Prime US REIT - RHB Invest 2024-05-21: Clearing The First Major Hurdle; BUY

• Prime US REIT (SGX:OXMU)’s divestment of One Town Center (OTC) is a positive step, in our view, even though it is being sold at slight discount to valuation. The move will lower gearing and provide additional capital buffer against further asset value declines.
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The divestment of One Town Center (OTC).

• The divestment of One Town Center (OTC) in Boca Raton, Florida, to Miles Capital for a sale price of US$82m (excluding sellers’ credit of US$4m) is a ~3% discount to end-Dec 2023 valuation of US$84.8m and ~18% discount to its purchase price (Jul 2021) of US$100m. The divestment is set for completion by July with the proceeds used to repay debts.
• While OTC is one of Prime US REIT’s core and better-performing assets (6% of total asset value) with near-full occupancy, the divestment is crucial and timely, in our view, helping to address gearing concerns that will be reduced to 45.8% from 48.4% as at end 2023.
• - Read this at SGinvestors.io -
• With this divestment, we believe Prime US REIT can adopt a wait-and-watch approach before considering more asset sales to maximise asset values. This divestment will result in a 2% reduction to pro-forma FY23 net asset value or NAV and distributable income.

The refinancing of Jul 2024 debt is in advanced stages.

• Read more at SGinvestors.io.

Vijay Natarajan RHB Securities Research | https://www.rhbgroup.com/ 2024-05-21 SGinvestors.io

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