Prime US REIT - DBS Research 2024-08-14: The Tide Is Turning

• Prime US REIT (SGX:OXMU) reported 1H24 gross revenue and net property income of US$73.5 mn (-8.0% y-o-y, -9.0% h/h) and US$40.6 mn (-14% y-o-y, -13% h/h), respectively. This was mainly due to a drop in contribution from One Washingtonian Center (OWC), which was undergoing asset enhancement initiatives.
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Distributing 10% of distributable income

• The manager has declared a 0.18 US cents Prime US REIT's distribution, which approximates ~10% of the distributable income of 1.78 US cents per unit on a 100% basis.
• The manger has also competed the strategic sale of One Town Center for US$ 82 mn, where proceeds will be deployed to improve liquidity, pare down of debt and provide for capital uses.

Refinancing relief.

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• Post refinancing, Prime US REIT’s pro-forma gearing is at ~46%, while below MAS’ leverage limit of 50%, is at the upper bound of peers and is at a comfortable level. This means that the manager will likely stay with an asset recycling strategy, with an aim to bring gearing down to < 45%.

Stock likely has seen the worst times, upgrade to HOLD

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Derek TAN DBS Group Research | Dale LAI DBS Research | https://www.dbs.com/insightsdirect/ 2024-08-14 SGinvestors.io

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