- We believe the increased uncertainties from US President Donald Trump’s tariffs policies and higher US recession odds have diminished the near-term US office demand recovery prospects. This, coupled with the lack of a clear visibility on dividend payout ratio and higher capex demand have dimmed the near-term catalysts for Keppel Pacific Oak US REIT despite trading at a huge above 70% discount to book value.
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Amended trust deed
- Amended trust deed provides Keppel Pacific Oak US REIT flexibility in determining distribution payout moving forward (between 0% and 100%) vs the previous 90% payout minimum. These changes were approved in the recent EGM with more than 97% votes.
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- Key factors that will determine payout ratio moving forward include asset valuations, capex, tenant incentive needs, and normalisation of financing conditions.
- Management has plans to restore a small payout, potentially earlier by end-2H25 if market conditions stabilise. We have currently assumed a dividend payout of 50%/60% for FY26/27F and none for FY25.
Portfolio occupancy remains relatively stable
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