Prime US REIT - RHB Invest 2023-11-08: Navigating Challenging Times; BUY

• Key uncertainties for Prime US REIT (SGX:OXMU) are the extent of year-end valuation decline – for which we have pencilled in a ~10% drop – and the refinancing of its upcoming 2024 debt. Valuations are at distress levels (P/BV: 0.25x). We see room for upside once these hurdles are cleared.
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Occupancy likely to trough at ~80%

• Prime US REIT's occupancy likely to trough at ~80% with two known key tenant vacates – Sodexo (~5% of income) by end 2023, and Apache Corp (2.2%) by mid- 2024.
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• At One Washingtonian Center, where Sodexo will be vacating, plans are in place to modernise and refurbish the asset with a revamped lobby. The asset enhancement plans, coupled with good surrounding amenities, has drawn healthy interest, with the recent signing of a healthcare tenant (19k sq ft) with a long 11-year lease.
• Other assets undergoing upgrades include Tower 909 and Reston Square.

Focused on improving occupancy over rents.

• Read more at SGinvestors.io.

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

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