Manulife US REIT (MUST) has posted distributable income of US$43 million ($58.4 million) for the 1HFY2021 ended June, falling 10.4% from the corresponding period the year before.
Distribution per unit (DPU) for the period was 2.7 US cents, 11.5% lower y-o-y from 3.05 US cents previously.
The lower distribution was underpinned by lower gross revenue and net property income, which decreased 7.9% and 9.8% y-o-y to US$90.8 million and US$56.1 million respectively, following lower rental income from Michelson, Centerpointe and Capitol.
The lower rental income comes on the back of higher vacancies, rent abatements provided to tenants affected by Covid-19, and lower portfolio carpark income.
“Our y-o-y occupancy and DPU levels suffered from the full brunt of the pandemic, given that the impact was only felt in the US from April 2020. Having weathered the worst of the pandemic and with leasing accelerating, we have a clearer path towards the recovery of our office portfolio,” says Jill Smith, CEO of MUST’s manager.
See also: Analysts remain upbeat on Manulife US REIT on strong leasing activity in 1Q
MUST’s portfolio occupancy as of June 30 stood at 91.7%, with a weighted average lease expiry of 5.3 years.
In 1H2021, the REIT executed leases amounting to some 305,000 sq ft or 6.5% of the portfolio by net lettable area (NLA), with a positive average rental reversion of 1.3%.
MUST’s nine office buildings remained open throughout the pandemic and physical occupancy is now rising across the portfolio, with some reaching 50% in early August. As at June 30, the manager has collected 99% of rents and provided 0.3% deferment, as well as 2.4% abatement mainly to retail and F&B tenants whose operations were restricted by the pandemic.
For its balance sheet, MUST's net asset value per unit stood at 71 US cents as at June 30, while its gearing ratio, which stood at 42.1%, has now reduced to 41.6% following a partial debt repayment of US$15 million in July.
Looking ahead, the manager believes that MUST’s portfolio - with committed occupancy of 91.7% and only 2.9% leases by NLA due over the remainder of 2021 - is well-positioned to weather any further uncertainty, and in good locations to ride the post-COVID-19 themes including acceleration of population and company migration, and attracting tenants from the growing tech sector as well as the healthcare and fast-developing
“As we look ahead, some 60% of our tenants have indicated their plans to return to the office from September, lifting revenue such as car park income for MUST. Amid the COVID-19 environment in 1H2021, we have focused on maximising leases and securing the future with forward renewals. We are confident of the road ahead and are encouraged by the increased leasing volume and digital/physical tours we are seeing plus committed leases since the end of 1H,” Smith says.
Smith also highlighted the REIT’s environmental, social and governance (ESG) targets. “On the ESG front, we are galvanising activity towards being a responsible environmental steward, targeting net zero and 80% GHG emissions reduction by 2050.”
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Units in MUST closed 2 US cents or 2.55% lower at 76.5 US cents on August 11.
Photo: MUST
