Manulife US REIT - RHB Invest 2023-04-13: Making A Course Correction

Manulife US REIT - Making A Course Correction

  • Manulife US REIT (SGX:BTOU)’s sale of its smallest asset to its sponsor, while a slight positive, does not fully solve its issues of high gearing and need for capital injection.
  • US office market conditions have deteriorated rapidly amidst bank refinancing concerns, but this does not justify MUST’s share price plunge, in our view. Manulife US REIT's debts are from local (Singapore) lenders, are fully unsecured, and it faces no immediate refinancing issue.
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Tanasbourne sale not the ideal choice, but one that fits the time constraints.

  • Manulife US REIT's announced the sale of Tanasbourne (located in Hillsboro, Oregon) to its sponsor for US$33.5m. The divestment price is at a slight premium to its latest valuation but on par with its end-Dec 2022 valuation and close to the Nov 2021 purchase price of US$33.9m. The asset accounted for 2% of total portfolio value and NPI.
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  • Management noted that this asset was narrowed on, after taking into account the need for speedier execution – since any interested party sale of 5% above NTA (~US$50m) would require unitholder approval in an EGM. This could take 3-6 months, and market conditions could drastically change in between.
  • While Manulife US REIT explored a JV and stake sale on other assets it was met with complex tax implications for the REIT structure, thereby limiting such options.

Mirae deal progressing but terms not finalised yet.

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Vijay Natarajan RHB Securities Research | 2023-04-13

Read also RHB's most recent report:
2024-02-09 Manulife US REIT - A Long Road Ahead; Now TRADING BUY.

Previous report by RHB:
2023-12-06 Manulife US REIT - A Bitter Cure.

Price targets by 3 other brokers at Manulife US REIT Target Prices.

Listing of research reports at Manulife US REIT Analyst Reports.

Relevant links:
Manulife US REIT Share Price History,
Manulife US REIT Announcements,
Manulife US REIT Dividends & Corporate Actions,
Manulife US REIT News Articles


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