Manulife US REIT - DBS Research 2024-02-09: Focus On Leasing & Divestments

• Manulife US REIT (SGX:BTOU)’s FY23 distributable income fell 16% y-o-y to US$74m (in line with our estimates) while 2H23 distributable income fell 13% y-o-y (-4% h-o-h) to US$36m.
• FY23 revenue and NPI grew 3% and 1% y-o-y, respectively. This could be partially due to US$13m in lease termination fees. Excluding termination fees, FY23 NPI fell 10% y-o-y while 2H23 NPI fell 17% y-o-y (-17% h-o-h).
• - Read this at SGinvestors.io -

A further 8% decline in portfolio valuation

• As previously reported, Manulife US REIT's gearing inched up to 58.3% vs 56% in 3Q23 due to a further 8% decline in valuation vs 1H23.
• Portfolio valuation decline was led by cap rates increased by 35bps; average discount rate expanded by 51bps and terminal cap rates expanded by 17bps.
• - Read this at SGinvestors.io -

Some new leases executed in 4Q23; Hyundai expanded in 1Q24

• Portfolio occupancy slid down marginally by 0.7ppt to 84.4%, mainly from Peachtree and Plaza.
• In 4Q23, Manulife US REIT executed 104k sq. ft. (largely new leases) with long WALE of 8.9 years at 1% rental reversions. Notable new leases signed in 4Q23 include:
  1. Insurance firm at Capitol (14k sq. ft., 9+ years) and
  2. Public administration tenant at Figueroa (42k sq. ft., 11 years).
• In 1Q24, Hyundai expanded 31k sq. ft. (5+ years) at Figueroa and The Children’s Place, which was expected to vacate in May24, signed 120k sq. ft. (lower from 198k sq. ft.) for 13 years.

Key highlights from analyst briefing

• Read more at SGinvestors.io.

Rachel TAN DBS Group Research | Derek TAN DBS Research | https://www.dbs.com/insightsdirect/ 2024-02-09 SGinvestors.io

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