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REITs investment & personal finance

Wednesday, May 19, 2021

Prime US REIT Review @ 19 May 2021

Basic Profile & Key Statistics

Prime US REIT (PRIME) is a pure office REIT with 12 properties in U.S.

Performance Highlight

Gross revenue increased by 2.5% YoY, but NPI and distributable income decreased YoY by 2% and 1.2% respectively.
Rental reversion is at a positive 9.5%.

Related Parties Shareholding

  • REIT sponsor's shareholding is low at 0.91%
  • REIT manager's shareholding is low at 0.49%
  • Directors of REIT manager's shareholding is high at 1.45%

Lease Profile

  • Occupancy is slightly low at 91.7%
  • WALE is long at 4.3 years
  • Highest lease expiry within 5 years is low at 19.3% which falls in 2025
  • All properties are freehold

Debt Profile

  • Gearing ratio is low at 33.8%
  • Cost of debt is high at 2.8%
  • Fixed rate debt % is high at 90%
  • All debts are secured debts
  • WADM is long at 3.8 years
  • Highest debt maturity within 5 years is slightly high at 33% which falls in 2023 and same for 2024
  • Interest coverage ratio is high at 5.8 times

Diversification Profile

  • Top geographical contribution is low at 19.3%
  • Top property contribution is low at 14.1%
  • Top 5 properties contribution is moderate at 56.5%
  • Top tenant contribution is low at 8.9% 
  • Top 10 tenants contribution is high at 41.3%

Key Financial Metrics

  • Property yield is high at 6.7% 
  • Management fees over distribution is low at 11.1% in which unitholders receive US$ 9.01 for every dollar paid 
  • Distribution on capital is high at 5.2%
  • Distribution margin is slightly high at 49.9%

Trends

  • Uptrend - Interest Coverage Ratio
  • Slight Uptrend - Distribution Margin
  • Flat - NAV per Unit, Distribution on Capital
  • Slight Downtrend - DPU
  • Downtrend - Property Yield

Relative Valuation

  • Dividend Yield - Latest 4 quarters DPU @ 6.81 cents / average yield @ 8.38% = US$ 0.815 
  • Price/NAV - NAV @ US$ 0.86 x average P/NAV @ 0.97 = US$ 0.835


Author's Opinion

 Favorable Less Favorable
Directors of REIT Manager's ShareholdingLow REIT Sponsor's Shareholding
Long WALELow REIT Manager's Shareholding
Well Spread Lease ExpiryHigh Cost of Debt
All Freehold Properties0% Unsecured Debt
Low Gearing RatioHigh Top 10 Tenants Contribution
High Fixed Rate Debt %Property Yield Downtrend
Long WADE 
High Interest Coverage Ratio 
Low Top Geographical Contribution 
Low Top Property Contribution 
Low Top Tenant Contribution 
High Property Yield 
Competitive Management Fees 
High Distribution on Capital 
Interest Coverage Ratio Uptrend

PRIME fundamental remains resilient at this moment albeit NPI and distributable income are lower than the previous quarter. With the U.S. government’s fiscal stimulus contributing to economic recovery and the ongoing vaccination in U.S., PRIME performance should improved in the coming quarters.


For more information, you could refer to:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview and Detail of Singapore REIT

REIT Analysis - List of previous REIT analysis posts

REIT-TIREMENT Patreon - Support as a Patron and get SREITs Dashboard PDF or Data Excel

REIT-TIREMENT Facebook Page - Support by liking my Facebook Page

REIT Investing Community - Facebook Group where members share and discuss REIT topic


*Disclaimer: Materials in this blog are based on my research and opinion which I don't guarantee accuracy, completeness, and reliability. It should not be taken as financial advice or a statement of fact. I shall not be held liable for errors, omissions and 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.

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