Manulife US Reit *Official* (SGX:BTOU)

[Shion]

Manulife US Reit clarifies US bank exposure after units tumble 14% on Monday​

https://www.straitstimes.com/busine...bank-exposure-after-units-tumble-14-on-monday
SINGAPORE - None of the lenders of Manulife US Reit is a regional bank in the United States, its manager said in a Monday bourse filing. This disclosure came after units of the real estate investment trust (Reit) tumbled 14 per cent, or 3.5 US cents, on Monday to close at 21.5 US cents.

Its manager, Manulife US Real Estate Management, had received “multiple queries” on Monday following news of US regional banks’ troubles and investor sentiment on US-based real estate funds, it said. The Reit’s lenders are mainly Singapore and international banks.

Manulife US Reit units were trading unchanged at 21.5 US cents at 10.15am on Tuesday, after its filing.

The manager added that the Reit’s unsecured sustainability-linked loan facility has been fully drawn to refinance its US$105 million (S$139.8 million) Phipps mortgage loan. “Manulife US Reit will not have any refinancing requirements until 2024 and 100 per cent of its loans will be unsecured,” it said.

As reported on March 15, Manulife US Real Estate Management is in discussions with Mirae Asset regarding a potential transaction which may involve the acquisition of its own shares, and the subscription of new shares in Manulife US Reit. The manager has denied reports of a 200 billion won (S$206.4 million) figure for the sale.

Due diligence on the transaction is ongoing, and the manager will make further announcements if there are material developments, it said. THE BUSINESS TIMES

 

[bryan76]

https://dividendpassiveincome.blogspot.com/2023/04/quartz-capital-steps-in-to-protect.html?m=1

Quartz Capital Steps In To Protect Manulife US REIT From Value Destruction by Its Sponsor Manulife.​

 

[Opps-gal]

https://www.businesstimes.com.sg/co...property-us335-million-still-talks-mirae-sale

Manulife US Reit divests Oregon property for US$33.5 million; still in talks with Mirae for sale of manager​

 

[stanlawj]

Tanasbourne property: "The property had a 100 per cent occupancy rate as at Dec 31, 2022, with a weighted average lease to expiry of 3.8 years."

Manulife US REIT sold one of their jewels to their sponsor.

 

[Shion]

RHB lowers Manulife US REIT's TP to 40 US cents after sale of Tanasbourne​

https://www.theedgesingapore.com/ca...s-reits-tp-40-us-cents-after-sale-tanasbourne
RHB Bank Singapore analyst Vijay Natarajan has lowered his target price on Manulife US REIT (MUST) BTOU 0.54% to 40 US cents (53 cents) from 43 US cents previously after the REIT sold its smallest asset, Tanasbourne, to its sponsor.

The divestment price of US$33.5 million is at a slight premium to its latest valuation price but on par with its valuation price as at end-December 2022. The price is also close to the REIT’s purchase price of US$33.85 million in November 2021. Tanasbourne accounts for 2% of MUST’s total portfolio value and net property income (NPI), notes the analyst.

While the analyst retained his “buy” call on the REIT, he notes that the sale, though positive, does not fully solve its issues about its high gearing and need for capital injection.

In his view, Tanasbourne, which is located in Hillsboro, Oregon, is not “the ideal choice”, but the asset is one that fits the time constraints.

He adds that Tanasbourne is among the REIT’s best-performing assets, has full occupancy and was only purchased recently. Furthermore, the REIT’s manager noted that the asset was “narrowed on” after factoring in the need for speedier execution since any interested party sale of 5% above net tangible assets (NTA) would require approval from its unitholders in an extraordinary general meeting (EGM). MUST’s NTA was around US$50 million.

The entire process could take around three to six months, in which market conditions could drastically change in the interim, says Natarajan.

“While it explored a joint venture (JV) and stake sale on other assets it was met with complex tax implications for the REIT structure, thereby limiting such options,” he writes.

At the same time, MUST provided an update pertaining to its discussions with Mirae Asset Global Investments, where the board decided that Mirae’s proposal offers the best value in terms of its strong financial muscle, US real estate presence and track record.

