Research from SooChow CSSD Capital Markets (Asia), SCCM Asia Research

SCCM Asia Research

Research from SooChow CSSD Capital Markets (Asia)

Thematic (Sector/Industry)

<h2>Singapore</h2><h3><a href="https://www.smartkarma.com/entities/prime-us-reit" target="_blank" data-smartkarma-citation="entities:28144" rel="noopener">Prime US REIT (PRIME SP)</a> to acquire two properties in California and Florida; DPU accretive by +2.4% but -1.2% NAV dilutive</h3><ul><li>PRIME, through KBS Realty Advisors, has entered into a purchase agreement with Sorrento Towers North to acquire Sorrento Towers (located at 5355 &amp; 5375 Mira Sorrento Place, San Diego, California) and a purchase agreement with CP OTC to acquire the property One Town Center (located at One Town Center, Boca Raton, Florida). Sorrento Towers is a freehold property comprised of two, seven-story, Class-A office towers and sits above a three-level podium garage with an occupancy rate of 95.6%, NLA of 296,327sqft and WALE By NLA of 6.6 years. One Town Center is a freehold 10-storey Class-A office tower and a five-storey attached parking garage with an occupancy rate of 94.7%, NLA of 191,294sqft and WALE by NLA of 6.2 years</li><li>The aggregate purchase consideration payable for the Acquisitions is US$245.5m, comprising US$146.0m for Sorrento Towers and US$99.5m for One Tower Center. Sorrento Towers would be acquired at valuation, whilst One Town Center will be acquired at a discount of 2.5% of its appraised value, representing an aggregate discount of 1%. The estimated total cost for the acquisitions is US$247.71m, including fees, which will be funded by a combination of loans and a private placement of new units (to raise gross proceeds of at least US$80.0m)</li><li>The Acquisitions will expand the REIT’s footprint in two new target markets, San Diego and Boca Raton. Post-acquisitions, no single market will contribute more than 11.7% of PRIME’s enlarged portfolio Cash Rental Income. In aggregate, the acquisitions have a long WALE of 6.5 years by NLA and 6.6 years by Cash Rental Income, with minimal proportion of leases expiring before 2025</li><li>100% of the leases at Sorrento Towers and One Town Center, based on Cash Rental Income for the month of Mar21, offers visible organic growth having a built-in rental escalation with a weighted average built-in escalation rate of c.3% pa. Moreover, both Sorrento Towers and One Town Center have positive office market dynamics with in-place rents that are currently below market</li><li>At the purchase price, the implied capitalisation rate for Sorrento Towers and One Town Center is approximately 5.3% and 5.8%, respectively. On a pro-forma 1Q21 basis, the WALE of the enlarged portfolio will increase to 4.5 years by NLA and 4.6 years by Cash Rental Income. On a pro-forma FY20 basis, the acquisitions are expected to be +2.4% DPU accretive, but -1.2% NAVPU dilutive. Gearing will increase to 39.1% from 33.8% as at 31Mar21 on a pro-forma basis.</li></ul><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/214/962/original/image003+%282%29.png?1624498042" class="editor-image img-responsive" data-smartkarma-image-id="214962"></figure><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/214/963/original/image004.png?1624498057" class="editor-image img-responsive" data-smartkarma-image-id="214963"></figure></section>

