KORE US REIT 1Q 2026 Investor Update: Momentum in Leasing, Strategic Enhancements, and US Office Market Recovery

Key Highlights from the 1Q 2026 Report

• Portfolio Occupancy: 85.1% (down from 87.2% in 4Q 2025, mainly due to a known vacancy at The Westpark Portfolio)
• Rental Reversion: +0.8%
• Aggregate Leverage: 43.7% (up from 44.1% as at 31 Dec 2025)
• Income Available for Distribution: US\$10.0 million (+4.3% year-on-year)
• Adjusted Net Property Income (NPI): US\$23.4 million (+15.9% year-on-year)
• Spec Suites Strategy: Launch of new full-floor spec suites and high pre-leasing activity
• New Asset Management Firm: Appointment of Transwestern Investment Group as the new US asset manager
• US Office Market Recovery: Leasing volumes up 25% year-on-year, surpassing pre-pandemic levels
• Favourable Market Tailwinds: Continued migration of wealth and businesses to low-tax states, directly benefiting KORE’s core markets

1Q 2026 Financial and Operational Performance

KORE US REIT delivered a resilient performance in 1Q 2026, with gross revenue rising 5.1% year-on-year to US\$38.7 million and Adjusted NPI surging 15.9% to US\$23.4 million. The increase was mainly attributed to higher one-off other operating income, improved cash rental income, and lower property expenses, partially offset by higher repair, maintenance, and utilities costs.

Income available for distribution grew 4.3% to US\$10.0 million. However, finance and other trust expenses increased by 10% due to higher finance costs.

Debt and Capital Management: Higher Leverage, Well-Managed Maturities

• Aggregate Leverage: Increased to 43.7%, approaching the MAS regulatory ceiling but still providing some headroom.
• Weighted Average Debt Maturity: 1.9 years.
• Interest Coverage Ratio: 2.5x (with sensitivity analyses indicating resilience to moderate interest rate or EBITDA declines).
• 58.2% of debt hedged at fixed rates, reducing exposure to further interest rate volatility.
• Average Cost of Debt: 4.89% p.a. (including amortisation of upfront debt costs).
• Sensitivity: Every 50bps movement in SOFR impacts income available for distribution by approximately US\$1.38 million per annum.

Operational Updates: Leasing, Occupancy, and Asset Enhancement

• Leasing Momentum: 58,157 sq ft of leases signed in 1Q 2026 (1.2% of NLA), with 58% new leases and 38% of renewals achieved without landlord incentives.
• Occupancy: The overall portfolio occupancy declined to 85.1% due to a major vacate at The Westpark Portfolio (vacancy dropped by 16.7 percentage points to 74.2%).
• Key leasing drivers: Finance & Insurance (38%), Professional Services (28%).
• Built-in average portfolio rental escalation: 2.4%.
• Management is confident of ending FY2026 with occupancy near 2025 levels, citing ongoing negotiations for major leases and steady renewal momentum.

Asset Enhancements and Spec Suites

• Completed repositioning of the 10800 The Plaza Building lobby: Former bank space transformed into high-quality amenity and gathering areas, attracting advanced tenant interest.
• Ongoing asset enhancements include upgrades to lobbies, corridors, and amenities at 105 Edgeview, Bridge Crossing, Great Hills Plaza, Westech 360, and Iron Point.
• Spec Suites:
  • Full floor spec suites at Iron Point and 1800 West Loop are fully leased.
  • 5 out of 6 spec suites at 10900 The Plaza Building leased.
  • Construction of a new full-floor spec suite, The Post, at 10800 The Plaza Building underway, with completion targeted for 3Q 2026 and early leasing interest already observed.
• Strategic focus: Move-in-ready spec suites are increasingly in demand, leasing 50% faster than traditional space, and now account for 55% of new office leases under 10,000 sq ft across the US.

