Manulife US REIT FY2020 Financial Results

Manulife US REIT

Manulife US REIT has released its FY2020 financial results on 8th February 2021. Gross revenue and distributable income rose 9.3% to US$194 million and 6.8% to US$89.0 million respectively.

However, despite the increase in distributable income, full year distribution per unit (DPU) fell 5.4% to 5.64 cents. A DPU of 2.59 cents was declared which will be paid on 30th March 2021.

Net property income increased 4.6% to US$116.0 million mainly due to the contributions from Centerpointe and Capitol acquired in 2019. The increase was partially offset by lower carpark income, lower rental income due to higher vacancies in Michelson and Peachtree and Provision for expected credit losses on trade receivables.

Financial Summary

Below is the full year 2020 versus 2019 financial results.

FY2020
(US$’000)
FY2019
(US$’000)
Change
Gross Revenue 194,312 177,853 9.3%
Net Property Income 115,837 110,776 4.6%
Distributable Income 88,967 83,341 6.8%
Distribution Per Unit (“DPU”) (US cents) 5.64 5.96 (5.4%)

Occupancy

Overall occupancy stood at 93.4% which is above the U.S. Class A office average of 84%.

Manulife US REIT Occupancy 31 Dec 2020

The Weighted Average Lease Expiry (WALE) is 5.3 years. The good news here is that there is minimal lease expiries in 2021.

Manulife US REIT Lease Expiry 31 Dec 2020

Debt

Gearing stood at 41.0% which is well below the Monetary Authority of Singapore (MAS) limit of 50%. Weighted Average Debt Maturity stood at 2.3 years.

According to what was shared from the presentation slides, there is still US$115.0 total undrawn committed facilities.

Manulife US REIT Debt Maturity Profile 31 Dec 2020

Current Dividend Yield

Based on the current share price of US$0.72 and FY20 full year DPU of 5.64 cents, this translate to a current dividend yield of 7.83%.

Sounds attractive?

Summary

In my opinion, the manager has performed well by keeping its occupancy high and with minimal leases expiring in 2021, the REIT should remain rather stable throughout the year.

The catalyst for Manulife US REIT to perform will be the recovery of the US economy from COVID-19. With Joe Biden taking over as President, he is in progress of delivering 150 m vaccines in 100 days. With more people back to work means more office space will be taken up.

Prior to the release of Manulife US REIT financial results, I have been making small purchases of Manulife US REIT over the past few months given the attractive dividend yield.

I still remember I wrote about why I did not subscribe to Manulife US REIT IPO in 2016. But I ended up buying Manulife US REIT in 2019 as the REIT has proven itself over the years to be resilient and the dividend yield has been rather stable.

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