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

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

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Equity Bottom-Up

Manulife US REIT (MUST) / Equity Bottom-Up






Data for office markets in Europe and the United States (US) are indicating potential signs of recovery. European office occupier activity remains robust and rents resilient in Q1 2022, and Q4 2021 recorded the strongest quarterly leasing volume since Q4 2018 driven by pent-up demand (Knight Frank, Savills).

Meanwhile in the US, leasing activity rose 5.4 per cent over Q1 2022, marking the fifth consecutive quarter of improved tenant demand, according to JLL.

There are 6 S-Reits with pure Europe and US office properties: Cromwell European Reit : CWBU 0%, IReit Global : 8U7U 0%, and Elite Commercial Reit : MXNU 0% have pure Europe office assets, while Manulife US Reit : BTOU 0%, Prime US Reit : OXMU 0%, and Keppel Pacific Oak US Reit : CMOU 0% have pure US office assets.

Cromwell European Reit reported 94.8 per cent in overall portfolio occupancy and 4.2 per cent positive rent reversion.

Its office portfolio registered positive rent reversion of 1.6 per cent, from several lease renewals and smaller new leases in Italy, France, and Finland. It noted that the preference in Europe trends towards shorter lease durations and flexible leases, while nascent recovery has been tempered by the Ukraine-Russia war which has reduced appetite for office expansions in Finland and Poland.

IReit Global reported an unchanged portfolio occupancy at 95.7 per cent as at Mar 31, 2022. It expects its portfolio to remain resilient, supported by a blue-chip tenant mix and diversified asset base.

IReit will continue to focus on asset management to maintain occupancy and long-term attractiveness through sustainability initiatives.

Elite Commercial Reit reported a 36.2 per cent year-on-year growth in Q1 2022 distributable income, driven by its maiden portfolio acquisition and tax savings as a UK Reit group. It achieved positive outcome from its major lease re-gearing exercise, removing lease break options from 109 assets (set to occur in March 2023).

It received notice to exercise break options for 8 of remaining 9 Department for Work and Pensions (DWP)-occupied assets and will actively manage these. The Reit’s portfolio remains fully occupied as of Mar 31, 2022.

Manulife US Reit reported 3.9 per cent positive rent reversion and portfolio occupancy of 91.7 per cent in Q1 2022, above US Class A average (83 per cent). It noted that employment in most office-using sectors are above pre-Covid-19 levels, led by professional services, information, and financial activities.

Prime US Reit continued to observe stronger leasing activity for Q1 2022, which more than doubled year on year, and positive rent reversion of 3.4 per cent.

Rent reversions over the last 7 quarters have consistently remained positive. It noted that portfolio rents are below asking rents by 6.0 per cent, reflecting the continued potential for rent reversion.

Parking revenue also increased by over 30 per cent as more return to offices in Q1 2022.

Keppel Pacific Oak US Reit reported 2.4 per cent positive rent reversion for Q1 2022 with zero rent deferment requests. It noted new leading demand and expansions from professional services, finance and insurance, TAMI (technology, advertising, media, information), and medical and healthcare. It noted that tenants appear to have long-term confidence in the office market as more companies expand footprints. 

REIT Watch is a weekly column on The Business Times, read the original version



REIT Watch - Signs of an inflection point for S-Reits with Europe, US office assets

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<p>With up to 75 per cent of employees now able to return to the workplace in Singapore, there has been a noticeable increase in crowds in office areas over the past week.<br><br>
This trend is also expected to be similar in the US as companies start to announce plans to bring more employees back to the office.<br><br>
According to the Microsoft Annual Work Trend Index Report 2022, 50 per cent of leaders say their company already requires, or plans to require, full-time in-person work in the year ahead.<br><br>
Companies such as Apple, JP Morgan, and Twitter are also said to welcome more staff back to office and consider hybrid models.</p>

