Prime US REIT - Phillip Securities 2025-02-25: Unexpected Rise In Portfolio Valuations

• Prime US REIT's distributions of 0.11/0.29 US cents for 2H24/FY24 (-52%/-88% y-o-y) were below expectations at 33%/88% of our FY24e forecast. The y-o-y decline was due to:
  1. - Read this at SGinvestors.io -
  2. the divestment of One Town Center in July 24,
  3. Waterfront at Washingtonian’s asset enhancement initiative (AEI), and
  4. higher finance expenses.
• 2H24/FY24 distributable income was 36%/93% of our FY24e forecast.
• Portfolio valuations rose 2.2% y-o-y to US$1.352bn, driven by stronger operating performance and positive leasing momentum, despite a slight increase in cap and discount rates. FY24 leasing volume grew 1.9% y-o-y, with leases signed at a 1.8% positive rental reversion.
• We lower our FY25e/26e DPU estimates by 21%/20% to reflect a lower NPI margin, aligning with FY24 levels as we roll forward our forecasts. Assuming a 10% payout ratio, the current Prime US REIT's share price implies an FY25e DPU yield of 1.7%.

The Positive

Positive leasing momentum.

• - Read this at SGinvestors.io -
• Notable lease singings are expected at Park Tower, Waterfront at Washingtonian, and Village Center Station I in the coming months, which should help increase portfolio occupancy from the current 80%. These three assets have occupancy rates ranging from 48.7% to 65.5%.

Portfolio valuations were a pleasant surprise.

• Read more at SGinvestors.io.

Darren Chan Phillip Securities Research | https://www.poems.com.sg/ 2025-02-25 SGinvestors.io

---