Keppel Pacific Oak US REIT (KORE) has reported an income available for distribution of US$11.9 million ($15.7 million) for the 3QFY2024 ended Sept 30, 8.8% lower y-o-y.
The lower distributable income stemmed from the REIT’s lower net property income (NPI), which also fell by 8.8% y-o-y to US$20.1 million mainly due to the lack of the one-off income in 3QFY2023 and higher property expenses in the 3QFY2024. The lower distributable income was also attributed to higher financing costs from the higher interest rates.
Gross revenue also fell by 2% y-o-y to US$37.6 million in the 3QFY2024.
For the 9MFY2024, distributable income fell by 8.8% y-o-y to US$35.7 million. Gross revenue fell by 2.0% y-o-y to US$112 million while NPI fell by 5.7% y-o-y to US$62.1 million.
As at Sept 30, KORE’s total debt stood at US$607.2 million of external loans, up from US$594.9 million as at Sept 30, 2023. The REIT’s aggregate leverage stood at 42.6% higher than last year’s 39.1% and interest coverage came in at 2.7 times, lower than last year’s 3.3 times.
The portfolio’s occupancy rates stood at 88.7% in the 3QFY2024, down from 90.7% in the quarter before and 91.4% in the year before. KORE’s portfolio weighted average lease expiry (WALE) of 3.9 years by cash rental income (CRI) and 3.7 years by net lettable area (NLA).
In its outlook statement, KORE says it continues to see strong leasing trends with more companies implementing an office attendance mandate. However, it still sees challenges in California namely a slowdown in the creation of jobs and higher business and housing costs from policies. The US office sales market also remains limited, which means financing is not readily available in the country yet.
“Well occupied properties are not receiving proper credit for tenancy and are seeing cap rates in the 8% - 9% range,” says KORE, while investors are adopting a “wait-and-see” approach due to interest rates.
As at 10.54am, units in KORE are trading 0.5 US cents lower or 1.89% down at 26 US cents.
