Prime US REIT - Phillip Securities 2024-11-18: Improving Leasing Volumes

• Prime US REIT's 3Q24/9M24 distributable income, down 42.2%/27.6% y-o-y, was in line with our expectations and formed 21%/77% of our FY24e estimates.
• 3Q24 distributable income fell 42.2% y-o-y due to:
  1. - Read this at SGinvestors.io -
  2. divestment of One Town Centre,
  3. AEI works at Waterfront at Washingtonian, and
  4. higher finance expenses from RCF drawdowns to fund CAPEX, along with higher interest costs.
• Leasing volume spiked 116% q-o-q in 3Q24, with a gross rental reversion of +6.5% for the quarter. Excluding Waterfront at Washingtonian, which completed its AEI in October 2024 and is currently 40.2% leased, portfolio occupancy fell by 0.9ppts q-o-q to 83%.
• We maintain BUY with a lower Prime US REIT's target price of US$0.20 from US$0.22. Assuming a 10% payout ratio, the current Prime US REIT's share price implies an FY24e DPU yield of 2.1%.

The Positive

Leasing volume spiked 116% q-o-q in 3Q24.

• - Read this at SGinvestors.io -
• An additional 10% of occupancy is expected to be leased by year-end for this property, with leasing discussions ongoing for another large tenant.
• Separately, Prime US REIT's management indicated that they are in major discussions with four large tenants who are looking for at least 60k sq ft of space.

The Negative

Aggregate leverage increased to 47.8% due to the drawdown of RCFs to fund CAPEX.

• Read more at SGinvestors.io.

Darren Chan Phillip Securities Research | http://www.poems.com.sg/ 2024-11-18 SGinvestors.io

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