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 at US$1.33 billion, despite a fair value loss of US$46.7 million after capital expenditures and tenant improvements.

• Adjusted NPI declined 4.7% year-over-year, and income available for distribution fell 8.8% to US$47.6 million, mainly due to higher financing costs and lower cash NPI.

• No distribution declared for 2H 2024 due to recapitalisation plan; distributions are suspended through 2025, with resumption targeted for 2026 or earlier if market conditions improve.

Financial highlights

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

• Net property income (NPI) for FY2024 was US$78.3 million, a 9.1% decrease year-over-year; adjusted NPI was US$83.4 million, down 4.7%.

• Aggregate leverage at 43.7%, interest coverage ratio at 2.6x, both within regulatory limits.

• NAV per unit at US$0.69; unit price dropped 45.3% to US$0.205.

• Average cost of debt was 4.45% p.a. (4.33% excluding non-cash amortization); weighted average debt maturity 2.4 years; 66.6% of loans hedged.

Outlook and guidance

• Occupancy expected to dip in early 2025 due to known vacates, but aim is to end 2025 in the high 80% range.

• Built-in average annual rental escalation of 2.6% to support organic growth; WALE stands at 3.8 years.

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

• No plans for asset divestment in 2025; potential sales targeted for 2026 as market liquidity improves.

• Sun Belt and key growth markets expected to benefit from ongoing business and population migration.