<p>SGX lists 3 pure-play US office S-Reits - Manulife US Reit, Prime US Reit, and Keppel Pacific Oak US Reit.<br><br>
The trio have a combined market capitalisation of S$3.8 billion, average distribution yield of 8.7 per cent and trade at a price-to-book ratio of 0.9 times.<br><br>
Manulife US Reit (MUST) has a portfolio of 12 freehold office properties in Arizona, California, Georgia, New Jersey, Oregon, Virginia and Washington DC with a combined asset value of US$2.2 billion as at Dec 31, 2021.<br><br>
As at end 2021, MUST recorded a 92.3 per cent occupancy rate against the US Class A average of about 83 per cent, according to JLL's Q4 2021 US Office Outlook.<br><br>
Must also noted that 2021 ended on a strong note for the US office segment as transaction volumes increased along with higher leasing activity and strong projections for 12-month rent growth in many markets.<br><br>
Over the first few months of 2022, MUST also observed higher numbers, signifying that return-to-office is gathering momentum, alongside H2 2021 portfolio valuations turning positive for the first time since the onset of Covid-19.<br><br>
It believes that office space will remain relevant, as firms are signing longer US office leases which averaged 7.1 years in Q1 2021 and lengthened to 7.8 years in Q4 2021 according to JLL.<br><br>
Prime US Reit (Prime) has a portfolio of 14 freehold office properties in 13 key US office markets with a total carrying value of US$1.65 billion as at Dec 31, 2021.<br><br>
It has a portfolio occupancy rate of 90.3 per cent (at end 2021), which is higher than the average US Class A.<br><br>
Prime anticipates an increase in leasing activity as employees cautiously plan for their return to office.<br><br>
Its leasing activity in H2 2021 more than doubled that in H1 2021 and rent collections have remained above 99 per cent throughout FY2020 and FY2021.<br><br>
Prime attributes its resilience to its industry sector diversification, where no single property contributes more than 11.4 per cent of its cash rental income.<br><br>
It continues to have a focus in growth and established STEM (science, technology, engineering and mathematics) and TAMI (technology, advertising, media and information) sectors.<br><br>
Keppel Pacific Oak US Reit (KORE) has a portfolio of 15 freehold office buildings and business campuses across 9 key growth markets in the US with a combined asset value of US$1.46 billion.<br><br>
KORE has a committed portfolio occupancy of 91.9 per cent.<br><br>
Close to 45 per cent of its portfolio by net lettable area comprises tenants from the growing TAMI, medical and healthcare sectors.<br><br>
The Reit has observed that the correlation between increasing Covid-19 cases and falling demand for office space has started to diminish.<br><br>
KORE quoted the CoStar Office National Report December 2021, where close to 100 million sq ft of office space was leased in Q3 2021, an indicator of stabilisation in the US office market. <br><br><strong><em>REIT Watch is a weekly column on The Business Times,<a href="https://www.businesstimes.com.sg/companies-markets/singapore-office-s-reits-poised-to-benefit-from-positive-rental-momentum-0"> </a><a href="https://www.businesstimes.com.sg/companies-markets/us-office-s-reits-set-for-continued-growth-with-the-return-to-office-0">read </a>the original version.</em></strong></p>
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    Trio of US office SREIT


With up to 75 per cent of employees now able to return to the workplace in Singapore, there has been a noticeable increase in crowds in office areas over the past week.  
This trend is also expected to be similar in the US as companies start to announce plans to bring more employees back to the office.  
According to the Microsoft Annual Work Trend Index Report 2022, 50 per cent of leaders say their company already requires, or plans to require, full-time in-person work in the year ahead.  
Companies such as Apple, JP Morgan, and Twitter are also said to welcome more staff back to office and consider hybrid models.

