Prime US REIT - RHB Invest 2023-08-11: Signs Of Bottoming Emerge; Keep BUY

• Prime US REIT’s 1H23 DPU is largely in line. While its occupancy rate fell q-o-q, assets are still broadly outperforming comparable peers amid a challenging market.
• Key market concern lies on Prime US REIT's ability to refinance major debts (maturing in Jul 2024) and a potential breach in financial covenants. However, with small green shoots emerging – the US’ economic recovery and return-to-office trend – we believe refinancing is still likely.
• - Read this at SGinvestors.io -

1H23 DPU plunged 30% y-o-y

• Prime US REIT (SGX:OXMU)'s 1H23 DPU plunged 30% y-o-y on higher interest expenses, lower operational income from the occupancy rate decline, and higher operating expenses. See Prime US REIT's distribution date. Management fees were fully paid in cash, excluding which, DPU would have fallen 24% y-o-y.
• - Read this at SGinvestors.io -
• Prime US REIT recently extended its US$400m debt by a year to Jul 2024, with no debts maturing until then. Management said its current focus is stabilising and improving the portfolio occupancy rate, which should help secure refinancing. About 80% of Prime US REIT’s debt remains hedged, and we think financing costs will likely peak in 2H.

We expect portfolio occupancy to trough at ~80% levels.

• Read more at SGinvestors.io.

Vijay Natarajan RHB Securities Research | https://www.rhbgroup.com/ 2023-08-11 SGinvestors.io

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