Prime US REIT Tower I at Emeryville. (Google Maps)

Prime US REIT has been approached by a tenant, which is a subsidiary of co-working space operator WeWork, to restructure its lease.

The tenant currently occupies 56,977 square feet of space at Tower I at Emeryville, which represents about a quarter of the property’s net lettable area.

Overall, it contributes less than 2.5% of the REIT’s cash rental income as at 31 March 2021.

Prime US REIT has called upon the tenant’s existing security package for the payment of its rental obligations, while discussions on the lease are ongoing.

Presently, the security package will cover the tenant’s monthly lease obligations through as much as the end of 2022, said the REIT.

With the security, Prime US REIT does not expect that this would have any impact on the distribution per unit for the current financial year.

Furthermore, based on independent valuation advice sought by the REIT’s manager, this development would not materially impact the value of its portfolio as compared to the portfolio appraisal conducted as at December 2020.

In addition to this, Prime US REIT disclosed that it has completed the closing of an upsize of its USD470 million credit facility, along with an adjustment to the facility covenants with its existing bank lending group.

The facility has been increased by USD130 million, comprising a USD40 million increase to each of the two term loan tranches due in 2023 and 2024 respectively, and a USD50 million increase in the revolving credit tranche due in 2022.

“The upsized USD600 million facility provides the REIT with liquidity of over USD220 million in a combination of available credit lines, and cash on hand to pursue its strategic growth initiatives", said the REIT.

Prime US REIT was last done on the SGX at USD0.87, which implies a distribution yield of 7.98% according to data compiled on the Singapore REITs table.

By Shariffa Al-Habshee

Shariffa joined REITsWeek in 2017, and monitors Asia-Pacific REITs for the publication.