Straits Times recently published an insightful article highlighting the potential upswing in the US Office REIT sector, capturing a trend I’ve also been optimistic about for some time. This optimism stems largely from the fact that all three US Office REITs listed on the Singapore Exchange have successfully navigated debt refinancing hurdles. By addressing this critical refinancing risk, they’ve put themselves in a more secure financial position. However, there’s a flipside for Manulife US REIT (MUST); while they managed refinancing, they’re now faced with selling US office properties, especially given the tenant vacancies at Penn and Diablo Buildings.
There’s some good news on the horizon, though. With refinancing squared away, these REITs have set the stage for reinstating a 10% dividend in 2026. Even though US Office REITs are operating under high leverage, thanks to elevated cap rates, they’ve obtained confirmations for their debt refinancing in 2024. My focus has been on PRIME US, which managed to refinance, albeit with an increase in both amount and the SOFR rate.
With their cashflow position now stable, I anticipate that by 2025, both KORE and PRIME US will leverage their rental income to maintain their payment schedules…
