On 9th February 2022, Manulife US REIT announced their 2H 2021 Financial Results. As compared to 2H 2020, Gross revenue declined by 1.4% to US$94.3 million in 2H 2021. Net property income as not spared and declined by 0.3% to US$53.5 million.
A Distribution Per Unit (“DPU”) of 2.63 US cents was declared whereby an advance distribution of 2.61 cents will be paid on 17 February 2022, with the remaining 0.32 US cents to be paid on 30 March 2022.
I have recently added more of Manulife US REIT to my stock portfolio. Manulife US REIT currently makes up 6.87% of my portfolio.
Let us take a deeper look at the reported financial results.
Manulife US REIT 2H 2021 Financial Results
Distributable Income was higher at 4.0% due to higher car park income of 36.4%, lower provision US$0.3 million for expected credit losses (ECL) versus 2H 2020 US$3.6 million. The increase was partially offset by lower rental income arising from higher vacancies.
| 2H 2021 (US$’000) | 2H 2020 (US$’000) | Change | |
| Gross Revenue | 94,300 | 95,682 | (1.4)% |
| Net Property Income | 53,478 | 53,664 | (0.3)% |
| Distributable Income | 42,609 | 40,989 | 4.0% |
| Distribution Per Unit (“DPU”) (cents) | 2.63 | 2.59 | 1.5% |
Manulife US REIT Full Year 2021 Financial Results
The full year 2021 financial results does not look that great. Gross revenue declined 4.7% YoY to US$185.1 million, while net property income decreased 5.4% to US$109.5 million.
Distributable income was 3.8% lower YoY at US$85.6 million, while DPU declined 5.5% YoY to 5.33 US cents due to higher rental abatements, lower car park income and lower rental income from higher vacancies, partially offset by net reversal of provision for expected credit losses (ECL).
| FY 2021 (US$’000) | FY 2020 (US$’000) | Change | |
| Gross Revenue | 185,099 | 194,312 | (4.7)% |
| Net Property Income | 109,547 | 115,837 | (5.4)% |
| Distributable Income | 85,599 | 88,967 | (3.8)% |
| Distribution Per Unit (“DPU”) (cents) | 5.33 | 5.64 | (5.5)% |
Occupancy
Overall portfolio occupancy stood at 92.3% and a long Weighted Average Lease Expiry (“WALE”) of 5.1 years.
Debt
As of 31 December 2021, the gearing stood at 42.8% which was an increase of 1.8% as compared to 41.0% in 31 December 2020.
In my opinion, the gearing is high and I hope Manulife US REIT does something to reduce the debt incurred.
Current Dividend Yield
Based on the current share price of US$0.65 and FY2021 full year dividend payout of 5.33 cents, this translate to a current dividend yield of 8.2%.
Manulife US REIT is currently trading below the Net Asset Value (“NAV”) of US$0.67.
Summary of Manulife US REIT 2H 2021 Financial Results
Here is an overall summary of the financial results.
- Higher rental abatements, lower car park income and lower rental income from higher vacancies in FY2021.
- High gearing of 42.8%.
- Low occupancy rate of below 90% at some of the properties.
- High current dividend yield of 8.2% based on the current share price of US$0.65.
- Currently trading at US$0.65 which is below NAV of US$0.67.
In my opinion, this can be a recovery play, betting on more office workers returning back to offices which should improve occupancy indirectly and car park income.