SingaporePrime US REIT (PRIME SP) to acquire two properties in California and Florida; DPU accretive by +2.4% but -1.2% NAV dilutivePRIME, through KBS Realty Advisors, has entered into a purchase agreement with Sorrento Towers North to acquire Sorrento Towers (located at 5355 &amp; 5375 Mira Sorrento Place, San Diego, California) and a purchase agreement with CP OTC to acquire the property One Town Center (located at One Town Center, Boca Raton, Florida). Sorrento Towers is a freehold property comprised of two, seven-story, Class-A office towers and sits above a three-level podium garage with an occupancy rate of 95.6%, NLA of 296,327sqft and WALE By NLA of 6.6 years. One Town Center is a freehold 10-storey Class-A office tower and a five-storey attached parking garage with an occupancy rate of 94.7%, NLA of 191,294sqft and WALE by NLA of 6.2 yearsThe aggregate purchase consideration payable for the Acquisitions is US$245.5m, comprising US$146.0m for Sorrento Towers and US$99.5m for One Tower Center. Sorrento Towers would be acquired at valuation, whilst One Town Center will be acquired at a discount of 2.5% of its appraised value, representing an aggregate discount of 1%. The estimated total cost for the acquisitions is US$247.71m, including fees, which will be funded by a combination of loans and a private placement of new units (to raise gross proceeds of at least US$80.0m)The Acquisitions will expand the REIT’s footprint in two new target markets, San Diego and Boca Raton. Post-acquisitions, no single market will contribute more than 11.7% of PRIME’s enlarged portfolio Cash Rental Income. In aggregate, the acquisitions have a long WALE of 6.5 years by NLA and 6.6 years by Cash Rental Income, with minimal proportion of leases expiring before 2025100% of the leases at Sorrento Towers and One Town Center, based on Cash Rental Income for the month of Mar21, offers visible organic growth having a built-in rental escalation with a weighted average built-in escalation rate of c.3% pa. Moreover, both Sorrento Towers and One Town Center have positive office market dynamics with in-place rents that are currently below marketAt the purchase price, the implied capitalisation rate for Sorrento Towers and One Town Center is approximately 5.3% and 5.8%, respectively. On a pro-forma 1Q21 basis, the WALE of the enlarged portfolio will increase to 4.5 years by NLA and 4.6 years by Cash Rental Income. On a pro-forma FY20 basis, the acquisitions are expected to be +2.4% DPU accretive, but -1.2% NAVPU dilutive. Gearing will increase to 39.1% from 33.8% as at 31Mar21 on a pro-forma basis.

ASEAN Builder's Scoop (24Jun21) - PRIME Acquires US Offices

SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

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Equity Bottom-Up

Manulife US REIT (MUST) / Equity Bottom-Up

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<p>SGX lists eight actively traded S-Reits with properties in the United States (US). Five out of the eight S-Reits have pure exposure to the US and among them are three US office S-Reits.<br><br>
The US Centres for Disease Control and Prevention (CDC) on May 13 announced that fully vaccinated individuals do not need to wear masks outdoors and can avoid wearing masks indoors in most places, and updated that life can begin to return to normal despite caution issued by the World Health Organization (WHO).</p>

<p>Nonetheless, US Office S-Reits remain sanguine about companies' return-to-office plans and are adapting to agile and "new normal" arrangements as the US continues to push for normalcy and re-opening of sectors and industries.<br><br>
The three US Office S-Reits trade at an average price-to-book ratio of 0.98 times and average 7.8 per cent in distribution yield. All of the three have average committed occupancy rates of over 90 per cent, above the average Class A US office average of 84 per cent, and have weighted average lease expiry (WALE) that range from 4.3 to 5.3 years.<br><br>
Manulife US Reit (MUST), which has an occupancy rate of 92 per cent, has observed more tenants gradually returning to the office with May 2021's portfolio physical occupancy at 20.0 per cent, versus 13.3 per cent seen in Jan 2021. The Reit notes that offices continue to remain relevant as companies adopt a hybrid model and the majority of employers do require the same if not more office space post Covid-19, driven by the demand for rising headcount and social distancing needs.</p>

<p>MUST sees post-Covid-19 themes such as the acceleration of population and company migration to magnet cities, growing tech sector, strong demand for health care, and fast developing knowledge economy to provide uplift for the Reit. MUST has a focus to target magnet cities which are defined as having attributes such as growing tech tenants, population growth, business friendly and lower costs of living.</p>

