The manager of Prime US REIT has reported distributable income of US$17.6 million ($23.5 million) for the 1QFY2021 ended March, a 1.2% y-o-y dip from US$17.8 million the previous year.
The slight dip in distributable income follows gross revenue that grew 2.5% y-o-y to US$35.9 million, while net property income dipped 2% y-o-y to US$23 million.
In its business updated dated May 18, the manager says the REIT’s performance “remained stable”, with rent collection rate maintained at 99% throughout FY2020 and into 1QFY2021.
Portfolio occupancy stood at 91.7%, with weighted average lease expiry of 4.3 years and “minimal” near-term lease expiries.
57,647 square feet of long-term leases were executed in 1Q2021 at positive rental reversion of 9.5%. “Despite current low physical occupancy due to Covid, interest in PRIME’s quality assets continue to pick up as the US economy recovers and more tenants make longer-term leasing decisions,” the manager says.
Aggregate leverage stood at 33.8% as of March 31, compared to 33.5% as of Dec 31, 2020, with debt headroom of US$290 million (at 45% gearing) and US$91.9 million of undrawn facilities.
SEE:'Buy' Prime US REIT as Americans return to the office: RHB
To that end, the manager notes that PRIME remains “well-positioned” to continue pursuing accretive acquisitions in non-gateway and key US office markets and is actively exploring opportunities.
Looking ahead, the manager states that the US government’s fiscal stimulus, combined with the ongoing vaccination rollout has boosted market optimism.
Citing studies by Cushman & Wakefield, the manager notes that office employment is expected to match the pre-pandemic peak by mid-2022. In the meantime, the hybrid work model could be the “next normal” in the near term as major companies, while quality office spaces will remain relevant as offices are deemed as a better place for casual interactions, collaboration, and innovation. To that end, the manager believes the REIT can capitalise on opportunities available, especially given its focus on attracting tenants from technology and growth industry sectors.
Barbara Cambon, CEO and chief investment officer of the manager, says that the REIT’s diversified portfolio and its focus in tech, as well as other established sectors, underpin its resiliency. “By leveraging technology, implementing protective measures and having close communications with tenants, we work closely with our experienced asset management team to provide a safe and healthy environment as tenants gradually return to the office,” she adds.
Units in Prime US REIT closed 0.5 cents or 0.59% higher at 85.5 US cents on May 18.
