Prime US Reit Q1 net property income down 7.2% to US$23.6 million

PRIME US Reit posted a 7.2 per cent fall in net property income to US$23.6 million for its first quarter ended Mar 31, 2023, from US$25.4 million the year before.

Gross revenue for the quarter dropped 1.7 per cent to US$40.2 million, from US$40.8 million, said the real estate investment trust (Reit) manager in a business and operational update on Wednesday (May 10).

Distributable income in Q1 slipped 22.5 per cent to US$14.9 million, from US$19.2 million in the year-ago period.

In terms of leasing activity, Prime US Reit booked a total of 64,400 sq ft leased at a negative rental reversion of 2.6 per cent, impacted by two renewals requiring minimal upfront capital expenditure, but with positive net effective rent reversion.

The Reit’s portfolio has a weighted average lease expiry of 3.9 years, with a debt headroom of US$200 million at a leverage limit of 43.7 per cent.

In its update, the Reit manager said it has a “well-diversified portfolio, both in terms of assets and cities”, and strategic footprints in “non-gateway affordable cities with individual merits”.

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Prime US Reit DPU down 3.4% to US$0.0655

It noted that rent growth continues to be positive, albeit with increased lease incentives amid relative scarcity of high-quality direct space.

The manager also identified move-in ready spaces as an “increasingly attractive” asset, given the reluctance of both sublessors and landlords to fund the upfront capital expenditure associated with build-outs.

Units of Prime US Reit closed at US$0.235 on Wednesday, down US$0.005 or 2.1 per cent.