<p>Prime US Reit (Prime) sees interest in its assets pick up as tenants make longer-term leasing decisions, despite the current low physical occupancy. Its current portfolio occupancy rate is at 91.7 per cent. Some of its tenants which include Goldman Sachs and Wells Fargo have also made plans for employees to return to the office by July 2021.</p>

<p>In securing new leases, Prime notes that its new tenants are largely from diverse established and technology sectors. The Reit observes that the US office transaction market has shown signs of activity in recent weeks and it is actively exploring acquisition opportunities in its target markets.</p>

<p>Keppel Pacific Oak US Reit (KORE) has a 91.6 per cent portfolio committed occupancy rate and believes that the rollout of vaccines and removal of restrictions is raising confidence and optimism. LaSalle Network's Office Re-Entry Index shows that 70 per cent of CEOs, human resources and finance leaders are planning for employees to return to the office by fall 2021.</p>

<p>KORE has a focus in markets with exposure to technology hubs and tech-tenancy. Its recent leasing activities are driven mainly by demand from professional services, finance and insurance, and technology. Over 37 per cent of its current portfolio by net lettable area comprises tenants from technology and medical and healthcare. <br><br><strong><em>REIT Watch is a weekly column on The Business Times, <a href="https://www.businesstimes.com.sg/companies-markets/us-office-s-reits-half-empty-or-half-full">read</a> the original version.</em></strong></p>
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    8 SREIT with exposes to US assets


SGX lists eight actively traded S-Reits with properties in the United States (US). Five out of the eight S-Reits have pure exposure to the US and among them are three US office S-Reits.  
The US Centres for Disease Control and Prevention (CDC) on May 13 announced that fully vaccinated individuals do not need to wear masks outdoors and can avoid wearing masks indoors in most places, and updated that life can begin to return to normal despite caution issued by the World Health Organization (WHO).

Nonetheless, US Office S-Reits remain sanguine about companies' return-to-office plans and are adapting to agile and "new normal" arrangements as the US continues to push for normalcy and re-opening of sectors and industries.  
The three US Office S-Reits trade at an average price-to-book ratio of 0.98 times and average 7.8 per cent in distribution yield. All of the three have average committed occupancy rates of over 90 per cent, above the average Class A US office average of 84 per cent, and have weighted average lease expiry (WALE) that range from 4.3 to 5.3 years.  
Manulife US Reit (MUST), which has an occupancy rate of 92 per cent, has observed more tenants gradually returning to the office with May 2021's portfolio physical occupancy at 20.0 per cent, versus 13.3 per cent seen in Jan 2021. The Reit notes that offices continue to remain relevant as companies adopt a hybrid model and the majority of employers do require the same if not more office space post Covid-19, driven by the demand for rising headcount and social distancing needs.

MUST sees post-Covid-19 themes such as the acceleration of population and company migration to magnet cities, growing tech sector, strong demand for health care, and fast developing knowledge economy to provide uplift for the Reit. MUST has a focus to target magnet cities which are defined as having attributes such as growing tech tenants, population growth, business friendly and lower costs of living.

Prime US Reit (Prime) sees interest in its assets pick up as tenants make longer-term leasing decisions, despite the current low physical occupancy. Its current portfolio occupancy rate is at 91.7 per cent. Some of its tenants which include Goldman Sachs and Wells Fargo have also made plans for employees to return to the office by July 2021.

In securing new leases, Prime notes that its new tenants are largely from diverse established and technology sectors. The Reit observes that the US office transaction market has shown signs of activity in recent weeks and it is actively exploring acquisition opportunities in its target markets.

Keppel Pacific Oak US Reit (KORE) has a 91.6 per cent portfolio committed occupancy rate and believes that the rollout of vaccines and removal of restrictions is raising confidence and optimism. LaSalle Network's Office Re-Entry Index shows that 70 per cent of CEOs, human resources and finance leaders are planning for employees to return to the office by fall 2021.

