PRIME US Reit’s distributable income for the third quarter ended Sep 30, 2023 fell 23.4 per cent to US$14.7 million from US$19.2 million a year ago, said the manager on Tuesday (Nov 7) in a business update.

Net property income fell 3.3 per cent to US$23.4 million, from US$24.2 million in the corresponding year-ago period. Gross revenue was down 0.9 per cent to US$40.2 million, from US$40.6 million a year ago.

The real estate investment trust (Reit) manager said it has elected to receive its full base fee for FY2023 in cash. This is opposed to its previous arrangement of 20 per cent in cash and 80 per cent in the form of units.

If its base fee was also paid fully in cash in the same period last year, income available for distribution in Q3 would have been 16.6 per cent lower than the adjusted figure of US$17.7 million a year ago.

Overall occupancy stood at 85 per cent, with occupancy at eight of the Reit’s 14 assets posting rates above the sub-market, which stood at 81.3 per cent. The portfolio had a weighted average lease expiry of 3.8 years as at Sep 30.

Rental reversion for the third quarter came in negative at 2 per cent. This was predominantly affected by one lease, which was at a rate lower than the prior short-term extension rate, said the manager.

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The Reit’s leverage stood at 43.7 per cent, with an interest coverage of 3.2 times. It has a debt headroom of US$203.6 million.

Amid cyclical headwinds in a high-interest-rate environment, the manager said that it expects improvement in the US office environment in 2024 and noted positive leasing momentum, with notable leasing discussions taking place at several of the Reit’s assets.

It added that it plans to focus on backfilling existing vacancies, and proactively addressing 2024 and 2025 expiries.

The counter closed at US$0.162 on Tuesday, up US$0.021 or 14.9 per cent, before the business update was issued.