REIT-TIREMENT - REITs Investing & Personal Finance

REITs investing & personal finance

Wednesday, May 24, 2023

Prime US REIT Review @ 24 May 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 and NPI, income available for distribution declined YoY mainly due to lower gross revenue arising from occupancy decline, high property expenses, and finance expenses. As the Manager has elected to receive 100% of its base fee for 2023 in cash, the decline would be 28.7%. For a like-for-like comparison in 2 cases, the decline is at 22.5%.

Rental Reversion

Rental reversion for 1Q is at -2.6%.

Related Parties Shareholding

  • REIT Sponsor's Shareholding: Below median by 20% or more
  • REIT Manager's Shareholding: Below median by 20% or more
  • Directors of REIT Manager's Shareholding: Above median by 20% or more

Lease Profile

  • Occupancy: Below median by 5% or more
  • WALE: ± 10% from median
  • Highest Lease Expiry within 5 Years: Below median by 10% or more; Falls in 2025
  • Weighted Average Land Lease Expiry: 100% freehold properties

Debt Profile

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

Diversification Profile

  • Top Geographical Contribution: Below median by 20% or more
  • Top Property Contribution: Below median by 20% or more
  • Top 5 Properties' Contribution: Below median by 10% or more
  • Top Tenant Contribution: Below median by 20% or more
  • Top 10 Tenants' Contribution: Above median by 10% or more

Key Financial Metrics

  • Property Yield: Above median by 10% or more
  • Management Fees over Operating Distributable Income: Below median by 20% or more; $9.17 distribution for every dollar paid 
  • Operating Distributable Income on Capital: Above median by 20% or more
  • Operating Distributable Income Margin: ± 10% from median
  • Operating Distribution Proportion: ± 5% from median

DPU Breakdown
  • Distributable Income Breakdown:
    • 93.5% from Operation
    • 6.4% from Management Fees Paid in Units
    • 0.1% from Release of Retention/Capital


  • Slight Downtrend: NAV per Unit
  • Downtrend: DPU from Operation, Occupancy, Interest Coverage Ratio, Property Yield, Operating Distributable Income on Capital, Operating Distributable Income Margin

Relative Valuation

  • P/NAV: Below -1SD for 1y; Below -2SD for 3y & 5y
  • Dividend Yield: Above +2SD for 1y, 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
Low Top Geographical ContributionHigh Gearing Ratio
Low Top Property & Top 5 Properties' Contributions0% Unsecured Debt
Low Top Tenant ContributionShort WADM
High Property YieldConcentrated Debt Maturity
Competitive Management FeesHigh Top 10 Tenants' Contribution:
High Operating Distributable Income on CapitalDPU from Operation Downtrend
 Occupancy Downtrend
 Interest Coverage Ratio Downtrend
 Property Yield Downtrend
 Operating Distributable Income on Capital Downtrend
 Operating Distributable Income Margin Downtrend

Performance remains similar as compared to the previous quarter. Despite positive rental reversion over the past 11 consecutive quarters until 4Q 2022, the declining occupancy rate (since IPO) continues to impact the performance. In terms of debt, the process of extending the US$ 200m Term Loan 1, which was due in July, is currently ongoing. Currently, fixed-rate debt accounts for 79% of total debt, slightly higher than the median level for SREITs.  In a move to avoid share dilution, the manager has elected to receive 100% base fee in cash for 2023, although this may result in a lower DPU.

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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