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The Deal / Market Move

Kore US REIT reported adjusted net property income of US$23.4 million (S$29.8 million) for the first quarter, marking a 15.9% increase compared to the same period a year earlier. The Singapore-listed real estate investment trust, which focuses on US office properties, also posted a 4.3% rise in distribution income to US$12.73 million, signalling improved operational performance across its American portfolio. The results come at a time when US office REITs listed in Asia have faced persistent scrutiny from investors wary of post-pandemic vacancy trends and elevated interest rates. Kore's stronger showing in Q1 offers a counter-narrative to the broader scepticism surrounding the sector.

  • Adjusted Net Property Income: US$23.4m (S$29.8m), +15.9% YoY
  • Distribution Income: US$12.73m, +4.3% YoY
  • Portfolio Focus: US office assets
  • Listing Market: SGX (Singapore Exchange)

Revenue and Expense Drivers

The uplift in net property income was driven by a combination of higher rental reversions on renewed leases and tighter control over property operating expenses. Several properties within Kore's portfolio benefited from contractual rental escalations that kicked in during the quarter, providing organic revenue growth without requiring new acquisitions. Lower utility and maintenance costs also contributed to margin expansion, as the trust's asset management team renegotiated service contracts across key buildings. The 4.3% growth in distribution income, while more modest than the net property income gain, reflects the continued drag from higher financing costs that have weighed on distributable earnings across the REIT sector globally.

Market Context

Singapore-listed US office REITs have traded at steep discounts to net asset value over the past two years, driven by concerns over remote work adoption and rising capitalisation rates in US commercial property markets. Kore US REIT's units have similarly languished below book value, even as the trust has delivered sequential improvements in occupancy and rental income. The latest Q1 figures suggest that the operational fundamentals are stabilising faster than unit prices reflect. Comparable SGX-listed vehicles such as Manulife US REIT and Prime US REIT have also reported tentative signs of recovery, though neither has matched Kore's near-16% jump in adjusted net property income. For context, the broader US office vacancy rate hovered near 19% nationally at the end of 2025, according to CBRE data, making selective asset positioning and lease management critical differentiators among office-focused trusts.

Portfolio Resilience

Kore's portfolio, concentrated in secondary US markets with strong employment bases, has benefited from tenants in sectors less susceptible to remote work disruption, including healthcare administration, government-linked agencies, and professional services. Weighted average lease expiry across the portfolio remains comfortably above three years, reducing near-term rollover risk. The trust has also maintained occupancy levels above 90%, outperforming the national office average by a considerable margin. These metrics provide a degree of income visibility that has become increasingly valued by yield-focused investors in the current rate environment.

What This Means for Investors

The 15.9% improvement in adjusted net property income positions Kore US REIT as one of the stronger performers among SGX-listed US office vehicles heading into the middle of 2026. Investors weighing exposure to the sector should monitor two key variables in the coming quarters: the trajectory of US interest rates, which directly impacts financing costs and capitalisation rate assumptions, and leasing velocity across Kore's portfolio as existing contracts approach renewal. Should the US Federal Reserve proceed with anticipated rate adjustments later this year, the discount to NAV at which Kore currently trades could begin to narrow, presenting a potential re-rating opportunity. However, any further deterioration in US office demand or unexpected tenant departures would pressure distributions. For Asia-based investors seeking US dollar-denominated income with property backing, Kore's Q1 results provide a data point worth watching closely as the year progresses.