PRIME US Reit, which focuses on office buildings in the US, saw its distribution per unit (DPU) fall 51.6 per cent to 0.11 US cent for the six months ended Dec 31. This comes as its manager continues to retain funds to meet expenses.
The Reit’s H2 distribution to unitholders is US$1.4 million, or about 10 per cent of the distributable income – similar to the year-ago period.
The manager seeks to “preserve a substantial proportion of distributable income to meet Prime’s capex needs and reinvest cash flows in the business”, the Reit said in a statement on Wednesday (Feb 19).
Gross revenue for the half year fell 16 per cent to US$67.5 million. This was due to its divestment of the One Town Center property in Boca Raton, Florida, last July, and lower contributions from Waterfront at Washingtonian in Gaithersburg, Maryland, which was undergoing asset enhancement initiatives during the year.
As a result, Prime US Reit’s net property income (NPI) was down 23.7 per cent to US$35.4 million. Its income available for distribution was nearly halved from the previous year, to US$14.8 million.
Key points
H2 FY2024
Gross revenue: US$67.5 million (-16%)
Net property income: US$35.4 million (-23.7%)
Distribution per unit: 0.11 US cent (-51.6%)
For the full year, the Reit’s DPU was down 88.2 per cent to 0.29 US cents.
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This came as gross revenue fell 11.8 per cent to US$141 million, while NPI was down 18.8 per cent to US$76 million.
The Reit continues to adopt a “prudent approach” to keeping debt ratios within required regulatory thresholds, said its manager.
Its leverage stood at 46.7 per cent as at Dec 31, following refinancing and divestment exercises during the year.
Prime US Reit recorded a leased occupancy rate of 80 per cent, with lease signings rising 1.9 per cent in FY2024. Its weighted average lease expiry rose to 4.4 years, up from four years in the year-ago period.
The Reit also enjoyed “good leasing momentum” in several of its assets, and “sizable” potential new leases in locations such as Sacramento, Maryland and Denver.
“With return-to-office mandates gaining momentum, office leasing volume has established a new post-pandemic high,” the manager said, adding that it remains “cautiously optimistic”.
Prime US Reit units closed at US$0.17 on Wednesday, down 0.6 per cent.