KORE has a focus in markets with exposure to technology hubs and tech-tenancy. Its recent leasing activities are driven mainly by demand from professional services, finance and insurance, and technology. Over 37 per cent of its current portfolio by net lettable area comprises tenants from technology and medical and healthcare.   REIT Watch is a weekly column on The Business Times, read the original version.



REIT Watch - US office S-Reits - half empty or half full?

<h2>Singapore</h2><h3><a href="https://www.smartkarma.com/entities/prime-us-reit" target="_blank" data-smartkarma-citation="entities:28144" rel="noopener">Prime US REIT (PRIME SP)</a> in talks with WeWork on proposed lease restructuring</h3><ul><li>Co-working space operator WeWork has approached PRIME with a proposal to restructure its lease at the latter's Class-A office property in California, and discussions are ongoing. The tenant occupies 56,977sqft within Tower I at Emeryville, out of the building's NLA of 222,606sqft. The tenant contributes less than 2.5% of PRIME's cash rental income as at end-Mar. It added that the tenant has been current on its rental obligations till mid-Jun21, and the lease terms are currently under evaluation</li><li>PRIME has called on the tenant to continue to meet its rental obligations, and also called upon the existing security package for the payment of such obligations. PRIME's security in relation to that WeWork lease consists of a combination of protections. If the counterparty honours its obligations, such protections will cover the tenant's monthly lease obligations through as much as end-2022. PRIME does not expect the matter to have any impact on the distribution per unit of PRIME for FY21, in light of the security. Based on the independent valuation sought, this will not materially affect the value of PRIME's portfolio as compared to the portfolio appraisal conducted as at last Dec.</li></ul>

SingaporePrime US REIT (PRIME SP) in talks with WeWork on proposed lease restructuringCo-working space operator WeWork has approached PRIME with a proposal to restructure its lease at the latter's Class-A office property in California, and discussions are ongoing. The tenant occupies 56,977sqft within Tower I at Emeryville, out of the building's NLA of 222,606sqft. The tenant contributes less than 2.5% of PRIME's cash rental income as at end-Mar. It added that the tenant has been current on its rental obligations till mid-Jun21, and the lease terms are currently under evaluationPRIME has called on the tenant to continue to meet its rental obligations, and also called upon the existing security package for the payment of such obligations. PRIME's security in relation to that WeWork lease consists of a combination of protections. If the counterparty honours its obligations, such protections will cover the tenant's monthly lease obligations through as much as end-2022. PRIME does not expect the matter to have any impact on the distribution per unit of PRIME for FY21, in light of the security. Based on the independent valuation sought, this will not materially affect the value of PRIME's portfolio as compared to the portfolio appraisal conducted as at last Dec.

ASEAN Builder's Scoop (18Jun21) - PRIME/WeWork Lease Restructuring

<div><em><strong>Non- SGX Report: These equity research reports are not written by the SGX</strong>.&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.<br></em></div>
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<h2>PRIME US REIT</h2>
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<h3>Towards normalisation</h3>
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<li>1Q21 NPI and distributable income met 23% of our FY21e estimates. Portfolio occupancy dipped 0.7% to 91.7%.</li>
<li>99% rent collection with minimal lease expiries of 8%/8.4% in FY21e/FY22e, evenly spread across properties. Leasing pick-up expected with greater return to offices.</li>
<li>Downgrade to ACCUMULATE from BUY as recent share-price improvements have likely priced in some positives. DDM target price of US$0.94 (COE 9.5%) unchanged.</li>
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<p><strong>The Positives</strong></p>
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<li>1Q21 largely in line. Although Covid-19 cases in the U.S. hit new highs in January, Prime’s income was resilient. Rent collection remained strong at 99% with minimal rent concessions. Gross revenue and net property income were steady YoY. Property expenses increased 11.7% YoY due to a full quarter’s share of Park Tower’s expenses, acquired on 24 Feb 2020.</li>
<li>High renewals; minimal FY21 expiries. In 1Q21, Prime signed 57,647 sq ft of leases at positive rental reversions of 9.5%. More than 80% were renewals or for expansion by existing tenants. Leases were signed with Extend Health, CBRE and FLS Transportation, among others. Prime also signed 22,437 sq ft of short-term extensions. Leases due to expire in FY21 account for only 8% of cash rental income (CRI). These expiries are well spread across its properties with none above 1.4%. Month-to-month leases constitute only 0.7% of CRI.</li>
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<p><strong>The Negative</strong></p>
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<li>Portfolio occupancy dipped 0.7% to 91.7%. Several properties’ occupancy dipped QoQ. The more notable declines were at 222 Main in Salt Lake City and Promenade I &amp; II in San Antonio. 222 Main’s occupancy fell 3% to 90.9%. That of Promenade I &amp; II retreated 3.6% to 93.9%. The main reason was a few tenants left the buildings. January’s Covid-19 spike halted leasing in those markets. As such, portfolio occupancy eased 0.7% to 91.7%. Still, this was well above the Class A office average of 84.3%.</li>
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Non- SGX Report: These equity research reports are not written by the SGX.&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report. 





