The manager of Manulife US REIT (MUST) has reported an occupancy rate of 78.7% in its business update for the 1QFY2024 ended March 31. Down from 84.4% at the end of 2023, the lower occupancy rate is likely due to TCW’s lease expiry at Figueroa. TCW occupies a space of some 189,000 sq ft.
The REIT has seen other leasing activities take place as at April 30, including the renewal of The Children’s Place at the Plaza, measuring 120,000 sq ft for a lease tenure of 13 years.
Portfolio weighted average lease expiry (WALE) as at March 31 stood at 4.3 years. A total WALE of 10.6 years of leases were signed in the 1QFY2024 and some 207,000 sq ft of leases were executed, representing some 4.1% of portfolio net lettable area (NLA).
MUST’s rent reversion for the quarter stood at a negative 9.5%.
Its submarkets metrics such as leasing volume and lease terms, as well as net effective rents were stable q-o-q. Concession packages dipped slightly while its subleasing was stabilising during the 1QFY2024.
Aggregate leverage in the 1QFY2024 fell to 56.7% as at March 31, down from 58.3% at the end of 2023, with an interest coverage ratio of 2.3 times. Its unencumbered gearing ratio stood at 59.7%.
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In its business update, the REIT manager saw demand for US offices recovering although challenges remain; the US is still seeing persistent inflation with the timing of rate cuts from the US Federal Reserve uncertain.
At this point, the REIT intends to prioritise its recapitalisation plan by focusing on asset dispositions while maximising sale proceeds and limiting its capital expenditure (capex) spend.
Following that, it seeks to maximise returns via leasing and asset optimisation and resume its distributions. Moving ahead, it aims to seek growth by repositioning its portfolio and diversifying into assets that offer a better return potential and are less capital intensive. It also seeks to optimise its portfolio to support long-term substantiable risk-adjusted cash flows, returns and distributions.
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MUST, on March 19, announced that its chief executive officer (CEO) William “Tripp” Gantt, deputy CEO Caroline Fong and chief financial officer (CFO) Robert Wong will be stepping down on June 30.
John Casasante, who was from DWS formerly RREEF, has been appointed to take over as CEO and chief investment officer (CIO) of the REIT manager. Mushtaque Ali, from sponsor Manulife, has been appointed CFO of the manager.
Units in MUST closed flat at 7 US cents on May 7.
