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).
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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.
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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:
Insurance firm at Capitol (14k sq. ft., 9+ years) and
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
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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/.