SGX lists 3 pure-play US office S-Reits - Manulife US Reit, Prime US Reit, and Keppel Pacific Oak US Reit.  
The trio have a combined market capitalisation of S$3.8 billion, average distribution yield of 8.7 per cent and trade at a price-to-book ratio of 0.9 times.  
Manulife US Reit (MUST) has a portfolio of 12 freehold office properties in Arizona, California, Georgia, New Jersey, Oregon, Virginia and Washington DC with a combined asset value of US$2.2 billion as at Dec 31, 2021.  
As at end 2021, MUST recorded a 92.3 per cent occupancy rate against the US Class A average of about 83 per cent, according to JLL's Q4 2021 US Office Outlook.  
Must also noted that 2021 ended on a strong note for the US office segment as transaction volumes increased along with higher leasing activity and strong projections for 12-month rent growth in many markets.  
Over the first few months of 2022, MUST also observed higher numbers, signifying that return-to-office is gathering momentum, alongside H2 2021 portfolio valuations turning positive for the first time since the onset of Covid-19.  
It believes that office space will remain relevant, as firms are signing longer US office leases which averaged 7.1 years in Q1 2021 and lengthened to 7.8 years in Q4 2021 according to JLL.  
Prime US Reit (Prime) has a portfolio of 14 freehold office properties in 13 key US office markets with a total carrying value of US$1.65 billion as at Dec 31, 2021.  
It has a portfolio occupancy rate of 90.3 per cent (at end 2021), which is higher than the average US Class A.  
Prime anticipates an increase in leasing activity as employees cautiously plan for their return to office.  
Its leasing activity in H2 2021 more than doubled that in H1 2021 and rent collections have remained above 99 per cent throughout FY2020 and FY2021.  
Prime attributes its resilience to its industry sector diversification, where no single property contributes more than 11.4 per cent of its cash rental income.  
It continues to have a focus in growth and established STEM (science, technology, engineering and mathematics) and TAMI (technology, advertising, media and information) sectors.  
Keppel Pacific Oak US Reit (KORE) has a portfolio of 15 freehold office buildings and business campuses across 9 key growth markets in the US with a combined asset value of US$1.46 billion.  
KORE has a committed portfolio occupancy of 91.9 per cent.  
Close to 45 per cent of its portfolio by net lettable area comprises tenants from the growing TAMI, medical and healthcare sectors.  
The Reit has observed that the correlation between increasing Covid-19 cases and falling demand for office space has started to diminish.  
KORE quoted the CoStar Office National Report December 2021, where close to 100 million sq ft of office space was leased in Q3 2021, an indicator of stabilisation in the US office market.   REIT Watch is a weekly column on The Business Times, read the original version.



REIT Watch - US office S-Reits set for continued growth with the return to office

<div><em><strong>Non- SGX Report: These equity research reports are not written by the SGX.&nbsp;</strong>SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.</em></div>
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<h2>Prime US REIT</h2>
<h3>Bottoming out expected at year-end</h3>
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<li>1H21 NPI and distributable income met expectations, at 46% of our FY21e estimates. Despite higher rental reversions and income contributions from Park Tower, NPI declined 2.3% YoY due to lower portfolio occupancy and transient parking income.</li>
<li>Two new properties were acquired in new markets with longer WALEs and higher occupancies than portfolio. We expect greater resilience and earnings visibility from an enlarged portfolio.</li>
<li>Maintain ACCUMULATE and DDM target price of US$0.94 (COE 9.5%). FY21e/FY22e DPUs lowered by 10.5%/0.7% to reflect lower carpark income and softer leasing, offset by reversions and rental income from new acquisitions. Catalysts include improved leasing and a greater return to office.</li>
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<p><strong>The Positives</strong><br><strong>+ Positive reversions.</strong> Prime signed 52,349 sq ft of leases in 2Q21 at positive rental reversions of 10.5%. Excluding short-term lease extensions of 9,931 sq ft, rental reversions were 13.3%. This could be credited to leases signed at 101 South Hanley and Tower 909, where expiring rents are 11-13.5% below market. Positive rent reversions are expected going into 3Q, as portfolio rents are below asking rents by 6.4%.</p>
<p><strong>+ Acquisitions enhance resilience.</strong> As of 23 July, Prime completed the acquisition of two new properties: Sorrento Towers in San Diego and One Town Center in Florida. San Diego is one of the top 10 tech cities in the US, where demand from the biotechnology, biopharmaceutical, international trade, high-tech and defence sectors is strong. South Florida is one of the top 10 states for population in-migration thanks to its favourable tax climate and quality of life. These acquisitions introduce Prime to two new markets and increase its exposure to key industry sectors. They have also extended its portfolio WALE from 4.4 to 4.6 years. Occupancy at both properties is above portfolio occupancy of 91.7%, at 98.2% and 94.7% respectively. This improves earnings visibility. The acquisitions were funded by debt and equity. Proforma DPU could be lifted by an estimated 2.4% after acquisition, based on FY20 figures.</p>
<p><strong>The Negative</strong><br><strong>- Lower portfolio occupancy and carpark income vis-à-vis a year ago.</strong> Despite its positive rental reversions and contributions from Park Tower acquired on 24 February 2020, 1H21 gross revenue climbed only 2.6% YoY. This is due to lower portfolio occupancy of 91.7% as compared to 93% a year ago, as well as reduced transient parking income which historically comprised mid to high single digits of Prime’s topline. Property expenses also increased 25.4% YoY with new expenses from Park Tower. As such, NPI and distributable income fell 2.3%/1.3% YoY. DPU declined 5.4% YoY from a larger unit base.</p>
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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
Bottoming out expected at year-end





