Keppel Pacific Oak US REIT (KORE) reported Wednesday its second half net property income rose 2.4 percent on-year to US$42.10 million on acquisitions in Tennessee and Colorado in August 2021, and on positive rental reversions and annual rental escalations.
Gross revenue for the six months ended 31 December rose 5.5 percent to US$72.87 million, the REIT said in a filing to SGX.
In the second half, property expenses rose 10 percent on-year to US$30.8 million, mainly on the enlarged portfolio and higher property taxes and repairs and maintenance, the REIT said.
Distributable income for the second half rose 10 percent on-year to US$32.48 million, the REIT said.
Distribution per unit (DPU) for the second half was 3.18 U.S. cents, up 1.6 percent from 3.13 U.S. cents in the year-ago period, the REIT said.
At end-2021, the REIT had 1.04 billion units, while the DPU for the second half of 2020 was calculated over 943.06 million units, the filing said.
KORE said its leasing momentum was positive, with around 250,454 square feet of office space committed in the fourth quarter, for full-year leasing of more than 730,619 square feet, or around 14.3 percent of the portfolio’s net lettable area.
“KORE ended the year with a healthy portfolio committed occupancy of 91.9 percent. Rental reversion continued to remain positive at 6.0 percent for the whole of 2021, driven mainly by strong rents in the technology hubs of Seattle – Bellevue/Redmond and Austin. At the same time, average rental collections for FY 2021 remained high at approximately 99 percent,” the REIT said.
For the full year, KORE reported net property income slipped 0.4 percent on-year to US$82.68 million, on gross revenue of US$141.26 million, up 1.2 percent on-year. The DPU for the full year was 6.34 U.S. cents, up 1.8 percent from 6.23 U.S. cents in the previous year, KORE said.
In its outlook, KORE noted economists expect the U.S. economy performed better in the fourth quarter, and office leasing activities in the country are improving as more employers bring employees back to offices.
The Seattle-Bellevue/Redmond area, responsible for around 43.8 percent of portfolio net property income for KORE, has also continued to see an influx of migration as a tech boomtown, the REIT said.
KORE said that despite Covid-19 variants causing restrictions and delays in re-opening plans, “conglomerates, especially tech giants have and are expected to continue committing to office spaces despite potential delays in their return to office mandates, reinforcing the necessity of offices and its need for social interaction and workplace collaboration, both of which are essential for employee development.”