By now, everyone should be aware of the downside of investing in US Commercial REITs listed on SGX. Given the maximum rule of no individual unit-holders can hold more than 9.8% of total units without dismantling with special tax concession granted by Uncle Sam, existing unit-holders will not be able to participate in rights issue. Instead existing unit-holders have to watch their investment get diluted at the worst possible time.
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| Financial Highlights |
Prime US REIT remains in great peril with aggregate leverage level of 46.7% albeit the gradual but slow recovery in US Offices occupancy rate. While Manulife US REIT is in a far worse condition, this gives scant comfort to existing unit-holders of Prime US REIT. The current strategy of suspending bulk of the dividends distribution from Unit-holders to finance CAPEX seems not to be working well as on September 25, 2025, the management of Prime US REIT announced a private placement of 129.2Mil new units to raise approximately US$25Mil at a 10% discount of average market price of US$0.215 per unit. This led to an immediate dip in market price of Prime US REIT to US$0.199 per unit as at Oct 3, 2025.
Parting Thoughts
Existing loyal retail unit-holders remain adversely short-changed by the management of Prime US REIT with this dilutive move. I hope that the management of Keppel Pacific Oak US REIT does not get inspired by this terrible move while trading at a huge discount to NAV per unit.
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