Kore’s distribution halt reflects Reits’ ‘original sin’ of needing constant access to capital to exist
Every Reit has a certain amount of debt that is refinanced from time to time, creating the risk of it being caught with too much leverage when market conditions weaken
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THE frightening thing about Keppel Pacific Oak US Reit (Kore) suspending its distributions last week is that doing so was deemed necessary despite its relatively good operational performance.
For 2023, Kore reported a 1.9 per cent rise in revenue to US$150.8 million and a 2.2 per cent increase in net property income (NPI) to US$86.1 million.
Income available for distribution fell 13.8 per cent to US$52.2 million, though. The decline was partly attributable to higher financing costs, and partly to Kore’s manager receiving its base fee for the first quarter of 2022 in units rather than cash.
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