Keppel Pacific Oak US REIT - RHB Invest 2024-02-16: Sharp Near-Term Pain For Long-Term Gain; BUY

• Keppel Pacific Oak US REIT's shock announcement of suspending distributions resulted in a steep 40% fall in share price yesterday. We see this dividend payment cut as a short-term pain in order to better preserve long-term value, especially with resilient operational income.
• - Read this at SGinvestors.io -

Distributions to be used to fund capex in order to maximise NPI.

• Keppel Pacific Oak US REIT (SGX:CMOU) will suspend distributions starting from 2H23 until 2H25. The withheld amount would be primarily used to fund its planned capex of US$60m in FY24 and US$50m for FY25.
• - Read this at SGinvestors.io -

No other feasible ways to fund raise

• While various options to raise capital such as raising equity, divestments or securing new debt were considered, none were feasible due to the current challenging market conditions. Management remains open to the above options should these arise in future – which may lead to the early resumption of divdend payments
• Keppel Pacific Oak US REIT’s strategy in the current market is to continue to reinvest strategically, to stay relevant to current and prospective tenants.

Portfolio valuation declined by ~7%

• Read more at SGinvestors.io.

Vijay Natarajan RHB Securities Research | https://www.rhbgroup.com/ 2024-02-16 SGinvestors.io

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