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Saturday, August 08, 2020

Prime US REIT Analysis @ 8 August 2020

Update: 13 Nov 2020

Note that the annualized 3Q 2019 DPU is 1.716 instead of 1.656. DPU as mentioned below.

Basic Profile & Key Statistics

Prime US REIT (Prime) invests in office properties in US across 9 states.

Lease Profile

Occupancy is healthy at 93%. WALE is long at 4.8 years. From the latest presentation, 46.4% of the lease will be expiring in 2025 and beyond without breakdown, if we consider before 2025, then the highest lease expiry of 18.6% falls in the year 2023. All of its properties are freehold. 

Debt Profile

Gearing is healthy at 33%.  Cost of debt is moderate at 2.6%. Fixed rate debt is high at 90%. All of its debt is secured debt. Interest cover ratio is high at 5.4 times. WADE is long at 4.6 years where the highest debt maturity of 33% falls in both 2023 and 2024, which is identical for both years.

Diversification Profile

Prime is diversified in terms of geographical and property where top geographical and top property contribute 15.6% and 14% respectively. Its top tenant contribution is low at 8.5% but top 10 tenants contribution is high at 43%.

Key Financial Metrics

Property yield and distribution on capital are high at 7.1% and 5% respectively. Management fee is competitive in which unitholders receive US 9.80 for every dollar paid. Distribution margin is moderate at 49.2%.

Related Parties Shareholdings

Sponsor and manager holding lesser stake than SREITs median level while directors of REIT manager holding higher stake than SREITs median level.


Note that the actual 3Q 2019 DPU is 1.38 for the period between 19 July 2019 to 30 September 2019, for a fair comparison, I have annualized it to 3 months period to around 1.656. DPU and NAV per unit maintained almost the same while distribution margin is at a slight uptrend.

Relative Valuation

i) Average Dividend Yield  - Apply past 4 quarters DPU of 6.946 (first quarter adjusted to 1.656) cents to average yield of 7.72% will get US$ 0.90

ii) Average Price/NAV - Average value is at 1, apply the latest NAV of US$0.873 will get US$ 0.875.

Author's Opinion

Favorable Less Favorable
100% Freehold Properties Unsecured Debt
WALE Top 10 Tenants Contribution
Interest Cover Ratio
Top Geographical Contribution
Top Property Contribution
Top Tenant Contribution
Property Yield
Management Fee
Distribution on Capital

From the above table, one could see that Prime has good fundamentals. 

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*Disclaimer: Materials in this blog are based on my research and opinion which I don't guarantee the accuracy, completeness, and reliability. It should not be taken as financial advice or statement of fact. I shall not be held liable for errors, omissions as well as loss or damage as a result of the use of the material in this blog. Under no circumstances does the information presented on this blog represent a buy, sell, or hold recommendation on any security, please always do your own due diligence before any decision is made.


  1. Hey, love the quick breakdown. One suggestion if you could add the sponsor background and their track record would be good. Good job!!

    1. Thanks. Can you suggest more specifically on what to put on "sponsor track record" part?