Prime US REIT (SGX:OXMU) reported a FY24 DPU of 0.29 US cents (-88% y-o-y), in line with expectations. The drop was mainly due to the manager retaining a significant portion of its distributable income (~90%) for capital expenditure and debt reduction.
Results in line with projections.
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Distributable income in 2H24 was lower, at US$14.8mil (-48.1% y-o-y) due to higher interest costs, which rose by 46% y-o-y following Prime US REIT’s debt refinancing in mid-2024.
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Overall NAV remained stable.
We were pleasantly surprised by Prime US REIT’s portfolio valuations, which rose by +2.2% y-o-y to US$1,352mil (but after taking into account capital expenditure, a fair value loss was recorded). Gearing remained stable at ~46.7%, resulting in a stable NAV of US$0.55 per Prime US REIT unit.
While we understand that a rise in cap rates and discount rates was seen in the latest round of valuations, we saw divergent valuation performance, which we believe was driven by cashflow improvements on a y-o-y basis.
Notably, we saw the valuation of properties like Reston Square rising by ~+21%, The 101 (St Louis) by +11.5%, and Tower 909 (Dallas) by +16.4% y-o-y, mainly driven by stronger cashflow visibility on the back of robust leasing activity and longer leases signed at these properties.
Similarly, lower vacancies and market comparisons drove valuations for Park Tower (-9.8%) and Village Center Station 1 (-9.0%) lower.
Improving leasing momentum.
Read more at SGinvestors.io.
Above is an excerpt from a report by DBS Group Research. Clients of DBS may access the full PDF report @ https://www.dbs.com/insightsdirect/.