PRIME US REIT




Towards normalisation





1Q21 NPI and distributable income met 23% of our FY21e estimates. Portfolio occupancy dipped 0.7% to 91.7%.
99% rent collection with minimal lease expiries of 8%/8.4% in FY21e/FY22e, evenly spread across properties. Leasing pick-up expected with greater return to offices.
Downgrade to ACCUMULATE from BUY as recent share-price improvements have likely priced in some positives. DDM target price of US$0.94 (COE 9.5%) unchanged.




















The Positives

1Q21 largely in line. Although Covid-19 cases in the U.S. hit new highs in January, Prime’s income was resilient. Rent collection remained strong at 99% with minimal rent concessions. Gross revenue and net property income were steady YoY. Property expenses increased 11.7% YoY due to a full quarter’s share of Park Tower’s expenses, acquired on 24 Feb 2020.
High renewals; minimal FY21 expiries. In 1Q21, Prime signed 57,647 sq ft of leases at positive rental reversions of 9.5%. More than 80% were renewals or for expansion by existing tenants. Leases were signed with Extend Health, CBRE and FLS Transportation, among others. Prime also signed 22,437 sq ft of short-term extensions. Leases due to expire in FY21 account for only 8% of cash rental income (CRI). These expiries are well spread across its properties with none above 1.4%. Month-to-month leases constitute only 0.7% of CRI.

The Negative

Portfolio occupancy dipped 0.7% to 91.7%. Several properties’ occupancy dipped QoQ. The more notable declines were at 222 Main in Salt Lake City and Promenade I &amp; II in San Antonio. 222 Main’s occupancy fell 3% to 90.9%. That of Promenade I &amp; II retreated 3.6% to 93.9%. The main reason was a few tenants left the buildings. January’s Covid-19 spike halted leasing in those markets. As such, portfolio occupancy eased 0.7% to 91.7%. Still, this was well above the Class A office average of 84.3%.







