Keppel Pacific Oak US Reit Q1 distributable income continues slide, tumbling 19.3% to US$9.6 million

[SINGAPORE] Keppel Pacific Oak US Reit (Kore) posted a distributable income of US$9.6 million for its first quarter ended Mar 31, down 19.3 per cent from US$11.9 million in the previous corresponding period.

The US office-focused real estate investment trust (Reit) blamed the decline on lower adjusted net property income (NPI), mostly as a result of lower rental income from higher free rents due to timing differences in various leases completed for the respective periods, said the manager in a business update on Thursday (Apr 17).

It posted a negative 3.6 per cent rental reversion for the quarter, mainly affected by a renewal at Bellevue Technology Center, said the Reit’s manager.

As at end-March, the Reit’s average leverage stood at 43.7 per cent.

No distribution was declared. The manager had announced previously it would suspend distributions for two years from H2 FY2023 to H2 FY2025 as part of recapitalisation plans to address capital needs and leverage concerns. 

For the three months ended Mar 31, NPI was at US$19.7 million, down 6.2 per cent from US$21 million before.

Revenue slipped 0.5 per cent to US$36.9 million.

The Reit’s buildings and business campuses in the tech hubs of Bellevue, Redmond, Austin and Denver contribute to about 65 per cent of its NPI.

The weighted average term to maturity of its debt was 2.2 years, said the manager.

Additionally, its full portfolio weighted average lease expiry by net lettable area is 3.5 years.

Kore’s performance had been sliding for some time with the challenging environment faced by the US office market.

For H2 and the full year in 2024, its distributable income tumbled due to lower cash NPI and higher financing costs. 

Full-year 2024 distributable income was down 8.8 per cent at US$47.6 million.

Units of Kore ended 1.6 per cent or US$0.003 lower at US$0.182 on Wednesday.