Mirae is likely to subscribe for over 9.8% in new unit issuance as part of the transaction while MUST’s sponsor, Manulife, will hold on to its 9.1% stake in the REIT.

To Natarajan, a key concern on the market has been the potential placement price and the dilution effect from the transaction. At present, MUST is trading well below its net asset value (NAV) of 55 US cents, he points out.

To this end, the analyst says he acknowledges and shares “similar concerns”, but will “await for the final deal proposal to evaluate the merits of such a transaction”.

He has also lowered his environmental, social and governance (ESG) score to 3.2 out of a total of 4.0. The score, which was down from 3.3, was due to RHB’s lowered governance score amid the lack of clear communication of challenges faced in some of its assets and delayed support from its sponsor.

Natarajan has lowered his distribution per unit (DPU) estimates for FY2023 to FY2025 by 4% to 5% after factoring in the latest sale of Tanasbourne. He has also reduced his margin assumptions following expectations of higher tenant incentives.

As at 4.21pm, units in MUST are trading flat at 18.4 cents.

 

[Shion]

Even after divestment, Manulife US REIT's gearing rises further to 49.5%; Mirae proposal expected in 2Q2023​

https://www.theedgesingapore.com/ca...eits-gearing-rises-further-495-mirae-proposal
As at April 18, aggregate leverage at Manulife US REIT (MUST) BTOU -1.33% stands at 49.5%, just shy of the 50% limit, even after divesting its Tanasbourne property in April for a consideration of US$33.5 million ($44.6 million). Gearing is up from 48.8% at the end of last year.

According to the REIT’s results for 1QFY2023 ended March 31, “gearing rose q-o-q mainly due to payment of 2HFY2022 distributions in March 2023”. MUST paid out $38 million in distributions for 2HFY2022 ended December.

The elevated gearing inhibits funding of capex and tenant incentives for leasing via debt, adds MUST in a May 11 announcement. The REIT has US$39.7 million of debt due this year, a revolving credit facility (RCF) drawn in 4Q2022 “mainly for capex funding”. While the loan utilised is due for rollover in 2023, the manager says it has the option to roll over the RCF up to the facility’s final maturity date in 2024.

Following that, the REIT has US$143.0 million in debt due in 2024.

The sale of its Tanasbourne property was part of MUST’s strategic review, unveiled last year and led by financial adviser Citigroup Global Markets Singapore. The REIT’s gearing remained high throughout 2022 but came under increased scrutiny in December when an overall decline in portfolio valuation brought aggregate leverage near the limit.

The REIT’s manager revealed in April 12 that discussions with its potential acquirer Mirae Asset Global Investments are still ongoing. On May 11, the manager says due diligence is “substantially completed” and the parties are currently negotiating key terms.

Mirae will subscribe for more than 9.8% of new units to recapitalise MUST, reduce gearing and provide stability and growth, subject to unitholders' approval.

They target to complete the sale by 3Q2023, with sponsor Manulife retaining its 9.1% stake. “As a placement to Mirae is subject to unitholder approval, there is also preparation of documentation for regulatory clearance prior to convening of extraordinary general meeting. We are working expeditiously and aim to update unitholders with the finalised proposal by 2Q2023.”

A potential rights issue could be on the cards; the REIT’s manager highlights its answer to a popular question from investors. “A rights issue remains a viable option and all unitholders are able to participate. Our considerations include investor appetite and the sponsor’s 9.8% unitholding limit. Banks have indicated that they are only willing to underwrite an equity fundraising if the majority of the rights issue was backstopped.”

1QFY2023 figures

MUST’s interest coverage ratio is 2.9x, above the regulatory minimum of 2.5x. As at March 31, MUST’s weighted average interest rate is 3.98%, and fixed rate loans make up 80.2% of its debt portfolio.

MUST’s occupancy of 86.1% as at April 18 is down from 88.0% at the end of 2022.

