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Friday, February 17, 2023

Prime US REIT Review @ 17 February 2023

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

Key Indicators

Performance Highlight
Gross revenue, NPI, income available for distribution and DPU declined yoy mainly due to high property expenses, finance expenses and the absence of a termination fee which was received in 2H 2021.

Rental Reversion

Rental reversion for 4Q is at a positive 20.2%.

Distribution Breakdown
  • Distributable Income Breakdown:
    • 91.7% from Operation
    • 0.1% from Release of Retention/Capital
    • 8.2% from Fees Payable/Paid in Units
  • Distribution = 100% of Distributable Income

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: Above median for more than 20%

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 2025
  • Weighted Average Land Lease Expiry: 100% freehold properties

Debt Profile

  • Gearing Ratio: Above median for more than 10%
  • Cost of Debt: ± 10% from median
  • Fixed Rate Debt %: ± 10% from median
  • Unsecured Debt %: 0%
  • WADM: Below median for more than 20%
  • Highest Debt Maturity within 5 Years: Above median for more than 20%; Falls in 2024
  • Interest Coverage Ratio: Above median for more than 10%

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 10%
  • 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


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

Relative Valuation

  • P/NAV: Below -1SD for 1y; Below -2SD for 3y & 5y
  • Dividend Yield: Above +1SD for 1y; Above +2SD for 3y & 5y

Author's Opinion

 Favorable Less Favorable
High Directors of REIT Manager's ShareholdingLow REIT Sponsor's Shareholding
Well Spread Lease ExpiryLow REIT Manager's Shareholding
100% Freehold PropertiesLow Occupancy
High Interest Coverage RatioHigh Gearing Ratio
Low Top Geographical Contribution0% Unsecured Debt
Low Top Property & Top 5 Properties' ContributionsShort WADM
Low Top Tenant ContributionConcentrated Debt Maturity
High Property YieldOccupancy Downtrend
Competitive Management FeesInterest Coverage Ratio Downtrend
High Distribution on CapitalProperty Yield Downtrend
 Distribution on Capital Downtrend

Compared to the previous half-yearly period, the performance has declined due to increases in both operating expenses and interest expenses. It is encouraging to note that PRIME achieved positive rental reversion for 11 consecutive quarters, however, the occupancy rate remains sluggish.

From the presentation, it was mentioned that the work-from-home trend appears to be slowly declining. This could potentially have a positive impact on occupancy rates in the near future, as people start to return to the office and businesses resume normal operations. It will be interesting to see how this trend develops and whether it leads to improved performance in the coming months.

For more information, check out:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview and details of Singapore REIT

REIT Review - List of previous REIT review posts

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*Disclaimer: The information presented on this blog is for educational and informational purposes only. The materials, including research and opinions, are based solely on my own findings and should not be considered as professional financial advice or a definitive statement of fact. I cannot guarantee the accuracy, completeness, or reliability of the information provided. I shall not be held liable for any errors, omissions, or losses that may occur as a result of using the information presented on this blog. It should be noted that the information presented on this blog does not constitute a buy, sell, or hold recommendation for any security. It is crucial to conduct your own thorough research and due diligence before making any investment decisions.

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