This item was originally published on Monday, 26 July 2021 at 23:03 SGT; it has since been updated to include comment from KORE.
Keppel Pacific Oak US REIT, or KORE, reported Monday its second quarter net property income slipped 3.3 percent on-year to US$20.23 million, while gross revenue declined 3.9 percent on-year to US$33.80 million.
KORE told Shenton Wire the decline was due to lower non-cash straight-line rent and lease incentives, lower recoverable property expenses and lower car park income.
KORE referred to its adjusted net property income, which excludes non-cash straight-line rent and lease incentives and amortisation of leasing commissions; that figure edged up 0.5 percent in the quarter to US$20.36 million, mainly on higher cash rental income from higher rental reversions and built in rental escalations, and lower expenses, partly offset by lower occupancy on-year.
Distribution per unit (DPU) for the period edged up 1.3 percent on-year to 1.58 U.S. cents, the REIT said in a filing to SGX.
For the first half, KORE reported net property income fell 3.1 percent on-year to US$40.59 million, while gross revenue declined 3.0 percent on-year to US$68.38 million as the Covid-19 pandemic resulted in lower car park income as well as lower recoverable property expenses.
Income available for distribution in the first half increased 2.8 percent on-year to US$29.94 million, while the DPU rose 1.9 percent on-year to 3.16 U.S. cents, the filing said.
“The improved financial performance for 1H 2021 was driven by several factors, including positive rental reversions and built-in annual rental escalations across the portfolio, as well as lower expenses, partially offset by lower year-on-year occupancy,” KORE said in the statement.
KORE said its committed occupancy was at 90.5 percent at end-June; it posted positive rental reversion of 5.4 percent in the first half, mainly on the performance of the technology hubs of Seattle.
The REIT noted the distribution yield for the first half was 8.1 percent, based on the unit closing price of US$0.785 on 30 June; the distribution will be paid on 28 September.
The REIT’s outlook was cautiously optimistic.
“While government aid and stimulus has helped boost consumer spending and mitigate the economic impact of the COVID-19 pandemic in the U.S., broad concerns remain over the pace of inflation fuelled by the fiscal and monetary policy,” KORE said.
“Notwithstanding that, with continued progress in the pace of vaccinations across the U.S., the manager remains confident of the long-term prospects of its key growth markets, and is proactively seeking expansion opportunities,” it added.
KORE’s portfolio holds 13 office properties in the U.S., across eight markets, as of end-June.