During the quarter, MUST signed 348,000 sq ft of leases, representing some 6.4% of portfolio net lettable area; while portfolio weighted average lease expiry stands at 5.0 years, up from 4.7 years in the previous quarter. MUST reported rent reversion of +5.0% for the quarter.

Units in MUST closed 1.4 US cents down, or 8.54% lower, at 15 US cents on May 10.

 

[Shion]

Manulife US REIT 'navigating challenges', CGS-CIMB keeps TP at 55 US cents as unit price hits all-time low​

https://www.theedgesingapore.com/ca...challenges-cgs-cimb-keeps-tp-55-us-cents-unit
Manulife US REIT (MUST) BTOU -2.11% is continuing to navigate challenges in 1QFY2023 ended March, say CGS-CIMB Research analysts Lock Mun Yee and Natalie Ong, amid high gearing and an ongoing strategic review.

MUST reported lower q-o-q portfolio occupancy of 86.1%, from 88% at end-FY2022, due to children’s apparel company Carter’s renewal and downsize of 69,000 sq ft of space at its Phipps property.

Physical occupancy at MUST’s buildings averaged some 30% as at end-1QFY2023. Portfolio weighted average lease expiry stood at five years as at end-1QFY2023. MUST’s gearing ticked up to 49.5% during the quarter while interest coverage ratio dipped to 2.9x. Average funding cost rose to 3.98% as at 1QFY2023.

Despite this, Lock and Ong maintain “add” on the REIT with an unchanged target price of 55 US cents (73.63 cents).

The analysts forecast distribution per unit (DPU) of 4.5 US cents for 2023, 4.3 US cents for 2024 and 4.5 US cents for 2025. “We keep our 2023-2025 DPU estimates unchanged… While the high projected FY2023 dividend yield reflects that much of the operational challenges have been priced in, we believe the pending outcome of the strategic review remains a near-term overhang,” write Lock and Ong.

MUST signed 348,000 sq ft of leases in 1QFY2023, including Carter’s lease renewal and extension, a renewal at Michelson (at more than 30% rent reversion) and a new lease at Figueroa.

Carter’s, MUST’s top tenant accounting for 4.5% of 1QFY2023 gross rental income (GRI), renewed 209,000 sq ft of space at Phipps and extended its lease expiry from 2030 to 2035.

According to the lease terms, MUST will enjoy a +18% rent reversion from 2025.

MUST also indicated that there has been healthy tenant interest for 10,000 to 20,000 sq ft of the 69,000 sq ft of space given up by Carter’s.

Overall, MUST enjoyed a +5% rent reversion in 1QFY2023.

MUST has a balance of 7.6% and 10.8% of leases expiring in 9MFY2023 and FY2024 respectively. According to property consultant Jones Lang Lasalle, leasing volumes in MUST’s submarkets continue to be weak; although lease terms are stable, concession packages remain elevated.

Strategic review

The REIT’s manager revealed on April 12 that discussions with its potential acquirer Mirae Asset Global Investments are still ongoing. On May 11, the manager says due diligence is “substantially completed” and the parties are currently negotiating key terms.

“MUST’s strategic review remains ongoing and management updated that due diligence by Mirae has been substantially completed and the parties are currently negotiating key terms,” note Lock.

The target completion date of the review is maintained at 2QFY2023/3QFY2023. As part of its review, sponsor Manulife is to retain its 9.1% stake in the REIT. MUST also earlier announced that Mirae will subscribe for more than 9.8% of new units, subject to unitholders’ approval, to recapitalise MUST, reduce gearing and provide stability and growth. Access to Mirae’s US asset pipeline would also allow MUST to execute its pivot strategy.

To Lock and Ong, potential re-rating catalysts include a quicker conclusion to the strategic review and swifter recovery of the US office transactions market.

However, key downside risks include a slower-than-expected backfilling of vacated spaces that could impact near-term income visibility, and a protracted slowdown in the US economy, which could dampen appetite for office space.

As at 1.26pm, units in MUST are trading 0.4 US cents lower, or 2.82% down, at 13.8 US cents. Units in MUST reached an all-time low of 13.7 US cents earlier in the day.

