Manulife US REIT (SGX:BTOU) has endured a series of downsizing and non-renewals by key tenants. We estimate that Manulife US REIT's portfolio occupancy could deteriorate by 9ppt to 79% by end-24 if vacant spaces are not backfilled. We expect valuation of investment properties to decline 15%, or US$250m, and aggregate leverage to hit 51.5% at end-23.
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Deleveraging through divestments.
We estimate Phipps’ valuation dropping US$48m to US$162m after factoring in the downsizing by William Carter (occupancy dropped 14.5ppt to 80.0% in 1Q23) and cap rate expansion of 25bp to 6.1%.
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Portfolio occupancy affected by downsizing and non-renewals.
Quinn Emanuel had downsized by 71,000sf at Figueroa in Los Angeles in 3Q22, while William Carter had downsized by 68,880sf at Phipps in Atlanta in 1Q23.
TCW Group will not be renewing when its lease for 188,835sf at Figueroa expires in Dec 23.
The Children’s Place has exercised its early termination option and will vacate 197,949sf of space at Plaza in Secaucus in Jun 24.
We estimated that Manulife US REIT’s portfolio occupancy could deteriorate by 9ppt to 79% by end-24 if vacant spaces are not backfilled.
Low physical occupancy could cause more downsizing.
Read more at SGinvestors.io.
Above is an excerpt from a report by UOB Kay Hian Research. Clients of UOB Kay Hian may be the first to access the full PDF report @ https://www.utrade.com.sg/.
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