Prime US REIT (OXMU.SGX) 3Q2020 quarterly report is released. First look at the financial data and compare 2Q2020:

  • Revenue increased by 1.6%, USD36.7mil in 3Q2020, 36.1mil in 2Q2020
  • Net Property inocme rose 0.83%, 3Q2020 was USD24.2mil, 2Q2020 was 24mil
  • Distributable income per unit fell 1.7%, 1.7cent(USD) in 3Q2020 and 1.73cent(USD) in 2Q2020

No dividends were paid this quarter.

The increase in Revenue is believed to come from positive rental reversion (8.9%). In fact, Prime’s occupancy rate has continued to decline for 4 quarters to the current 92.6% (2Q2020: 93%) (1Q2020: 94.9%) (4Q2019: 95.8%).

What puzzles me is why the Distributable income per unit declines when revenue rises. However, there is no detailed financial data for this quarter, so it is impossible to know.

In fact, Prime give tenants rent deferment amount to USD0.2mil in 3Q2020, or 0.018cent (USD) per unit. If this is added, the distributed income per unit is 1.718cent (USD).

Compared with another US office REIT Keppel Oak USD REIT, 3Q2020 recorded a revenue decline of 1.91%. In fact, Prime can still record a revenue increase, which is not easy.

In the coming 4Q2020, Prime still has 2% (calculated by Cash Rental Income) of the lease that will expire soon.

In terms of debt management, Prime’s WADE (weighted average debt expired) is 4.9 years.

If Prime maintain 3Q2020 performance, I expect DPU of 3.4cent(USD)per unit in 4Q2020.

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