1H21 NPI and distributable income met expectations, at 46% of our FY21e estimates. Despite higher rental reversions and income contributions from Park Tower, NPI declined 2.3% YoY due to lower portfolio occupancy and transient parking income.
Two new properties were acquired in new markets with longer WALEs and higher occupancies than portfolio. We expect greater resilience and earnings visibility from an enlarged portfolio.
Maintain ACCUMULATE and DDM target price of US$0.94 (COE 9.5%). FY21e/FY22e DPUs lowered by 10.5%/0.7% to reflect lower carpark income and softer leasing, offset by reversions and rental income from new acquisitions. Catalysts include improved leasing and a greater return to office.






The Positives + Positive reversions. Prime signed 52,349 sq ft of leases in 2Q21 at positive rental reversions of 10.5%. Excluding short-term lease extensions of 9,931 sq ft, rental reversions were 13.3%. This could be credited to leases signed at 101 South Hanley and Tower 909, where expiring rents are 11-13.5% below market. Positive rent reversions are expected going into 3Q, as portfolio rents are below asking rents by 6.4%.
+ Acquisitions enhance resilience. As of 23 July, Prime completed the acquisition of two new properties: Sorrento Towers in San Diego and One Town Center in Florida. San Diego is one of the top 10 tech cities in the US, where demand from the biotechnology, biopharmaceutical, international trade, high-tech and defence sectors is strong. South Florida is one of the top 10 states for population in-migration thanks to its favourable tax climate and quality of life. These acquisitions introduce Prime to two new markets and increase its exposure to key industry sectors. They have also extended its portfolio WALE from 4.4 to 4.6 years. Occupancy at both properties is above portfolio occupancy of 91.7%, at 98.2% and 94.7% respectively. This improves earnings visibility. The acquisitions were funded by debt and equity. Proforma DPU could be lifted by an estimated 2.4% after acquisition, based on FY20 figures.
The Negative - Lower portfolio occupancy and carpark income vis-à-vis a year ago. Despite its positive rental reversions and contributions from Park Tower acquired on 24 February 2020, 1H21 gross revenue climbed only 2.6% YoY. This is due to lower portfolio occupancy of 91.7% as compared to 93% a year ago, as well as reduced transient parking income which historically comprised mid to high single digits of Prime’s topline. Property expenses also increased 25.4% YoY with new expenses from Park Tower. As such, NPI and distributable income fell 2.3%/1.3% YoY. DPU declined 5.4% YoY from a larger unit base.














(Non-SGX Report): Prime US REIT: Bottoming Out Expected at Year-End

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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?

<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

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Prime US REIT (PRIME SP)

REIT Watch - Signs of an inflection point for S-Reits with Europe, US office assets

Data for office markets in Europe and the United States (US) are indicating potential signs of recovery. European office occupier activity...

Singapore Exchange Ltd (SGX)

REIT Watch - US office S-Reits set for continued growth with the return to office

With up to 75 per cent of employees now able to return to the workplace in Singapore, there has been a noticeable increase in...

Singapore Exchange Ltd (SGX)

(Non-SGX Report): Prime US REIT: Bottoming Out Expected at Year-End

Non- SGX Report: These equity research reports are not written by the SGX. SGX supports the distribution of the research reports by external...

Singapore Exchange Ltd (SGX)

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

SGX lists eight actively traded S-Reits with properties in the United States (US). Five out of the eight S-Reits have pure...

Singapore Exchange Ltd (SGX)

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

Non- SGX Report: These equity research reports are not written by the SGX. SGX supports the distribution of the research reports by external...

Singapore Exchange Ltd (SGX)

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