Prime US REIT Announces Major Distribution Policy Hike, Robust Leasing Activity, and U.S. Office Market Recovery

Key Business and Operational Updates for 3Q2025

Prime US REIT (SGX: OXMU) has delivered a series of significant business updates that are likely to capture investor attention and potentially impact its share price. The Trust’s Manager, Prime US REIT Management Pte. Ltd., announced a much-anticipated shift towards a higher distribution payout, robust leasing momentum, and a positive outlook for the U.S. office market, signaling a potential inflection point for the REIT’s mid- to long-term performance.

Highlights for Investors

• Distributable Income Payout Policy Increased to At Least 50% from 2H2025
  After a period of conservatism, where only 10% of distributable income was paid out as distributions since July 2023, the Manager will increase the payout ratio to at least 50% starting from the second half of 2025. This normalization reflects management’s confidence in stable and visible future cash flows arising from newly signed leases and improved portfolio occupancy. This is a notable return to a higher yield profile for unitholders and could be a catalyst for re-rating the REIT’s units.
• Strong Improvement in Leasing and Occupancy
  In 3Q2025, Prime US REIT secured approximately 92,000 square feet of new leases, extending the portfolio’s weighted average lease expiry (WALE) to 4.9 years, up from 4.7 years in the previous quarter. For the first nine months of 2025, a total of 492,000 square feet of leases were signed, with an average rental reversion of 6.4%. Portfolio committed occupancy improved further to 80.7% as at 30 September 2025, a clear sign of operational recovery and leasing traction.
• Securing Large, High-Quality Tenants and Long Tenures
  Key leases include an 11-year lease for at least 120,000 square feet with X-Energy at Waterfront at Washingtonian, pushing asset occupancy from 33% to above 85%. Another major lease is a 20-year lease for 61,000 square feet with the U.S. Attorney’s Office, District of Utah, bringing occupancy at 222 Main in Salt Lake City back above 90%. These long-term, blue-chip tenancies are likely to enhance income visibility and reduce leasing risk.
• US\$25 Million Equity Fund Raise Bolsters Liquidity and Debt Headroom
  In October 2025, Prime US REIT completed a US\$25 million private placement. The primary use of proceeds is to fund tenant incentives and capital expenditures needed to activate over 450,000 square feet of recently signed leases, providing immediate capital readiness to match demand and support further lease commencements. In the interim, US\$23.8 million was used for debt repayment, improving the REIT’s financial flexibility.
• U.S. Office Market Recovery Supports Positive Outlook
  The U.S. office market is showing signs of stabilization, with 3Q25 leasing volume up 6.5% quarter-on-quarter to 52.4 million square feet and net absorption turning positive at 6.1 million square feet—the highest since before the pandemic. Class A vacancies tightened by over 100 basis points year-on-year, and construction activity has dropped 84% from 2019 levels, leading to a net contraction in inventory and setting the stage for a multi-year tightening trend. Investment sales have also rebounded, up 45% year-on-year to USD 32 billion.
• Strategic Positioning for Future Growth
  As the rent payments for most of the newly signed leases commence throughout 2026, the Manager expects further growth in property cash income, supporting the higher distribution payout without compromising capital and operational needs.

Key Considerations for Shareholders

• Distribution Policy Shift Is Potentially Price-Sensitive
  The decision to increase the payout ratio to at least 50% marks a significant change in the REIT’s capital management approach and could directly impact the unit price by making the REIT more attractive to income-focused investors.
• Occupancy and Leasing Performance
  The visible trend of rising occupancy and strong lease signings with high-quality tenants is a crucial indicator of the REIT’s operational recovery and may drive further investor confidence.
• Liquidity and Debt Management
  The equity fund raise, while slightly dilutive in the short term, immediately strengthens the REIT’s balance sheet and accelerates the path to higher recurring income, reducing financial risk.
• Exposure to U.S. Office Market Recovery
  Investors should note the broader sector recovery, which could provide a tailwind to valuations and future rental growth, particularly for well-located, Class A assets like those in Prime US REIT’s portfolio.

About Prime US REIT

Prime US REIT is a Singapore-listed REIT that owns a diversified portfolio of 13 Class A freehold office properties across 12 key U.S. office markets, with a total carrying value of US\$1.38 billion as of 30 September 2025. The REIT is sponsored by KBS Asia Partners Pte. Ltd., part of a group with over US\$43 billion in completed transactions since 1992.

Contact and Further Information

For investor inquiries:
Email: [email protected]
Phone: (65) 6951 8095
Website: www.primeusreit.com

Disclaimer

This article is for informational purposes only and does not constitute investment advice or an offer to buy or sell any securities. Investors should conduct their own due diligence and consult professional advisers before making any investment decisions. The value of investments can fall as well as rise, and past performance is not indicative of future results.

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