SINGAPORE (THE BUSINESS TIMES) – Manulife US Real Estate Investment Trust (Manulife US Reit) saw its distribution per unit (DPU) decline 11.3 per cent to 2.59 US cents for the half year ended Dec 31, from 2.92 US cents a year ago.
In a bourse filing on Monday morning (Feb 8), its manager said the drop was mainly due to lower property income as well as a provision for expected credit losses, and comes after factoring in the enlarged unit base from equity fundraising in H2 2019.
Gross revenue for the half year grew 1.2 per cent to US$95.6 million (S$127.6 million) on contributions from 400 Capitol Mall, a freehold 29-storey Class A office tower which the Reit acquired in October 2019. This was partially offset by lower rental income from Michelson and Peachtree, as well as lower portfolio carpark income. Michelson is a 19-storey office building located in Irvine, Orange County, within the Greater Los Angeles market, while Peachtree is a 27-storey Class A office building located in the heart of Midtown, Atlanta.
Net property income (NPI) fell 8.2 per cent to US$53.7 million from US$58.4 million a year ago, mainly due to lower rental income from Michelson and Peachtree, lower portfolio carpark income, as well as provision for expected credit losses, partially offset by contribution from Capitol.
Over H2 2020, a net fair-value loss of US$51.2 million was recorded for the Reit’s investment properties. This comes after its appraiser factored in higher vacancies and higher leasing costs assumptions as a result of the Covid-19 pandemic, as well as adjusted for capital expenditure and other costs related to investment properties.
As a result of the lower NPI and the provision for expected credit losses, income available for distribution to unitholders for the half year declined 5.5 per cent to US$41 million.
The Reit’s latest set of half-yearly results brings its DPU for the full year to 5.64 US cents, which is 5.4 per cent lower than its 2019 DPU of 5.96 US cents due to lower NPI, provision for expected credit losses in H2 of 2020, and after factoring in the enlarged unit base from equity fundraising in 2019.
For FY 2020, Manulife US Reit’s revenue grew 9.3 per cent to US$194.3 million from US$177.9 million a year ago, while its NPI rose 4.6 per cent to US$115.8 million from US$110.8 million previously.
Due to the higher contributions from the Centrepointe and Capitol properties, yearly income available for distribution to unitholders was higher by 6.8 per cent at US$89 million compared to US$83.3 million in 2019.
As at end-2020, Manulife US Reit’s portfolio had a committed occupancy of 93.4 per cent and a weighted average lease expiry of 5.3 years.
Its manager said it continues to focus on asset, lease and capital management, adding that it will selectively seek investment opportunities that deliver long-term value to unitholders.
Jill Smith, chief executive of the manager, deemed the latest set of results “stable” for the full year.
“In 2020, we refinanced mortgages taking full advantage of the low interest rates and for 2021 we are in advanced negotiations for a sustainability-linked loan with expected cost savings. The fast-paced US vaccine rollout will hasten the economic recovery, return to work and enable business leaders to start making decisions on office leases. Having built a well-diversified top-quality tenant base, we intend to boost growth with at least 20 per cent of tenants in high-growth sectors,” she said.
Units of Manulife US Reit closed flat at 72 US cents on Friday.