In addition, the regulatory aggregate leverage limits KORE to 50% if its interest coverage ratio (ICR) remains at 2.5 times or higher.
On Feb 15, Keppel Pacific Oak US REIT’s (KORE) manager announced it plans to suspend distributions along with a recapitalisation plan. KORE was scheduled to announce its results for the FY2023 ended Dec 31, 2023, on Jan 30 but re-scheduled to Feb 15. Its unit price plunged this morning by more than 39% to as low as 15.2 US cents in reaction. Units in KORE closed at 25 US cents on Feb 14.
Although KORE announced an aggregate leverage of 43.2% following its FY2023 valuation, its bank covenants limit the REIT to a loan-to-value of 50%. “Lenders remain concerned about the US office market,” the REIT’s manager says. “Banks are reluctant to lend above 45% leverage for the US market.”
