Distributable income down 18.8% at US$12.1 million due largely to lower property operating income as a result of lease expiries
[SINGAPORE] The manager of Prime US Real Estate Investment Trust (Reit) on Wednesday (Feb 11) posted a distribution per unit (DPU) of US$0.0049 for the second half ended Dec 31.
This is an increase from the US$0.0011 DPU recorded in the year-ago period.
The H2 DPU comprises an advanced distribution of US$0.0024 for the period from Jul 1 to Oct 5 that was already paid out. The remaining US$0.0025 will be paid on Mar 31, after the record date of Feb 23.
Distributable income for the half-year was down 18.8 per cent at US$12.1 million, from US$14.8 million. The decline was due largely to lower property operating income as a result of lease expiries, said the manager.
Revenue was down 2.2 per cent on the year at US$66 million, mainly because of lease expiries during the year. Property operating expenses was on a par with that of H2 2024 at US$32.6 million.
As a result, net property income (NPI) was down 5.6 per cent year on year at US$33.4 million.
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For the full year, DPU rose to US$0.0061 from US$0.0029 in the year-ago period. Distributable income, meanwhile, was down 24.8 per cent on the year at US$28.7 million.
Revenue declined 5.4 per cent to US$133.3 million, and NPI decreased 8.8 per cent to US$69.3 million.
The manager also announced that it was increasing the distributable income payout ratio amid stronger leasing momentum and higher committed occupancy.
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The Reit secured about 680,000 square feet (sq ft) of leasing activities – including both new and renewal leases – resulting in a positive rental reversion of 5.6 per cent for the 2025 financial year.
Its portfolio’s weighted average lease expiry (Wale) lengthened to 5.6 years from 4.4 years as at Dec 31, 2024, supporting stronger income visibility.
Committed occupancy improved to 82.7 per cent as at Dec 31, 2025, compared with 80 per cent in the previous year.
Two sizeable single-tenant leases of about 120,000 sq ft each were signed in H2 2025, and the group is working with several existing tenants on their potential expansion needs, which will improve unitholder returns, said the Reit manager.
One of the two leases was for 15 years at Park Tower in Sacramento, California, which raised the property’s leased occupancy to 89.9 per cent. The other was an 11-year lease at Waterfront at Washingtonian in Maryland.
Given the leasing momentum, higher occupancy and the visibility and certainty of contractual future cash flows, the manager increased the distributable income payout ratio from 10 per cent to 50 per cent for the advanced distribution.
It further raised it to 65 per cent for the period beginning Oct 6.
“Mindful” of rewarding unitholders
The manager believes that increasing the payout ratio while retaining 35 per cent of the current distributable income can continue to ensure coverage for ongoing capital and operational needs.
As rental cash flows of the majority of newly signed leases commence in H2 2026, the manager said it expects further growth in Prime US Reit’s cash property income.
The trust’s year-end portfolio valuation rose 3.5 per cent on the year to US$1.4 billion, driven by higher contractual cash flows, portfolio quality and disciplined capital management, said the manager.
Its aggregate leverage ratio decreased to 45 per cent in 2025, from 46.7 per cent in 2024.
Rahul Rana, chief executive officer of Prime US Reit’s manager, said: “2025 was a strong year for Prime’s leasing activities, with higher committed occupancy and longer Wale.
“We have started to increase distributions in a measured way, and we remain mindful of rewarding our long-term unitholders.”
The Reit manager also pointed out that investment activity in US office assets has improved, with office sales volume rising for seven consecutive quarters and total deal volume up 35 per cent.
This came as credit conditions stabilised, and “buyers grew more confident around clearing prices and cap-rate levels for high-quality, well-leased assets”, it added.
Units of Prime US Reit ended Wednesday 4.5 per cent or US$0.01 higher at US$0.23, before the release of its results.
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