 

[Shion]

Manulife US Reit to sell Phipps Tower to sponsor; exclusivity period with Mirae lapses​

https://www.straitstimes.com/busine...pps-tower-exclusivity-period-for-mirae-lapses
SINGAPORE - Manulife US Real Estate Investment Trust (Manulife US Reit) has entered into a letter of intent to sell Phipps Tower in Atlanta, Georgia, to its sponsor The Manufacturers Life Insurance Company, the Reit’s manager said on Wednesday.

It also disclosed that an exclusivity period with Korean firm Mirae Asset Global Investments regarding a potential transaction had lapsed.

The Reit manager had said in April that it was in talks with Mirae to explore a possible acquisition of shares in the manager and the subscription of new units in Manulife US Reit.

The proposed divestment of Phipps Tower is part of its ongoing strategic review to “enhance unit holder value”, the Reit manager said on Wednesday.

It intends to redeploy proceeds into debt repayment or capital expenditure such as tenant incentives.

The purchase consideration should be no more than the average of two independent valuations commissioned by the Reit’s manager and its trustee, DBS Trustee.

The Reit manager said it aims to enter into a definitive agreement for Phipps Tower’s disposal by June 30, 2023. It will also waive the disposal fee.

The Reit acquired Phipps Tower from its sponsor in 2018 for US$205 million (S$276 million). The property was valued at US$210 million as at Dec 31, 2022.

Apart from the Reit’s divestment of its Oregon property, Tanasbourne, and its proposed divestment of Phipps Tower, its manager said it is also exploring other fund-raising options. These include further asset dispositions to reduce gearing.

Proceeds from both divestments will be prioritised towards near-term loan maturities and essential capital expenditure, it added.

Units of Manulife US Reit shot up 24.1 per cent to 15.5 US cents on Tuesday. They were trading down 8 per cent to 16.1 US cents at 4.30pm on Wednesday. THE BUSINESS TIMES

 

[Shion]

Manulife US REIT's fifth-largest tenant to terminate lease early, pays fee of US$4 mil​

https://www.theedgesingapore.com/ne...tenant-terminate-lease-early-pays-fee-us4-mil
The manager of Manulife US REIT (MUST) BTOU -0.57% has announced that its fifth-largest tenant by gross rental income (GRI) has exercised an early termination of its lease at 500 Plaza Drive, also known as Plaza, in New Jersey.

According to a bourse filing on June 7, MUST’s tenant, The Children’s Place, has exercised its early termination rights for the leases expiring May 31, 2029 and will vacate its 197,949 sq ft of space on May 31, 2024.

The tenant contributes 3.3% of MUST’s overall gross rental income.

The leases include a one-time early termination option, which the tenant has chosen to exercise, says the manager. The tenant is obligated to pay rent until May 31, 2024 and has paid a termination fee of approximately US$4 million ($5.38 million).

The manager says it is currently working to secure new leases to fill the space occupied by the tenant. The tenant’s current rental is below the passing rents at the 11-storey property by approximately 16%, and market rents by approximately 21%.

Assuming that the lease was terminated on Jan 1, 2022, the pro-forma impact on MUST’s distribution per unit (DPU) on the loss of revenue for FY2022 would be a reduction in DPU before retention from 4.97 US cents to 4.62 US cents.

Units in Manulife US REIT closed 0.5 US cents higher, or 2.96% up, at 17 US cents on June 7.

 

[stephenbishop]

https://www.businesstimes.com.sg/co...bkh-reinitiates-coverage-manulife-us-reit-buy

Brokers’ take: UOBKH reinitiates coverage on Manulife US Reit with ‘buy’​

UOB Kay Hian (UOBKH) on Friday (Jun 23) reinitiated coverage on Manulife US Real Estate Investment Trust : BTOU +1.16% (Manulife US Reit) with a “buy” call and a target price of US$0.47.

The new target implies a potential upside of 170.1 per cent from the last traded price of US$0.174 as at 11.47 am. Manulife US Reit’s units were trading up 0.6 per cent or US$0.001.

