Keppel Pacific Oak US REIT's NPI up 15.7% to $58m in H1

This was driven by contributions from One Twenty Five in Dallas, Texas.

Keppel Pacific Oak US REIT's (KORE) net property income (NPI) rose 15.7% YoY to $58m (US$41.87m) in H1, from $50.12m (US$36.18m) in H1 2019, according to a filing. Gross revenue jumped 20.1% YoY to $97.67m (US$70.5m) over the same period.

In Q2, NPI grew 16.3% YoY to $28.98m (US$20.92m) whilst revenue surged 20.1% YoY to $48.73m (US$35.17m).

Overall, income available for distribution to unitholders expanded 18.5% YoY to $20.36m (US$14.7m) in Q2, and 17.6% YoY to $40.32m (US$29.11m) for H1.

The stronger YoY performance for H1 was driven by several factors, including contributions from One Twenty Five in Dallas, Texas, acquired in November 2019. At the same time, higher rental income mainly from new leases across the rest of the portfolio and positive rental reversion from lease renewals signed in H2 2019, as well as the built-in rental escalation in the portfolio also contributed to the robust performance.

Notwithstanding the slowdown in property tours across the US due to the pandemic, KORE committed approximately 196,000 sf of office space in H1, equivalent to about 4.2% of its total portfolio by net lettable area. Most of the leasing activity occurred in Seattle, Atlanta and Houston.

This is said to have brought KORE’s portfolio committed occupancy to 94.3% as at 30 June, with only 2.8% of leases by cash rental income (CRI) expiring for the remainder of the year.

KORE also continued to achieve strong rental reversion of 14.7% in H1, driven mainly by the tech hubs of Seattle and Austin. At the same time, average rental collections for the period was approximately 94% by CRI.

To-date, the manager notes that it has received rent relief requests from approximately 15% of KORE’s tenancies by CRI across different industries. Of this, only 5.7% have been granted, equivalent to approximately 2.8% in economic impact.

KORE also notes that it will have no long-term debt refinancing requirements until November 2022 and continues to maintain a strong and flexible balance sheet with significant liquidity. As at 30 June, 84.3% of the REIT’s non-current loans have been hedged.

The REIT’s manager said they remain cautiously optimistic of leasing performance in its key growth markets and remain focused on its long-term goal of delivering stable distributions and strong total returns for unitholders.