Keppel Pacific Oak US REIT (KORE) has reported a distributable income of US$47.6 million ($64.7 million) for the FY2024 ended Dec 31, 2024, 8.8% lower y-o-y. Distributable income for the 2HFY2024 also fell by 8.8% y-o-y to US$23.8 million. The lower distributable incomes for both periods were due to higher finance costs and lower cash net property income (NPI).
The REIT announced in February 2024 that it would suspend distributions as part of its recapitalisation plans. The distributions will be resumed in FY2026.
As at Dec 31, 2024, KORE had 1,044,450,254 units in issue, unchanged from the year before.
For the full year, gross revenue fell by 2.9% y-o-y to US$146.4 million due to lower rental income and other operating income but offset by a slight growth in recoveries income.
Rental income fell by 4.2% y-o-y to US$101.5 million due to the reduction in non-cash amortisation of straight-line rent and lease incentives as a result of timing differences in leases completed for the respective periods. Other operating income was down by 10.3% y-o-y to US$3.8 million due to higher vacancies in The Plaza Buildings and Iron Point as well as lower carpark income from lower usage by construction workers from neighbouring developments at The Plaza Buildings in FY2024. Meanwhile, recoveries income grew by 1.3% y-o-y to US$41.1 million due to higher recoverable property expenses in FY2024.
In FY2024, property expenses increased by 5.4% y-o-y to US$68.1 million mainly from higher y-o-y costs related to repairs and maintenance, property management fees and other property-related expenses.
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As a result, net property income (NPI) for FY2024 fell by 9.1% y-o-y to US$78.3 million.
Finance expenses during the year also increased by 11.9% y-o-y to US$27.6 million mainly due to the higher interest rates on the unhedged portion of the loans as well as additional revolving credit facility (RCF) drawn down in 2023 to finance capital expenditures and tenant improvements spending.
During the year, KORE also saw a fair value loss in derivatives of US$7.2 million, compared to the fair value loss of US$9.4 million in FY2023.
In FY2024, KORE reported a net fair value loss of US$46.7 million mainly from The Plaza Buildings, Westmoor Center, Iron Point, Bellaire Park and Bellevue Technology Center. The decline was largely due to higher discount rates across the portfolio and partly offset by higher rental rates and occupancy for certain properties. Otherwise, the portfolio valuation during the year remained relatively flat, at US$1.33 billion as at Dec 31, 2024.
Overall, the REIT saw a net loss of US$6.9 million for FY2024, compared to a net loss of US$67.7 million in FY2023.
Cash and cash equivalents as at Dec 31, 2024, stood at US$44.2 million.
As at the same period, KORE’s portfolio occupancy stood at 90%, compared to 88.7% a quarter ago and 90.3% from a year ago. Portfolio weighted average lease expiry (WALE) stood at 3.8 years by cash rental income (CRI) and 3.5 years based on net lettable area (NLA).
Some 938,655 sq ft of leases, or 19.6% of portfolio NLA were signed in FY2024.
As at Dec 31, 2024, KORE’s aggregate leverage stood at 43.7% with an interest coverage ratio of 2.6 times. In 4QFY2024, KORE had refinanced a loan facility of US$20 million and conducted an early refinancing of a US$40 million loan facility that was due in 1QFY2025.
Units in KORE closed flat at 24 US cents on Feb 3.
