Prime US Reit Q1 net property income up 10.4% to US$25.4m, as leasing activity more than doubles

Prime US Reit : OXMU 0% posted net property income of US$25.4 million (S$35.2 million) for the first fiscal quarter ended Mar 31, 2022, up 10.4 per cent from US$23 million in the corresponding quarter last year.

Leasing activity more than doubled, with renewals constituting a majority of this leasing activity. All in, 171,747 sq ft of leases were executed in the quarter at a positive rental reversion of 3.4 per cent, said the real estate investment trust (Reit) manager in its key business and operational update on Wednesday (May 11).

Gross revenue for the quarter rose 13.6 per cent to US$40.8 million from US$35.9 million.

Distributable income for Q1 2022 rose 19 per cent to US$20.9 million from US$17.6 million, on the back of contributions from its 2 new assets — Sorrento Towers in San Diego, California, and One Town Center in Boca Raton, Florida. The Reit has 14 Class-A freehold office properties in 13 US office markets.

The Reit’s well-diversified portfolio occupancy remained resilient at 89.9 per cent, and maintained strong rent collections of over 99 per cent for the quarter with no deferrals, its manager noted.

Prime US Reit’s portfolio has a weighted average lease expiry (Wale) of 4.2 years, and a valuation of US$1.66 billion. The Reit’s gearing ratio stands at 39.1 per cent, with a debt headroom of US$371 million at a gearing covenant limit of 50 per cent.

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Upcoming lease expiries are well-spread across the portfolio, thus reducing single-asset exposure, the manager said.

In its update, the manager also noted that expectations are now centred around a more gradual return to schedule in workplaces.

The Reit continues to actively explore accretive acquisition opportunities in non-gateway and key US office markets with the right risk-reward profile, economic and employment growth prospects, and favourable attributes such as diverse talent pools, highly educated workforces, and reliable transportation infrastructure, it added.

Barbara Cambon, chief executive officer and chief investment officer of the manager of Prime US Reit, said: “Prime’s income resiliency continues to be underpinned by our diversified portfolio in favourable US office markets with strong economic and investment characteristics, and our focus on key growth technology and established industry sectors.”

The Reit will continue to pursue accretive acquisitions and attract prospective tenants in growth-oriented urban centres, and remains committed to delivering long-term sustainable growth to unit holders and supporting tenants’ long-term workspace needs, Cambon added.

Units in Prime US Reit closed at US$0.725 on Wednesday, up 2.1 per cent or US$ 0.015, before the announcement was made.