Prime US REIT distributable income slips 1.3% YoY in H1, remains stable

Prime said its gross revenue and net property income also remained stable.

Prime US REIT distributable income declined 1.3% to US$35.4m in the first half of 2021 from US$35.9m from the same period last year but still remains stable.

Prime's gross revenue and net property income (NPI) for the period also remained stable, according to Prime’s Manager, KBS US Prime Property Management Pte. Ltd.

Prime posted a revenue of US$72.1m, up by 1.2% year-on-year (YoY) from US$71.2m, whilst its net property income fell 2.3% to US$46.3m from US$74.5%. The distributable share per unit also declined 5.4% YoY to 3.33 cents in the first half from 3.52 cents.

Prime said the distributable income was in line with the stable NPI performance and benefitted from lower interest costs.

“Prime’s well-diversified portfolio and prudent capital structure continue to deliver on our growth objectives and enhance Unitholders’ value," Barbara Cambon, CEO and chief investment office of Prime’s manager said. “The strategic timing of the acquisitions of two high-quality assets, One Town Center and Sorrento Towers, will contribute positively to portfolio performance in the second half of 2021.”

“We believe non-gateway markets will continue to provide superior risk-adjusted returns, and the extension of our presence into key growth markets and sectors presents significant future growth opportunities for us,” she added.

This takes the company closer to achieving its goal of inclusion to the FTSE EPRA/NAREIT Global Real Estate Index “which will further institutionalise our unitholder register and improve trading liquidity,” she said.

Prime achieved a high portfolio occupancy of 91.7%, which is above the US occupancy average of 4/5 Star properties of 83.9%. Its long weighted average lease expiry of 4.1 years and rent collections of 99.6% in the second quarter with minimal deferrals “further supports the portfolio’s stability.

Renewal of leases and executing of new leases “to address remaining 2021 lease expiries continue to be a key focus of management.”

It also has a prudent capital structure with a low gearing of 34.4% as of 30 June.

It has debt headroom of US$458.5m and US$200m of undrawn facilities. Its fixed interest rates on 86% of its debt and weighted debt maturity of 4.1 years mitigate “any near term interest rate and refinancing risks.” Prime’s interest coverage was 5.8 times during the period with a 2.8% effective interest cost.