Keppel Pacific Oak US REIT (KORE) announced a 10.9% rise y-o-y in distributable income to US$16.6 million for 1Q2022. The growth was attributed to the acquisitions of Bridge Crossing in Nashville and 105 Edgeview in Denver in August 2021. Adjusted Net Property Income (NPI) rose 7.1% to US$22 million.
The portfolio’s committed occupany was 91.7% in 1Q2022; portfolio WALE stood at 3.7 years by gross rental income. During 1Q, around 146,768 sq ft of space was leased, equivalent to 2.9% of portfolio NLA. About 8.9% of in-place rents are 8.9% below asking rents, which provides an avenue for organic growth. In 1Q the portfolio experienced a 2.4% positive rent reversion. There is a 2.4% built-in average annual rental escalation across the portfolio and average rent collection was 99% with no rent deferment requests during the quarter. The manager says new leasing demand and expansions were from professional services 41.3%; finance and insurance 33.4%; others 15.5%; TAMI 6.3%; and medical and healthcare 3.5%
Capital management remains conservative, with well staggered debt expiries. Only 8.4% of KORE’s debt is due this year, with no long term refinancing requirements till Nov 2023. Its weighted average term to maturity is 2.9 years; interest coverage stands at 5x; aggregate leverage is a reasonable 37.5%. KORE’s manager has said that every 50bps rise in LIBOR translates to a negative 0.062 US cents in DPU a year.
KORE's portfolio comprises 15 freehold office buildings and business campuses across nine markets with a combined asset value of US$1.46 billion and an aggregate net lettable area of approximately 5.1 million sq ft.
