Kilpatrick Townsend, Manulife US REIT (SGX:BTOU)’s fourth largest tenant, has renewed their lease early and extend it by another five years to expire in 2030, following Manulife US REIT’s commitment to a US$18m AEI, as previously announced. As such, we noted that Manulife US REIT recorded strong rental reversions of +24% this quarter (9M23: +10%).
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Gearing and unencumbered ratios remain relatively stable q-o-q, at 56% and 59.9%, respectively.
Interest costs continued to inch up, by 0.3ppt q-o-q to 4.38%, and the interest coverage ratio declined to 2.4x vs 2.6x in 2Q23.
Manulife US REIT's hedging ratio has declined to 69% vs 80% in 2Q23.
Key operational highlights during Manulife US REIT's briefing
Some top 10 tenants may renew and/or expand leases
Post the announcement of the Peachtree AEI, rents at Peachtree have been on a rising trend, from mid-US$20psf to close to US$30psf.
The Children’s Place, Manulife US REIT’s third largest tenant, is re-engaging Manulife US REIT for discussions on its lease. This would be a positive development should it result in a potential renewal, after The Children’s Place had chosen to terminate the lease early in Mar 23.
Management highlighted that they are engaging with tenants, especially the top 10 tenants, and some have indicated their intention for some expansions and/or renewals. The realisation of potential renewals would bode well for Manulife US REIT.
Physical occupancy has inched up but remains in the mid- 30% to 40% range.
Discussions between Manulife US REIT, sponsor, and lenders are ongoing, working on holistic sponsor package
Read more at SGinvestors.io.
Above is an excerpt from a report by DBS Group Research. Clients of DBS may access the full PDF report @ https://www.dbs.com/insightsdirect/.
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