(Non-SGX Report) PRIME US REIT: Towards Normalisation

<h2>Singapore</h2><h3>SREITs results in a glance (see detailed spreadsheet and calendar attached)</h3><table class="table table-striped"><tbody><tr><td style="width: 141.25pt;"><p> </p></td><td style="width: 141.2pt;"><p>PRIME (US$)</p></td><td style="width: 141.2pt;"><p>KORE (US$)</p></td><td style="width: 141.2pt;"><p>MUST (US$)</p></td></tr><tr><td style="width: 141.25pt;"><p>Period</p></td><td style="width: 141.2pt;"><p>1Q21</p></td><td style="width: 141.2pt;"><p>1Q21</p></td><td style="width: 141.2pt;"><p>1Q21</p></td></tr><tr><td style="width: 141.25pt;"><p>Gross Revenue (S$ m)</p></td><td style="width: 141.2pt;"><p>35.9 (+2.5% YoY)</p></td><td style="width: 141.2pt;"><p>34.6 (-2.1% YoY)</p></td><td style="width: 141.2pt;"><p>NA</p></td></tr><tr><td style="width: 141.25pt;"><p>NPI (S$ m)</p></td><td style="width: 141.2pt;"><p>23.0 (-2.0% YoY)</p></td><td style="width: 141.2pt;"><p>20.4 (-2.8% YoY)</p></td><td style="width: 141.2pt;"><p>NA</p></td></tr><tr><td style="width: 141.25pt;"><p>DPU (S$ c)</p></td><td style="width: 141.2pt;"><p>Not Disclosed</p></td><td style="width: 141.2pt;"><p>Not Disclosed</p></td><td style="width: 141.2pt;"><p>NA</p></td></tr><tr><td style="width: 141.25pt;"><p>NAV per Unit (S$)</p></td><td style="width: 141.2pt;"><p>Not Disclosed</p></td><td style="width: 141.2pt;"><p>Not Disclosed</p></td><td style="width: 141.2pt;"><p>0.730</p></td></tr><tr><td style="width: 141.25pt;"><p>P/B (x)</p></td><td style="width: 141.2pt;"><p>0.99(Based on 4Q20 NAV)</p></td><td style="width: 141.2pt;"><p>0.90 (Based on 4Q20 NAV)</p></td><td style="width: 141.2pt;"><p>1.030 (Based on 4Q20 NAV)</p></td></tr><tr><td style="width: 141.25pt;"><p>Occupancy (%)</p></td><td style="width: 141.2pt;"><p>91.7</p></td><td style="width: 141.2pt;"><p>91.6</p></td><td style="width: 141.2pt;"><p>92.0</p></td></tr><tr><td style="width: 141.25pt;"><p>Reversion (%)</p></td><td style="width: 141.2pt;"><p>8.5</p></td><td style="width: 141.2pt;"><p>5.7</p></td><td style="width: 141.2pt;"><p>2.1</p></td></tr><tr><td style="width: 141.25pt;"><p>Gearing (%)</p></td><td style="width: 141.2pt;"><p>33.6</p></td><td style="width: 141.2pt;"><p>37.5</p></td><td style="width: 141.2pt;"><p>41.3</p></td></tr><tr><td style="width: 141.25pt;"><p>Cost of Debt (%)</p></td><td style="width: 141.2pt;"><p>2.8</p></td><td style="width: 141.2pt;"><p>2.82</p></td><td style="width: 141.2pt;"><p>3.18</p></td></tr><tr><td style="width: 141.25pt;"><p>1 Yr Fwd Yield (%)</p></td><td style="width: 141.2pt;"><p>8.24</p></td><td style="width: 141.2pt;"><p>8.3</p></td><td style="width: 141.2pt;"><p>8.00</p></td></tr><tr><td style="width: 141.25pt;"><p>Debt Hedged (%)</p></td><td style="width: 141.2pt;"><p>90.0</p></td><td style="width: 141.2pt;"><p>84.7</p></td><td style="width: 141.2pt;"><p>NA</p></td></tr><tr><td style="width: 141.25pt;"><p>Target Price</p></td><td style="width: 141.2pt;"><p>NA</p></td><td style="width: 141.2pt;"><p>NA</p></td><td style="width: 141.2pt;"><p>NA</p></td></tr><tr><td style="width: 141.25pt;"><p>Rating</p></td><td style="width: 141.2pt;"><p>NA</p></td><td style="width: 141.2pt;"><p>NA</p></td><td style="width: 141.2pt;"><p>NA</p></td></tr></tbody></table><h3><a href="https://www.smartkarma.com/entities/prime-us-reit" target="_blank" data-smartkarma-citation="entities:28144" rel="noopener">Prime US REIT (PRIME SP)</a> 1Q21 Business Update – Robust operations metrics; Trading at an attractive 8+% USD yield  </h3><ul><li>1Q21 revenue and NPI came in +2.5% YoY and -2.0% YoY, respectively, to US$35.9m (25.2% BB est) and US$23.5m (26.7% BB est). 1Q21 DI came in -1.2% YoY at US$17.6m, which benefitted from lower interest cost. 1Q21 DPU was undisclosed</li><li>Leasing momentum remained robust with a positive rental reversion of +8.5% in 1Q21 (vs +8.7% in 4Q20 and +8.9% in 3Q20). Focusing on long-term leases – 57,647sqft of long-term leases were executed in 1Q21 at a rental reversion of +9.5%. Below-market portfolio in place rents (by 6.5%) also provide a buffer for rental reversion potential</li><li>Overall portfolio committed occupancy fell to 91.7% in 1Q21 (vs. 92.4% in 4Q20 and 92.6% in 3Q20). PRIME has ~100% of cash rental income with built-in rental escalations averaging over +2% pa. Portfolio occupancy still well above Class-A office average of 84.3%. Rent collections remained robust at 99% with minimal rent concessions. Portfolio WALE stood at 4.3%</li><li>Portfolio gearing stands at 33.8% (vs. 33.5% in 4Q20 and 32.7% in 3Q20) with average cost of debt of 2.8% pa. (vs. 2.7% in 4Q20 and 2.7% in 3Q20) and 90.0% of debt hedged</li><li>PRIME currently trades at 8.24% FY21E yield and 0.99x P/B.</li></ul>

