Decline is mainly due to lower cash rental income from higher free rents, increase in finance and other trust expenses

 

[SINGAPORE]   Keppel Pacific Oak US Reit   : CMOU +6.52% (Kore) posted a distributable income of US$30.4 million for the first nine months of the financial year ended Sep 30, down 14.8 per cent from US$35.7 million in the previous corresponding period. 

 

The lower distributable income was due to a drop in cash rental income from higher free rents due to timing differences in leases completed, as well as higher finance and other trust expenses, the manager of the US office-focused real estate investment trust (Reit) said in a business update on Tuesday (Oct 28).

 

The Reit posted a positive 9.6 per cent rental reversion for the nine months.

 

As at end-September, its aggregate leverage stood at 43.1 per cent. 

 

No distribution was declared. The manager previously said it would suspend distributions for two years from H2 FY2023 to H2 FY2025 as part of recapitalisation plans to address capital needs and leverage concerns.

 

It added that it was &ldquo on track to restart distributions&rdquo for the first half of 2026, with payments expected in the second half that year, barring any unforeseen circumstances. 

 

When that happens, Kore will adopt a &ldquo conservative initial payout ratio, with a view to progressively increasing it to a sustainable level aligned with long-term portfolio performance&rdquo .

 

For the nine months, net property income (NPI) was at US$61.3 million, down 1.3 per cent from US$62.1 million.

 

Revenue rose 0.1 per cent to US$112.1 million from US$112 million.

 

The Reit&rsquo s buildings and business campuses in the tech hubs of Bellevue, Redmond, Austin and Denver contributed to about 66 per cent of its NPI.

 

The weighted average term to maturity of its debt was 1.8 years, said the manager. 

 

Additionally, its full portfolio weighted average lease expiry by net lettable area was 3.7 years.

 

Kore&rsquo s performance had been sliding amid the challenging environment faced by the US office market. 

 

It posted a 19.3 per cent year-on-year drop in distributable income for the first quarter of 2025. For the first half-year, distributable income fell 16.2 per cent due to lower cash NPI and other higher trust expenses.