The manager of Manulife US REIT (MUST) has announced distribution per unit (DPU) of 2.59 US cents (3.455 cents) for the 2HFY2020 ended December, an 11.3% drop from DPU of 2.92 US cents in the corresponding period a year ago.
The lower DPU was mainly attributable to lower distributable income over an enlarged unit base during the half-year period.
Distributable income for 2HFY2020 declined 5.5% y-o-y to US$41.0 million mainly due to lower property income and provision for expected credit losses.
As such, FY2020 DPU fell 5.4% y-o-y to 5.65 US cents compared to 5.96 US cents in FY2019.
Distributable income for FY2020 increased 6.8% y-o-y to US$89.0 million mainly due to contributions from Centerpointe and Capitol, which were acquired in 2019.
FY2020 DPU fell due to lower property income and provision for expected credit losses in 2HFY2020, after factoring in the enlarged unit base from equity fund raisings in 2019.
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2HFY2020 gross revenue grew 1.2% y-o-y at US$95.7 million mainly due to contribution from Capitol, and partly offset by lower rental income from Michelson and Peachtree as well as lower portfolio carpark income.
The lower portfolio carpark income was attributable to the working from home (WFH) arrangements, which became the norm in FY2020.
Net property income (NPI) for 2HFY2020 fell 8.2% y-o-y to US$53.7 million mainly due to lower rental income from Michelson and Peachtree, lower portfolio carpark income and provision for expected credit losses.
The REIT reported a net loss of US$7.7 million for 2HFY2020 compared to profit of US$30.9 million in the year before, mainly due to lower NPI and net fair value loss on investment properties and derivatives.
For the FY2020, gross revenue increased by 9.3% y-o-y to US$194.3 million due to contributions from Centerpointe and Capitol. Accordingly, NPI for the FY2020 was up by 4.6% y-o-y to US$115.8 million due to the same reasons.
As at Dec 31, 2020, the REIT’s occupancy rate stood at 93.4%, with a weighted average lease expiry (WALE) of 5.3 years.
Its top 10 tenants have a WALE of 5.6 years, with a majority of them being public-listed companies, government agencies or corporate headquarters.
In FY2020, MUST executed leases amounting to some 279,000 sqft or 5.9% of the portfolio by net lettable area (NLA), at an average rental reversion of +0.1% and WALE of 6.4 years.
Looking ahead, MUST says its portfolio remains “solid” enough to weather the headwinds due to the Covid-19 pandemic.
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“FY2020 was a year like no other with MUST weathering the storm of the pandemic and now, in 2021, with that behind us, we are working to resume a positive track to growth,” says Jill Smith, CEO of the manager.
“Overall, we are reporting a stable set of results for the year ended 31 December 2020. DPU was down 5.4% YoY. Out of prudence, we made a provision for expected credit losses mainly from retail and F&B tenants, but already this new year the retail tenant has reached an agreement to settle its arrears,” she says.
Smith adds that she expects car parking revenue to reverse from its decline as “returning office-users will prefer to drive than take public transport”.
“At 93.4%, our occupancy is higher than the U.S. Class A average of 84%, although sluggish leasing meant lower rental income. 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 roll out 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% of tenants in high growth sectors,” she adds.
Units in MUST closed flat at 72 US cents on Feb 5.
