PRIME US Reit : OXMU 0% reported a 30.1 per cent fall in distribution per unit (DPU) to US$0.0246 for the first half of its 2023 financial year ended Jun 30, from US$0.0352 in the same period last year. 

This comes as the total amount of income available for distribution dropped 29.3 per cent year on year to US$29.2 million, from US$41.3 million a year ago.   

In a bourse filing on Tuesday (Aug 8), the real estate investment trust’s (Reit) manager said it has elected to receive its full base fee in cash, with effect from Jan 1, 2023. This is opposed to its previous arrangement of 20 per cent in cash and 80 per cent in the form of units. 

Assuming its base fee was also paid fully in cash in the same period last year, the adjusted income available for distribution would have been US$38 million, with a DPU of US$0.0323. 

The current DPU of US$0.0246 translates to a distribution yield of 23.6 per cent, based on the Reit’s closing price of US$0.21 as at Jun 30. The latest distribution will be paid out on Sep 28. 

Revenue for the period slipped 2.9 per cent to US$79.5 million, from US$81.8 million in the year-ago period. Net property income also fell 7.2 per cent to US$47.2 million, from US$50.8 million. 

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This was primarily due to reduced rental income owing to lower occupancies at certain properties, which was mitigated by higher parking income, said the manager. 

Property operating expenses increased by 4.2 per cent to US$32.3 million, which the Reit manager noted was largely due to a higher amortisation of lease commission recorded in the period. 

Other property operating expenses, including utilities, also rose in H1, due to higher physical occupancies, said the manager. 

The Reit’s portfolio occupancy stood at 85.6 per cent as at Jun 30, with a weighted average lease expiry of 3.9 years. It also saw an average rental reversion of 9.5 per cent, with 34 per cent of total leasing comprising new leases. 

“While there are welcome notable leasing discussions at several of Prime’s assets, there are others where leasing activity is still slow pending a recovery in the form of a broader return to office,” the manager said. 

The management’s key focus will therefore remain on lease renewals and executing new leases, especially as it continues to see “increasing interest and more definitive conversations for potential tenants for assets across the portfolio”. 

As at Jun 30, the Reit’s total assets stand at US$1.6 billion. Net asset value per unit was US$0.75. 

Some 80 per cent of its debt is hedged or fixed rate to mid-2024, with a fully extended weighted average debt maturity of 2.2 years. 

Chief executive officer of the Reit’s manager, Harmeet Singh Bedi, reckoned that the approach in driving organic growth through “active leasing strategies and diversified portfolio in non-gateway growth markets” has provided resilience amid bifurcated markets. 

“We are encouraged by the improving physical occupancy across our assets, which continue to increase quarter on quarter, currently at 58 per cent across the portfolio,” he said. 

“Strong capital management is a key focus, and we are managing our balance sheet prudently given the current environment. We remain well-capitalised, and this has been reflected in our strong relationships with our financiers, who in July 2023 granted us an extension for our credit facilities.” 

Units of the Reit closed 1.6 per cent or S$0.003 lower at S$0.188 on Tuesday, before the announcement.