Manulife US REIT Portfolio 30 June 2022

Manulife US REIT 1H 2022 Financial Results

Manulife US REIT Portfolio 30 June 2022

On 4th August 2022, Manulife US REIT released their 1H 2022 Financial Results. Currently, Manulife US REIT makes up 7.51% of my stock portfolio.

A Distribution Per Unit (DPU) of 2.61 US Cents was declared which will be paid on 27th September 2022.

Manulife US REIT 1H 2022 Financial Results

Gross revenue rose 10.6% Y-o-Y to US$100.4 million mainly due to contributions from the three properties (Tanasbourne, Park Place and Diablo) acquired in December 2021, higher carpark income and lower rent abatements.

The gain was partly offset by lower rental income from existing properties as a result of higher vacancies.

Net property income rose 2.8% to US$57.6 million, while distributable income increased 6.9% to US$46.0 million.

Despite an increase in Gross Revenue and distributable income, Distribution Per Unit (DPU) for 1H 2022 fell 3.3% to 2.61 US cents. This was due to lower income from existing properties, after factoring in the enlarged unit base from the private placement last year.

1H 2022
(US$’000)
1H 2021
(US$’000)
Change
Gross Revenue 100,418 90,799 10.6%
Net Property Income 57,622 56,069 2.8%
Distributable Income 45,966 42,990 6.9%
Distribution Per Unit (“DPU”) (cents) 2.61 2.70 (3.3)%

Occupancy

Overall portfolio occupancy stood at 90% with a steady weighted average lease expiry (WALE) of 5.0 years.

Lease Expiry

Only 4.8% and 10.2% of leases by net lettable area are expiring in 2022 and 2023, respectively.

Debt

Gearing stood at 42.4% with 85.7% of the loans based on fixed rate. This is to hedge against fluctuation in interest rates, especially in the current environment whereby hikes are the new norm.

As of 30th June 2022, Weighted Average Debt Maturity stood at 2.3 years. This will be updated to 3.3 years after post refinancing.

Current Dividend Yield

Based on the current share price of US$0.58 and FY2021 full year dividend payout of 5.33 cents, this translate to a current dividend yield of 9.19%.

Summary of Manulife US REIT 1H 2022 Financial Results

In summary, below are the pros and cons

  • Gross revenue rose 10.6% Y-o-Y to US$100.4 million.
  • Distribution Per Unit (DPU) for 1H 2022 fell 3.3% to 2.61 US cents.
  • Lower income from existing properties.
  • Overall portfolio occupancy is low at 90%.
  • Gearing is high at 42.4%.
  • Current dividend yield is high at 9.19%.

Manulife US REIT’s CEO Tripp Gantt shared that Americans’ preference for hybrid work is likely to be the new normal.

To embrace this secular shift, Manulife US REIT will partner best-in-class flex operators to provide more flexible office workspace and shortlist assets for ‘hotelisation’ to meet tenants’ preference for well-located buildings with premium amenities.

In my opinion, Manulife US REIT is facing headwinds given that there are more negatives than positives.

Like what Manulife US REIT has shared, in anticipation of economic volatility ahead, Manulife US REIT need to ride out the cyclical office downturn by protecting its occupancy and WALE, while being nimble in leasing.

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