US reits in play today

The Reit&rsquo s manager is cautiously optimistic about return-to-office mandates &ldquo gaining momentum&rdquo

 

PRIME US Reit : OXMU -0.58%, which focuses on office buildings in the US, saw its distribution per unit (DPU) fall 51.6 per cent to 0.11 US cent for the six months ended Dec 31. This comes as its manager continues to retain funds to meet expenses.

 

The Reit&rsquo s H2 distribution to unitholders is US$1.4 million, or about 10 per cent of the distributable income &ndash similar to the year-ago period.

 

The manager seeks to &ldquo preserve a substantial proportion of distributable income to meet Prime&rsquo s capex needs and reinvest cash flows in the business&rdquo , the Reit said in a statement on Wednesday (Feb 19).

 

Revenue for the half year fell 16 per cent to US$67.5 million. This was due to its divestment of the One Town Center property in Boca Raton, Florida, last July, and lower contributions from Waterfront at Washingtonian in Gaithersburg, Maryland, which was undergoing asset enhancement initiatives during the year.

 

As a result, Prime US Reit&rsquo s net property income (NPI) was down 23.7 per cent at US$35.4 million. Its income available for distribution was nearly halved from the previous year, to US$14.8 million.

 

Key points

 

H2 FY2024

 

Revenue: US$67.5 million (-16%)

 

Net property income: US$35.4 million (-23.7%)

 

Distribution per unit: 0.11 US cent (-51.6%)

 

For the full year, the Reit&rsquo s DPU was down 88.2 per cent at 0.29 US cents.

 

This came as revenue fell 11.8 per cent to US$141 million, while NPI was down 18.8 per cent at US$76 million.

 

The Reit continues to adopt a &ldquo prudent approach&rdquo to keeping debt ratios within required regulatory thresholds, said its manager.

 

Its leverage stood at 46.7 per cent as at Dec 31, following refinancing and divestment exercises during the year.

 

Prime US Reit recorded a leased occupancy rate of 80 per cent, with lease signings rising 1.9 per cent in FY2024. Its weighted average lease expiry rose to 4.4 years, up from four years in the year-ago period.

 

The Reit also enjoyed &ldquo good leasing momentum&rdquo in several of its assets, and &ldquo sizable&rdquo potential new leases in locations such as Sacramento, Maryland and Denver.

 

&ldquo With return-to-office mandates gaining momentum, office leasing volume has established a new post-pandemic high,&rdquo the manager said, adding that it remains &ldquo cautiously optimistic&rdquo .