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
TT 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.
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