Prime US REIT (SGX:OXMU)’s 3Q25 results were broadly in line. The recent equity fundraising to fund growth capex positions it well to capture increased leasing momentum, despite coming at a cost to existing unitholders.
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Payout ratio to be raised to at least 50% from 2H25.
The move comes on the back of improved leasing/cashflow visibility and strengthened balance sheet from the recent US$25m equity fundraising. The proceeds have been used to repay debt, bringing gearing down to 44.9% (from 46.6%).
Capex is expected to remain high at ~US$40m for FY25-FY26F due to tenant incentives and planned asset improvements. We have pencilled in 50% and 60% payouts for FY26 and FY27F, translating to ~7% and 10% dividend yield.
Portfolio occupancy to reach ~85% by year-end
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Management continues to see good leasing interest for Class-A assets in the majority of its submarkets and is confident of moving portfolio occupancy closer to 90% by end-2026.
For 3Q25, portfolio occupancy improved by 0.5 ppt q-o-q driven by occupancy improvements at 222 Main, Promenade II & II and Waterfront at Washingtonian, partially offset by a tenant vacate at The 101, St. Louis. Rent reversion was +14.5% in 3Q25 (2Q25: +4.3%), indicating the new lease signings are not at the expense of rents but rather a function of improving demand.
Cashflow from majority of new leases signed will kick in from 2H26
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Above is an excerpt from a report by RHB Securities Research. Clients of RHB may be the first to access the full PDF report @ https://www.rhbtradesmart.com/.
