Prime US REIT Surges on Return-to-Office Momentum, Occupancy Gains, and Higher Payouts – Is a Turnaround Underway?

Key Highlights from the Latest Corporate Presentation

Prime US REIT, a Singapore-listed office real estate investment trust with 13 Class A freehold assets across 12 key U.S. office markets, has unveiled its latest corporate presentation, revealing several strategic developments that could potentially move its share price and reinvigorate investor sentiment.

1. Accelerated Return-to-Office Momentum Driving Leasing Recovery

• Seven of the ten largest Fortune 100 employers now require four or more days in office, signaling a robust shift back to physical office occupancy.
• Active tenant space requirements have rebounded to the highest level since 2021, with a 5.8% quarter-over-quarter increase in Q2 2025.
• Flight to quality continues, with investors showing renewed interest in well-amenitized Class A office assets and portfolios.

2. Portfolio Occupancy on the Upswing

• Portfolio occupancy rose to 80.2% in June 2025, up from 78.9% in March 2025, with further gains expected in the coming quarters.
• Recent leasing highlights include a 61,000 sq ft lease at 222 Main in Salt Lake City with the U.S. Attorney Office – District of Utah, offsetting a temporary dip after Goldman Sachs rightsized its tenancy.
• Large leases at LOI (Letter of Intent) stage are expected to sign in 2025, with rent collection commencing in 2026. This will drive portfolio occupancy closer to stabilization.
• Notably, only 154,000 sq ft of new leases signed in FY2024 and 1H2025 have commenced payment as of June 2025, with 440,000 sq ft (10.5% of the portfolio) staggered to commence rent from Q3 2025 onwards. This staged rent commencement ensures future income upside.

3. Strong Financial Position and Enhanced Shareholder Returns

• Aggregate leverage stands at 46.7%, with substantial debt headroom of US\$95 million and undrawn committed credit facilities of US\$64 million. No debt matures in 2025, providing strong liquidity and flexibility for growth.
• Net Asset Value (NAV) per unit is US\$0.55, while the unit price trades at a steep 60% discount to NAV (US\$0.220 as of September 24, 2025).
• The trust is increasing its distributable income payout ratio from just 10% to at least 50% for 2H 2025 onwards, a significant move likely to attract yield-focused investors and potentially move the share price.
• 1H2025 DPU was US 0.12 cents, up from US 0.11 cents in 2H 2024.

4. Sector and Tenant Diversification Bolstering Resilience

• No single asset contributes more than 14.3% to the total portfolio carrying value, and no single market contributes more than 12.4% of cash rental income.
• Top tenants span communications, finance, legal, medical/biotech, government, and real estate sectors, reducing concentration risk.
• Major tenants include Charter Communications (10.2% of portfolio CRI), Dexcom, Wells Fargo, Goldman Sachs, Matheson Tri-Gas, State of California, and others.

5. Asset Enhancement and Leasing Pipeline Updates

• Waterfront at Washingtonian (Maryland) occupancy surged from 33% to 85.7% following asset enhancements and a 120,000 sq ft lease with X-energy, an Amazon-backed clean energy firm.
• Reston Square (Virginia) occupancy rose from 47% to 69.4% post-minor upgrades.
• Village Center Station I (Denver) signed a 43,000 sq ft lease with a global engineering firm, boosting occupancy from 50.2% to 68.3%.
• Park Tower (Sacramento) expects a large lease (~24% of asset space) to sign in 2H 2025, which could lift occupancy to near 85%.

6. U.S. Office Market Dynamics: Macro Tailwinds and M&A Pickup

• U.S. GDP growth was 3.0% in Q2 2025. Unemployment edged up to 4.3% in August 2025. Inflation remains relatively contained at 2.6% (PCE) and 2.9% (CPI).
• Fed officials cut their benchmark interest rate by 25bps to 4%-4.25%, potentially supporting asset values and REIT yields.
• JLL data shows inventory decline outpacing new deliveries, and sublease availability continues to drop, tightening supply in key office markets.
• M&A activity is picking up: City Office REIT agreed to be taken private for US\$1.1 billion, Cohen & Steers invested US\$300 million in Hudson Pacific Properties, and Shorenstein continues a US\$1 billion acquisition spree. These transactions may signal a bottoming of U.S. office asset values and renewed institutional confidence.

What Investors Should Watch: Price-Sensitive Developments

• Significant increase in payout ratio from 10% to at least 50% for 2H 2025 onwards. This is a major shift that could catalyze share price re-rating.
• Occupancy gains and staggered rent commencement from large new leases signed in FY2024 and 1H2025 will drive distributable income in the coming quarters.
• Potential for further large lease signings in 2H 2025, which could accelerate occupancy stabilization and future income growth.
• Deep NAV discount (unit price at 60% discount to NAV) offers a compelling entry point if fundamentals continue to improve.
• Strong balance sheet and liquidity position enable pursuit of large-scale leasing opportunities, supporting future growth and value creation.
• Asset enhancement successes (Waterfront at Washingtonian, Reston Square, Village Center Station I) and sector/tenant diversification reinforce portfolio resilience.

Conclusion: Turnaround Potential and Share Price Catalysts

Prime US REIT’s latest update paints a picture of a trust at an inflection point: return-to-office momentum, improving occupancy, strong leasing pipelines, and a dramatic increase in payout ratio are all price-sensitive factors that could drive the share price higher. Investors should closely monitor the upcoming rent commencements, further lease signings, and the impact of the higher payout ratio, as these developments will be central to the REIT’s turnaround narrative.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should carefully consider their own financial situation and consult with professional advisors before making any investment decisions. Past performance is not indicative of future results. The information was inferred from a corporate presentation and may be subject to change and/or management interpretation.

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