The manager of Prime US REIT has reported distribution per unit (DPU) of 3.42 US cents (4.53 cents) for the 2HFY2020 ended December, outperforming its IPO forecast of 3.35 US cents by 2.1%.
FY2020 DPU stood at 6.94 US cents, surpassing its IPO forecast of 6.70 US cents by 3.6%.
Prime US REIT, which has a high-quality office portfolio in the US, listed on the Singapore Exchange (SGX) on July 19, 2019.
At the time, the REIT’s IPO, with a market capitalisation of US$813 million ($1.1 billion), was expected to be the largest on the bourse year-to-date.
The REIT’s portfolio of 12 Class A freehold properties over 10 key US office markets brought in gross revenue of US$72.4 million for the 2HFY2020, representing a 7.4% increase from its IPO forecast.
The figure represented a 19.3% y-o-y growth from 2HFY2019 due to contributions from Park Tower, which was acquired in February 2020.
SEE: Prime US REITs a prime opportunity as leasing performs strongly in slow market
For the same reason, 2HFY2020 net property income (NPI) came in 7.8% higher than its IPO forecast at US$47.5 million, or 18.3% y-o-y higher than NPI of 2HFY2019.
Net change in fair value of derivatives in 2HFY2020 resulted in a gain of US$2.7 million primarily due increase in interest rates.
Income available for distribution for the 2HFY2020 stood at US$36.2 million, 16.1% higher than its IPO forecast, or 24.1% y-o-y higher as compared to the same period a year ago.
FY2020 gross revenue stood at US$143.6 million, 6.6% higher than forecasted during its IPO. Gross revenue during the period surged 136.7% y-o-y largely due to contributions from Park Tower. The period was also longer than FY2019’s period that spanned slightly under six months, from July 19, 2019, to Dec 31, 2019.
FY2020 NPI came in at US$95 million, 7.7% higher than its IPO forecast, and 136.5% y-o-y higher than FY2019 for the same reasons.
Income available for distribution for the FY2020 came in at US$72.1 million, 15.6% higher than its IPO forecast, and 147% y-o-y higher than that of FY2019.
As at end-December 2020, Prime US REIT’s portfolio occupancy remained “resilient” at 92.4%, with a weighted average lease expiry (WALE) of 4.4 years and a Top 10 tenant WALE of 5.2 years.
According to the manager, the REIT saw higher leasing momentum in 2HFY2020 with 142,673 sq ft leased at an 8.7% rental reversion, bringing FY2020 leasing volumes to 225,222 sq ft at a positive rental reversion of 7.2%.
As at Dec 31, 2020, cash and cash equivalents stood at US$37.4 million.
Looking ahead, the REIT’s manager says it is optimistic on tenants returning to their offices in 2021 due to the introduction of the Covid-19 vaccine in late 2020.
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Office-using equipment has rebounded since 2Q2020 as businesses resumed their rehiring plans.
Cushman and Wakefield predicts that the US will return to peak office-using employment by 1Q2022, adds the manager.
“The resounding sentiment among industry leaders is that flight to quality will continue, which should benefit Prime US REIT’s well-located and highly amenitised assets,” it says in a Feb 17 statement.
“Prime US REIT’s robust performance has been consistent since its listing which is a testament to our focus on maximising long-term unitholder value. Our strategy to build a well-diversified portfolio in favourable US office markets, and our focus in the technology and established industry sectors, continues to underpin our success and demonstrates PRIME’s diversity and income resiliency in these uncertain times,” says Barbara Cambon, CEO and chief investment officer of the manager.
“As tenants gradually return to office, our experienced asset management team continues to employ technological solutions to assist existing tenants in office planning as well as to enhance Prime US REIT’s leasing prospects.”
“We have our goal set on inclusion in the FTSE EPRA NAREIT index, and are well-positioned to grow through accretive acquisition opportunities,” she adds.
Unitholders can expect to receive their DPU on March 30.
Units in Prime US REIT closed 1 US cent higher or 1.3% up at 81 US cents on Feb 17.
