Manulife US REIT Portfolio 30 June 2022

Manulife US REIT 3Q 2022 Operational Update

Manulife US REIT 3Q 2022 Operational Update

Today, Manulife US REIT announced their 3Q 2022 Operational Update. The manager has provided latest updates related to occupancy and debt.

Manulife US REIT has also shared their repositioning strategy which introduce the new concepts such as “hotelisation” and flexible space. Peachtree will embark on hotelisation in 1H 2023.

Hotelised Office

Plaza has introduced flexible space solution in 3Q 2022.

Flex

Occupancy

Overall portfolio occupancy stood at 88.1%. Weighted Average Lease Expiry (WALE) stood at 4.9 years.

The manager specifically mentioned that Diablo’s occupancy improved from 85.7% in 30 June 2022 to 91.1% in 30 September 2022. This is because of a 10-year lease with a semi-conductor company.

The good news here is that Manulife US REIT achieved positive 4.3% rent reversion.

Debt

As of 30th September 2022, gearing ratio stood at 42.5%. In my opinion, this is extremely high.

The good news is that 81.1% of the loans are hedged at fixed rates which helps to mitigate against the interest rate hikes. However, every 1% increase in interest rate is expected to impact Distribution Per Unit (DPU) by 0.105 US cents.

Weight Average Debt Maturity stood at 3.1 years. As you can see below, Manulife US REIT needs to secure refinancing of US$ 105 million by FY2022.

Manulife US REIT Debt Maturity Profile 3Q 2022

Current Dividend Yield

Based today’s closing price of US$0.36 and FY2021 DPU of 5.33 cents, this translate to a current dividend yield of 14.8%.

Manulife US REIT Share Price 2 Nov 2022

Summary of Manulife US REIT 3Q 2022 Operational Update

As you can see, Manulife US REIT is facing headwinds.

Post-COVID-19 work patterns continue to impact space demand and leasing activity. But, I am glad the manager is doing something about it such as introducing “hotelisation” and flexible spaces concepts. At this point, I think it is still too early to conclude such concepts can work. We have to observe in the next few quarters to see the effect.

The manager expect further rate hikes in 4Q 2022. Thus, I am also expecting the share price to go lower and DPU to be impacted as well.

For those that are not vested, I advise not to jump in. For those vested like me, let us cross our fingers that Manulife US REIT can sail out of the headwinds.

Meanwhile, keep calm and continue to collect dividends!

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