The Reit recorded US$72.4 million in gross revenue and US$47.5 million in net property income (NPI) for H2, higher than the comparable year-ago period by 19.3 per cent and 18.3 per cent respectively.

The H2 performance was boosted by contributions from Park Tower, which it acquired in February last year, although it was partially offset by declines in parking revenues.

The Reit's distributable income came in at US$36.2 million for H2, 24.1 per cent higher than the year-ago period. This was boosted by lower interest costs and other trust expenses.

For FY2020, the Reit recorded US$143.6 million in gross revenue and S$95 million in NPI. Distributable income stood at US$72.1 million, 15.6 per cent higher than forecast. Based on Prime US Reit's closing price as of Dec 31, its DPU yield was 8.8 per cent.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

In a commentary accompanying the results, Prime US Reit said that its portfolio remained resilient, with average collections of 99 per cent for the year and "minimal" rental deferrals. The portfolio occupancy was 92.4 per cent as at December 2020.

Leasing momentum had also picked up in H2, with 142,673 sq ft leased at an 8.7 per cent rental reversion. Overall FY2020 leasing volume stood at 225,222 sq ft, with a positive rental reversion of 7.2 per cent.

Uncertainty remains as tenants continue to review their requirements and flexible working arrangements, the Reit manager noted. Nevertheless, it believes that Prime US Reit can benefit from a "flight to quality" among tenants to its "well-located and highly amenitised" assets.

The Reit will look to grow through "accretive acquisitions opportunities", said Barbara Cambon, chief executive of the Reit manager. It is also aiming for inclusion in the FTSE EPRA NAREIT index.

"Our strategy to build a well-diversified portfolio in favourable US office markets, and our focus in the technology and established industry sectors, continues to underpin our success and demonstrates Prime's diversity and income resiliency in these uncertain times," she said.

"As tenants gradually return to the office, our experienced asset management team continues to employ technological solutions to assist existing tenants in office planning as well as to enhance Prime's leasing prospects."

The Reit's gearing stood at 33.5 per cent as at end-2020, and it has a fully extended debt maturity of 4.6 years. Its effective interest rate on borrowings was 2.7 per cent, with an interest coverage ratio of 5.8 times as of end-2020.

Units of Prime US Reit closed at US$0.81 on Wednesday, up 1.25 per cent.