The brokerage said that Manulife US Reit’s negatives have largely been priced in. The Reit was recently hit by a series of downsizing and non-renewals by key tenants, including the early termination by The Children’s Place at Plaza in Secaucus in the eastern US state of New Jersey.


The Children’s Place, which vacates its space on May 31, 2024, is Manulife US Reit’s fifth-largest tenant by gross rental income and contributes 3.3 per cent of the Reit’s overall gross rental income.

The research team said that portfolio occupancy could fall by nine percentage points to 79 per cent by the end of 2024 if the vacancies are not backfilled. It noted that lower occupancy could lead to more downsizing.

“Manulife US Reit is hampered by its large exposure to California (Irvine, Los Angeles and Sacramento) and Washington DC, which accounted for 36 per cent and 8 per cent of portfolio valuation respectively,” said UOBKH analyst Jonathan Koh.


The research team projects the fair value of the Reit’s investment properties to fall by 15 per cent to US$1.5 billion by the end of 2023, assuming capitalisation rate rises to 6.3 per cent. This comes amid a drop in capital values for office properties, UOBKH said, citing end-March figures from the RCA Commercial Property Price Index.

UOBKH also expects aggregate leverage to hit 51.5 per cent by the end of 2023. However, the Reit’s divestment of its properties could allow gearing to fall by 4.3 percentage points to 45.2 per cent, assuming a capital expenditure of US$25 million per year.

Last month, the Reit entered into a letter of intent to sell Phipps Tower in Atlanta, Georgia, and redeploy the proceeds into repaying debt or capital expenditure. In April, it also disposed of Tanasbourne, its property located in Hillsboro, Oregon, for US$33.5 million.

Amid potential revaluation losses, Koh highlighted that the Reit “has to continue to deleverage”. He said equity fundraising could be difficult as the Reit is trading at a “steep” 70 per cent discount to its net asset value per unit of US$0.57.

 

[mgx-alander]

This reit ggpok le

 

[$ingaporean]

Wonder why the reit come down to this price. If the reit liquidate all the property and return the money to the unit holders, i am sure the amount will be substantially higher than the current price?

 

[Soracak]

Wonder why the reit come down to this price. If the reit liquidate all the property and return the money to the unit holders, i am sure the amount will be substantially higher than the current price?

Hard to tell if fire sale will amount to anything. I am so done with this miserable counter

 

[$ingaporean]

They just did a valuations recently isn't it? That valuation report resulted in this counter crash. That valuation is so much much higher than this current price. See the post higher up, net asset value per unit of US$0.57.

Manulife sound like a big established fund manager, and selling funds and insurance in singapore. Really have to discount this brand and never to buy into their product anymore.

 

[crimsontactics]

They just did a valuations recently isn't it? That valuation report resulted in this counter crash. That valuation is so much much higher than this current price. See the post higher up, net asset value per unit of US$0.57.

Manulife sound like a big established fund manager, and selling funds and insurance in singapore. Really have to discount this brand and never to buy into their product anymore.

Recently got up 8% in a day for BTOU...

Moi dunno why...

 

[crimsontactics]

Up close to 8% today...

 

[Moowoow]

Wonder why the reit come down to this price. If the reit liquidate all the property and return the money to the unit holders, i am sure the amount will be substantially higher than the current price?

A lot of helpers advisers chiak the margin along the way, by the time land on yr hand, u pick bones nia

 

[hellscream]

Wonder why the reit come down to this price. If the reit liquidate all the property and return the money to the unit holders, i am sure the amount will be substantially higher than the current price?

If bankrupt , after debt holder takes the money, maybe nothing left for us as share holder

 

[sohguanh]

If bankrupt , after debt holder takes the money, maybe nothing left for us as share holder

That means the stock will be de-listed most likely unless some company want to do reverse takeover. Nothing left is indeed correct becuz I kena before many years ago. Bankrupt what you want them to do? That is why buy stock (even ETF also not spared I think) always got risk. Good times good price, bad times can be capital zero monies get back.

 

[$ingaporean]

Up close to 8% today...

Up all lot in pct terms these days.