Prime US REIT's 2H FY23 Result Review

Basic Profile & Key Statistics

Key Indicators

Performance Highlight

Gross revenue and NPI remain stable YoY, but income available for distribution decreased significantly due to higher finance costs and 100% of management fees being received in cash. For DPU, the manager has decided to distribute 0.25 cent and retain the rest to fund capital expenditure and pare down borrowings.

Rental Reversion

Rental reversion for 4Q stands at 9.6%, while for FY23, it's at 5.8%. 

Related Parties Shareholding

The directors of the REIT manager hold a relatively high proportion of shares, while the REIT sponsor holds a relatively low proportion.

Lease Profile

Committed occupancy is low, but lease expiry is well spread and all properties are freehold.

Debt Profile

The gearing ratio is high with all debts being secured debt. Additionally, WADM is short, and debt maturity is concentrated.

Diversification Profile

The portfolio demonstrates diversification across geographical locations and properties. However, there is concentration among the top 10 tenants, although the contribution from the top tenant is low.

Key Financial Metrics

Property yield, operating distributable income on capital and operating distributable income margin are high. Additionally, the management fee is low compared to operating distributable income. 

DPU Breakdown

• TTM Distributable Income Breakdown:
• 100% from Operation
• TTM DPU = 55.6% of Distributable Income

Trends

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

Relative Valuation

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

Author's Opinion

As compared to the previous quarter, gross revenue and NPI remain similar. Manager has decided to preserve capital, distributing only 25 cents and 1 for 10 bonus issue. In addition, occupancy might dip as the lease for the 3rd largest tenant, Sodexo, ended on Dec 31. Concerning debt, a substantial 85% is set to mature in Jul 2024, with 16.5% offering extension options.

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 findings and should not be considered 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.