Manulife US REIT - RHB Invest 2024-02-09: A Long Road Ahead; Now TRADING BUY

• No dividend distributions were made by Manulife US REIT (SGX:BTOU) in 2H23 and none is expected until at least 1H25, in light of ongoing restructuring. Manulife US REIT’s 2HFY23 top-line beat expectations due to one-off termination income.
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Portfolio occupancy to fall to ~80% levels

• Manulife US REIT's portfolio occupancy is expected to fall to ~80% levels in 1Q24 (4Q23: 84.4%) with the exit of TCW Group.
• On a positive note, there has been signs of pick-up in leasing volume with notable deals including Hyundai expansion (31k sq ft) at Michelson, and The Children’s Place (Plaza) re-leasing reduced space (120k sq ft from 198k sq ft) for longer lease term.
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• Overall rent reversions were 1%/8% for 4Q23/FY23 but with high tenant incentive packages prevailing in Manulife US REIT’s submarket, we believe the net rent reversions are likely to be flat to negative.

Asset valuation fell 8%

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Vijay Natarajan RHB Securities Research | https://www.rhbgroup.com/ 2024-02-09 SGinvestors.io

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