SingaporeSREITs results in a glance (see detailed spreadsheet and calendar attached) PRIME (US$)KORE (US$)MUST (US$)Period1Q211Q211Q21Gross Revenue (S$ m)35.9 (+2.5% YoY)34.6 (-2.1% YoY)NANPI (S$ m)23.0 (-2.0% YoY)20.4 (-2.8% YoY)NADPU (S$ c)Not DisclosedNot DisclosedNANAV per Unit (S$)Not DisclosedNot Disclosed0.730P/B (x)0.99(Based on 4Q20 NAV)0.90 (Based on 4Q20 NAV)1.030 (Based on 4Q20 NAV)Occupancy (%)91.791.692.0Reversion (%)8.55.72.1Gearing (%)33.637.541.3Cost of Debt (%)2.82.823.181 Yr Fwd Yield (%)8.248.38.00Debt Hedged (%)90.084.7NATarget PriceNANANARatingNANANAPrime US REIT (PRIME SP) 1Q21 Business Update – Robust operations metrics; Trading at an attractive 8+% USD yield  1Q21 revenue and NPI came in +2.5% YoY and -2.0% YoY, respectively, to US$35.9m (25.2% BB est) and US$23.5m (26.7% BB est). 1Q21 DI came in -1.2% YoY at US$17.6m, which benefitted from lower interest cost. 1Q21 DPU was undisclosedLeasing momentum remained robust with a positive rental reversion of +8.5% in 1Q21 (vs +8.7% in 4Q20 and +8.9% in 3Q20). Focusing on long-term leases – 57,647sqft of long-term leases were executed in 1Q21 at a rental reversion of +9.5%. Below-market portfolio in place rents (by 6.5%) also provide a buffer for rental reversion potentialOverall portfolio committed occupancy fell to 91.7% in 1Q21 (vs. 92.4% in 4Q20 and 92.6% in 3Q20). PRIME has ~100% of cash rental income with built-in rental escalations averaging over +2% pa. Portfolio occupancy still well above Class-A office average of 84.3%. Rent collections remained robust at 99% with minimal rent concessions. Portfolio WALE stood at 4.3%Portfolio gearing stands at 33.8% (vs. 33.5% in 4Q20 and 32.7% in 3Q20) with average cost of debt of 2.8% pa. (vs. 2.7% in 4Q20 and 2.7% in 3Q20) and 90.0% of debt hedgedPRIME currently trades at 8.24% FY21E yield and 0.99x P/B.

ASEAN Builder's Scoop (19May21) - PRIME robust operations metrics

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