Hold Rating Maintained for Prime US REIT Amid Improving Operations and Long-term Growth Potential

Analyst Derek Tan of DBS maintained a Hold rating on Prime US REIT (OXMU – Research Report), with a price target of $0.19.

Derek Tan has given his Hold rating due to a combination of factors influencing Prime US REIT’s current and future performance. The REIT’s recent operational results indicate improvement, with increased leasing momentum and a 2.2% rise in portfolio valuations, suggesting stronger cash flow visibility. However, despite these positive indicators, the gearing position remains stable at 46.7%, with an interest coverage ratio of 2.0x, which suggests limited immediate upside potential.
Moreover, while the REIT is well-positioned to benefit from the return-to-office trends in the US, the recovery in this sector is expected to take time. The REIT’s diversified portfolio of Class A US office assets is in submarkets experiencing in-migration and employment growth, which could eventually drive improvements in portfolio metrics and capital values. However, given the ongoing need for capital expenditure and tenant incentives, distributable income is projected to remain low in the near term. Therefore, Tan maintains a Hold rating with a target price of USD 0.19, awaiting further clarity on economic conditions and potential asset recycling opportunities to enhance returns.

According to TipRanks, Tan is an analyst with an average return of -2.1% and a 38.81% success rate. Tan covers the Real Estate sector, focusing on stocks such as Capitaland India Trust, Mapletree Logistics, and Mapletree Industrial.