Already offering a bountiful 8.6% distribution per unit (DPU) for FY2020, the stock has exceeded Natarajan’s forecasts by 3.6%. This was supported by positive rent growth and contributions from its Park Tower property in Sacramento, California. The strong performance has more than offset lower occupancy and car park income, which constitute 5-7% of its total revenue.
SGX stocks are well-known for their generous dividends, but PRIME US REIT takes the cake with a forecasted dividend yield of around 9% by December 2023. Currently trading at just 0.9 times price-to-book (P/B) value, this is a counter that would leave most value investors salivating.
“PRIME US REIT’s operating metrics portfolio remains sturdy, with stable occupancy, a continued positive rent reversion outlook (FY2020: +7.2%), and strong inorganic growth potential on the back of its low gearing. The REIT’s well-diversified asset and tenant mix – with exposure to growth sectors – put it in a strong position to tide through COVID-19,” says RHB Group Research (RHB) analyst Vijay Natarajan.
