The REIT then aims to grow its distributions in “future years” until it gets “back up somewhere, up into that 80% to 90% range over time,” Snyder continues.
KORE, on July 29, reported that its distributable income for the 1HFY2025 ended June, fell by 16.2% y-o-y to US$19.9 million ($25.6 million). No distribution was declared, as they are supposed to be suspended till Dec 31 this year. On Feb 15, 2024, KORE announced that it would suspend its distributions through 2HFY2025 that would otherwise be paid in 1HFY2026.
While the REIT remains “on target” for its 1HFY2026 deadline, Snyder floated the possibility of restarting its distributions earlier depending on its refinancings. “If that’s all done early, then, yeah, there still remains the possibility that we could restart a bit early.”
On the leasing front, KORE’s portfolio committed occupancy fell to 88.2%, down from 89.1% as at end-March this year and 90% as at end-December last year. As at end-June last year, KORE’s portfolio occupancy stood at 90.7%.
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Although this was “slower” than Snyder had hoped, he explains that this was attributed to the portfolio’s “known vacates” of about 177,000 sq ft or 3.6% of the REIT’s net lettable area (NLA), although the rate still stands above the average US rate of about 84% of occupancy compared to the “big boys” like SL Green Realty Corp, a REIT mainly focused on Manhattan commercial properties. He adds that one of the known vacates is Meta at its Westpark Portfolio in Redmond. However, the REIT already has two clients who have already “expressed interest” in that space.
Snyder also sees the US market strengthening, with tenants looking to renew and lock in their new lease rates now instead of waiting for their leases to expire three to four years later with lease rates potentially “going to be worse”.
“We're seeing that we got one of our significant tenants that's pushing on us on that front as well right now. So it's an interesting time. Things are definitely, across the board, feeling better and stronger than they have,” says Snyder, who adds that the second half of the year is expected to see better leasing rates for the REIT.
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On refinancing its loans maturing in the fourth quarter this year and in 2026, See Ai Lin, head of finance of KORE’s manager, says the REIT is “in active discussions” with the banks and its existing lenders. The REIT is also in the midst of finalising “some of the terms for some of them,” she shares. See was appointed to her current position on June 16 when Gwee left his position as chief financial officer (CFO) to join Keppel. See had worked with Gwee previously and was responsible for overseeing KORE’s accounting and financial reporting under the former CFO.
As at June 30, KORE’s aggregate leverage stood at 43.7%, up from the 42.7% reported as at June 30, 2024. The REIT’s interest coverage ratio was 2.5 times as at June 30, 0.4 times lower y-o-y. According to the REIT, every 50 basis point change in the Secured Overnight Financing Rate (SOFR) will affect around US$0.89 million in distributable income. Excluding uncommitted revolving credit facilities, 75.3% of the REIT’s loans have been hedged through floating-to-fixed interest rate swaps. About 20% of the hedge expires in 3Q2025.
Units in KORE closed 1 US cent lower or 4.35% down at 22 US cents on July 29.