Portfolio Quality and Diversification

• Geographic Diversification: Bellevue/Redmond (46.4% of NPI), Denver (11.4%), Dallas (10.9%), Houston (10.0%), Austin (7.1%), Orlando (7.1%), Sacramento (5.3%), Nashville (1.8%).
• Sector Diversification: TAMI (Technology, Advertising, Media, Information) accounts for 40.8% of NLA; Professional Services 22.3%; Finance & Insurance 12.6%; Medical & Healthcare 9.1%.
• Tenant Concentration: Top 10 tenants account for 29.4% of cash rental income, with a portfolio WALE of 3.2 years by NLA and 3.3 years by CRI, indicating low concentration risk.

Market Outlook: US Office Recovery and Structural Tailwinds

• US office sector at a turning point: 1Q 2026 leasing volumes rose 25% year-on-year, exceeding pre-pandemic averages for the first time since 2018.
• Strong demand for high-quality, well-amenitised, flexible space is driving outperformance of modern office assets.
• Migration of companies and talent to Sunbelt and low-tax states continues, directly benefiting KORE’s core markets (Dallas, Austin, Nashville, Orlando, Bellevue/Redmond).
• Corporate HQ relocations and expansions into KORE’s markets remain robust, with Dallas-Fort Worth, Austin, and Nashville ranking among the top five metros for net new HQs in 2025.
• Limited new supply in KORE’s submarkets reduces competitive pressure and supports rental growth prospects.

Strategic Initiatives and Asset Management Update

• Appointment of Transwestern Investment Group as US Asset Manager:
  • Transwestern brings over 45 years of asset management and operational expertise, with a nationwide platform and deep market knowledge.
  • Continuity of KORE’s existing asset management team is maintained, ensuring a seamless transition and operational stability.
• Active Capital Management:
  • Proactive refinancing to enhance financial flexibility and manage near-term maturities.
  • Portfolio reconstitution strategy: Potential divestments of non-core assets and redeployment of capital into growth opportunities or debt reduction.

What Investors Should Watch (Potential Price-Sensitive Issues)

• Occupancy Risk: The sharp fall in The Westpark Portfolio’s occupancy (from 90.9% to 74.2%) is a key watchpoint. Management is actively negotiating to backfill the vacancy, but unsuccessful efforts could depress earnings and valuations.
• Leverage: Aggregate leverage stands at 43.7%, leaving limited headroom under regulatory caps and exposing the REIT to refinancing risks and higher borrowing costs if market conditions deteriorate.
• Distribution Growth: While income available for distribution is up (+4.3% y-o-y), higher finance costs and the impact of any further interest rate increases (SOFR sensitivity) could constrain future DPU growth.
• Market Recovery: The US office market is showing early signs of recovery, and KORE’s focus on amenity-rich, tech-driven markets positions it for upside if momentum continues. However, any setbacks in the broader market or demand for office space could negatively impact leasing and asset values.
• Potential Asset Sales: Management has flagged portfolio reconstitution, including potential divestments. Depending on market pricing, asset sales could be either value-accretive or dilutive.

Conclusion: KORE US REIT Positioned for Recovery, But Risks Remain

KORE US REIT’s 1Q 2026 results reflect resilience amidst a challenging operating environment, with positive income growth, active asset enhancement, and a strategic focus on move-in-ready leasing formats. The REIT’s positioning in high-growth, low-tax markets and its ongoing capital management initiatives provide a solid foundation to capture the benefits of the US office sector’s nascent recovery.

However, investors should closely monitor the backfilling of The Westpark Portfolio vacancy, overall occupancy trends, leverage levels, and the impact of interest rate movements on distributions. The appointment of Transwestern as asset manager and continued portfolio enhancements are positive, but execution risk remains in a still-volatile asset class.

Disclaimer: This article is provided for informational purposes only and does not constitute investment advice or an offer or solicitation to buy or sell any securities. The information is based on materials provided by KORE US REIT as of 1Q 2026 and may not include all developments. Investors should conduct their own due diligence and consult professional advisors before making investment decisions. Past performance is not indicative of future results.

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