KORE US REIT (CMOU) H2 2024 earnings summary

Executive summary

• Committed occupancy rose to 90.0% at year-end 2024, up from 88.7% in the prior quarter, with 938,655 sq ft (19.6% of portfolio NLA) leased, the highest since IPO and above pre-COVID levels.

• Portfolio value remained stable year-over-year at US$1.33 billion, despite a fair value loss of US$46.7 million after capital expenditures and tenant improvements.

• Income available for distribution fell 8.8% year-on-year to US$47.6 million, mainly due to higher financing costs and lower cash NPI.

• No distribution declared for 2H 2024 and distributions remain suspended through 2025 as part of a recapitalisation plan; resumption targeted for 2026, contingent on leverage, operational performance, and market conditions.

Financial highlights

• Gross revenue for FY2024 was US$146.4 million, down 2.9% year-over-year.

• Net property income (NPI) declined 9.1% year-over-year to US$78.3 million; adjusted NPI fell 4.7%.

• Finance and other trust expenses increased 11.3% to US$31.1 million.

• NAV per unit remained at US$0.69, but unit price dropped 45.3% to US$0.205.

• Aggregate leverage at 43.7%, interest coverage ratio at 2.6x, and average cost of debt at 4.45% (4.33% excluding non-cash amortization).

Outlook and guidance

• Expect occupancy to fall in Q1 2025 due to known vacates, with year-end occupancy targeted in the high 80% range.

• Distributions to remain suspended through 2025, with resumption targeted for 2026, contingent on leverage, operational performance, and market conditions.

• CapEx and TIs budgeted at $50 million for 2025, fully covered by cash, facilities, and portfolio income.

• Portfolio WALE stands at 3.8 years, with built-in average annual rental escalations of 2.6%.

• Projected 12-month rent growth in key markets averages 1.6%, above the US average of 0.3%.