Distributions to unitholders represent 10% of distributable income in H1 FY2024

 

PRIME US Reit&rsquo s manager on Tuesday (Aug 13) said the real estate investment trust&rsquo s (Reit) distribution per unit (DPU) tumbled 92 per cent to US$0.0018 for the six months ended Jun 30, from US$0.0224 in the year-ago period.

 

The manager noted that the amount to be distributed to unitholders for the six months is about 10 per cent of the distributable income for H1 FY2024. The manager said this was to &ldquo balance our objectives to preserve a substantial proportion of distributable income to meet Prime US Reit&rsquo s capital expenditure needs and reinvest cash flows in the business&rdquo .

 

The amount retained will be used to fund capital expenditures on the properties and pare down borrowings.

 

The lower DPU was also attributed to a larger unit base, as the Reit in March conducted a one-for-10 bonus issue. It issued new units to all unitholders on the basis of one new unit credited as fully paid for every 10 existing units held.

 

The H1 DPU from the previous year, of US$0.0224, was restated to take into account the bonus issue, said the manager.

 

The Reit recorded revenue of US$73.5 million for the six months, a 7.5 per cent decrease from US$79.5 million in H1 FY2023.

 

This comes as cash rental, recoveries and other property income fell 5.8 per cent, on lower contribution from One Washingtonian Center, which has been undergoing asset enhancement initiatives since the start of 2024.

 

&ldquo Excluding the performance of One Washingtonian Center, cash revenue for the portfolio remained stable. Non-cash straight-line rent adjustments contributed to the remaining decrease in revenue,&rdquo said the manager.

 

Net property income for the six months was US$40.6 million, sliding 14 per cent year on year from S$47.2 million.

 

Income available for distribution fell 20.2 per cent to US$23.3 million, from US$29.2 million.

 

Prime US Reit also recorded a net fair value loss on investment properties of US$6.9 million on One Town Center in Florida, as the asset was divested in July.

 

The manager called this divestment &ldquo a strategic sale&rdquo , in line with Prime US Reit&rsquo s deleveraging strategy as the manager sought to bring down the aggregate leverage and maximise liquidity to fund capital expenditures. These expenditures are necessary in driving new leasing activities.

 

Prime US Reit&rsquo s leasing volume more than doubled on-year to 268,600 square feet (sq ft), from 131,200 sq ft. &ldquo The increase in lease executed in the first half of 2024 accentuated US office tenants&rsquo improving confidence on executing leases,&rdquo said the manager.

 

Leased occupancy was 83.9 per cent, excluding the divested One Town Center and the ongoing asset enhancement at One Washingtonian Center. Weighted average lease expiry was 4.2 years, as at Jun 30.

 

Meanwhile, the manager on Aug 9 entered into a new credit facility agreement for an aggregate principal amount of up to US$550 million, comprising a US$400 million term loan facility and a US$150 million committed revolving credit facility.

 

The facility has an initial maturity of July 2026 and a further one-year extension option. The manager added that US$330 million of borrowings remained hedged till mid-2026 via interest rate swap.