Prime US REIT has declared a distribution of 0.12 US cents (0.15 cents) per unit for 1HFY2025 ended June 30, maintaining a 10% payout ratio of distributable income. This is up slightly from distribution per unit (DPU) of 0.11 US cents in 2HFY2024.
In an Aug 12 announcement, the manager of the US office REIT says the capital retained is allocated to prepare for approximately 440,000 sq ft of new leases, equivalent to 10.5% of portfolio occupancy.
According to the manager, rental cash flows will commence on a staggered basis “as early as 3Q2025 onwards”, with majority of the space commencing only in FY2026. “This deployment is expected to drive meaningful yield expansion as these leases transition from rent-free periods to contributing income.”
Prime US REIT began retaining capital from the release of its results for 2HFY2023. Then, it elected for a 1-for-10 bonus issue in addition to a cash distribution of 0.25 US cents, or about 10% of its distributable income for the half-year.
During 1HFY2025, Prime US REIT recorded net property income (NPI) of US$35.8 million, up 1.1% h-o-h, while distributable income rose 12.3% h-o-h to US$16.7 million.
Prime US REIT’s performance is being presented h-o-h owing to the divestment of One Town Center, which was completed on July 10, 2024.
See also: RHB raises target price for Prime US REIT to 23 US cents on resilient office market
In 1HFY2025, Prime US REIT secured 400,000 sq ft of leases, up 24% h-o-h. The leases have annual rent escalations of 2% to 3% and achieved positive rental reversion of 3.4%.
Portfolio occupancy climbed to 80.2% as of June 30, and the portfolio’s weighted average lease expiry (WALE) has extended to 4.7 years from 4.3 years at end-March.
In June, Prime US REIT signed a new 11-year lease of “minimum 120,000 sq ft” at the rebranded Waterfront At Washingtonian, one of the 13 freehold, Class A office properties in its portfolio.
This new anchor lease, together with earlier leasing activities, had brought Waterfront At Washingtonian to above 85% occupancy, up from 33% prior to the building renovations.
The deal follows a new 43,000 sq ft lease signed in the middle of June at another asset in the portfolio, Village Center Station I, with a global engineering and consultancy firm that is also a new tenant at Waterfront At Washingtonian.
As at June 30, Prime US REIT’s aggregate leverage stands at 46.7%, with a US$95 million debt headroom until aggregate leverage reaches 50%.
The weighted average interest rate is 5.4%, while the interest coverage ratio is 1.7 times.
Out of US$663 million in gross borrowings, Prime US REIT has no debt maturing in 2025, US$70 million due in 2026, US$488 million due in 2027, no debt due in 2028 and US$105 million due in 2029.
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Some 66% of loans are fixed or hedged, with 50% until 2026 and 16% until 2029.
Prime US REIT closed 0.1 US cents higher, or 0.58% up, at 17.4 US cents on Aug 12.
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