SINGAPORE (July 22): The manager of Keppel Pacific Oak US REIT (KORE) reported a distribution per unit (DPU) of 1.56 US cents for 2Q20 ended June, some 4.0% higher than its DPU of 1.50 cents in 2Q19.
This brings KORE’s 1H20 DPU to 3.10 US cents, 3.3% higher than the 3.0 US cents reported a year ago.
Gross revenue for the quarter registered a 20% y-o-y increase to US$35.2 million ($48.8 million), while gross revenue for the half year saw a 20.1% y-o-y increase to US$70.5 million.
The increase was primarily attributable to contributions from One Twenty Five, an office complex comprising two Class A buildings located in Dallas, which was acquired in November 2019.
New leases across the REIT’s portfolio and positive rental reversion from lease renewals signed in 2H19, as well as the built-in rental escalation in the portfolio also contributed to higher rental income.
Property expenses for 2Q20 increased 26.2% y-o-y to US$14.3 million. For 1H20, KORE’s property expenses rose 27.0% y-o-y to US$28.6 million due to the enlarged portfolio as well as higher y-o-y recoverable expenses such as repairs and maintenance, property management fees, and property taxes for the existing portfolio.
As a result, net property income (NPI) for 2Q20 rose 16.3% y-o-y to US$20.9 million, and rose 15.7% y-o-y for 1H20 to US$41.9 million.
KORE’s distributable income for 2Q20 rose 18.5% y-o-y to $14.7 million, and increased 17.6% y-o-y to US$29.1 million.
For 1H20, KORE continued to achieve strong rental reversion of 14.7%, driven mainly by the tech hubs of Seattle and Austin. At the same time, average rental collections for 1H 2020 was approximately 94% by cash rental income (CRI).
The REIT also committed approximately 196,000 sf of office space in 1H20, equivalent to about 4.2% of its total portfolio by net lettable area.
Most of the leasing activity occurred in Seattle, Atlanta and Houston.
As at June 30, KORE’s portfolio committed occupancy stood at 94.3%This brought KORE’s portfolio committed occupancy to 94.3% as at 30 June 2020, with only 2.8% of leases by CRI expiring for the remainder of the year.
The REIT’s weighted average lease expiry (WALE) by CRI for its portfolio and top 10 tenants as at June 30, stood at 4.1 years, and 5.2 years, respectively.
As at June 30, cash and cash equivalents stood at US$58.6 million.
Looking ahead, KORE’s manager says it remains “cautiously optimistic” of leasing performance in its key growth markets. It also remains focused on its long-term goal of delivering stable distributions and strong total returns for its unitholders.
Unitholders can expect to receive their distributions on September 24.
Units in KORE closed 0.5 cent lower, or 0.7% down, at 67.5 US cents on Wednesday, prior to the announcement.
