- Outperforming through focus on growth cities. Keppel Pacific Oak US REIT (KORE) reported 3Q23 distributable income of US$13.1m (-10.7% yoy), which is in line with our expectations. Adjusted NPI increased 5.0% yoy in 3Q23 due to better performance from its existing properties. Distributable income declined 10.7% yoy to US$13.1m due higher borrowing costs increased as a result of rising interest rates.
- Outperforming through higher portfolio occupancy. Portfolio occupancy improved slightly by 0.6ppt qoq to 91.4% in 3Q23. Eastside Seattle – Bellevue/Redmond, which accounted for 45.2% of portfolio NPI, saw continued positive leasing momentum and higher occupancies across The Plaza Buildings (+1.2ppt qoq to 89.0%), Bellevue Technology Center (+2.2ppt qoq to 91.2%) and The Westpark Portfolio (+1.1ppt qoq to 96.1%). Serviced office provider Regus renewed lease for 45,000sf at Bellevue Technology Center. Occupancy for Maitland Promenade in Orlando improved 2.2ppt qoq to 87.7% after securing infrastructure specialist Burns & McDonnell as new tenant for 48,000sf.
- Sustaining organic growth. KORE has signed leases for 250,122sf of office space and achieved positive rental reversion of 3.8% in 3Q23. In-place passing rent remains 0.6% below asking rents. The portfolio has built-in average rental escalation of 2.5% per year.
