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REITs investment & personal finance


Thursday, June 02, 2022

Prime US REIT Review @ 2 June 2022

Basic Profile & Key Statistics
  • Main Sector(s): Office
  • Country(s) with Assets: United States
  • No. of Properties (exclude development/associate/fund): 14

Performance Highlight

Gross revenue, NPI and distributable income increased YoY due to contribution from One Town Center and Sorrento Tower which were acquired in July 2021. Distributable income improved more than NPI is due to amortized lease termination income.

Rental Reversion

Rental reversion is at 3.4% for 1Q 2022.



Sensitivity to Interest Rate
For every 1% increase in interest rate, the impact to DPU is less than 0.1 cents, which is around 1.4%. 

Related Parties Shareholding

  • REIT sponsor's shareholding: Below median for more than 20%
  • REIT manager's shareholding: Below median for more than 20%
  • Directors of REIT manager's shareholding: 0%

Lease Profile

  • Occupancy: Below median for more than 5% 
  • WALE: ± 10% from median
  • Highest lease expiry within 5 years: Below median for more than 20%; Falls in 2023
  • Weighted average land lease expiry: 100% freehold properties

Debt Profile

  • Gearing ratio: ± 10% from median
  • Cost of debt: Above median for more than 20%
  • Fixed rate debt %: Above median for more than 10%
  • Unsecured debt %: 0%
  • WADM: ± 10% from median
  • Highest debt maturity within 5 years: Above median for more than 20%; Falls in 2024
  • Interest coverage ratio: Above median for more than 20%

Diversification Profile

  • Top geographical contribution: Below median for more than 20%
  • Top property contribution: Below median for more than 20%
  • Top 5 properties' contribution: Below median for more than 10%
  • Top tenant contribution: Below median for more than 20%
  • Top 10 tenants' contribution: ± 10% from median

Key Financial Metrics

  • Property yield: Above median for more than 20%
  • Management fees over distribution: Below median for more than 20%; $9.80 distribution for every dollar paid 
  • Distribution on capital: Above median for more than 20%
  • Distribution margin: ± 10% from median

Trends

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

Relative Valuation

  • P/NAV: Below -1SD for 1y  & 3y
  • Dividend Yield: Above +2SD for 1y; Above +1SD for 3y

Author's Opinion

 Favorable Less Favorable
Well Spread Lease ExpiryLow REIT Sponsor's Shareholding
100% Freehold PropertiesLow REIT Manager's Shareholding
High Fixed Rate Debt %Low Directors of REIT Manager's Shareholding
Interest Coverage RatioLow Occupancy
Low Top Geographical ContributionHigh Cost of Debt
Low Top Property & Top 5 Properties Contributions0% Unsecured Debt
Low Top Tenant ContributionConcentrated Debt Maturity
High Property YieldProperty Yield Downtrend
Competitive Management Fees 
High Distribution on Capital

Performance has declined slightly compared to the previous quarter and the occupancy has declined to 89.9%. With most states dropping COVID restrictions and more employers announcing the return to office dates starting in early April, leasing activity is expected to be improved moving forward. 


You could also refer below for more information:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview and Detail of Singapore REIT

REIT Analysis - List of previous REIT analysis posts


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*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 due to 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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