Manulife US REIT, which owns a portfolio of US office properties, has reported a distribution per unit of 2.61 US cents for 1HFY2022 ended June, down 3.3% y-o-y, as the unit base became larger from a private placement.
Net property income was up 2.8% y-o-y to US$57.6 million and distributable income was up 6.9% y-o-y to US$46 million.
Revenue, meanwhile, was up 10.6% y-o-y to US$100.4 million, due to contributions from three newly-acquired properties, Tanasbourne, Park Place and Diablo.
The distribution will go ex on Aug 12 and be paid on Sept 27.
As at end-June 2022, the REIT saw a slight dip in occupancy to 90.0%, from 91.7% at end-March 2022. The portfolio’s weighted average lease expiry remains at 5 years.
In 1HFY2022, the REIT signed some 192,000 sq ft of leases at an average higher rate of 1%.
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Tripp Gantt, CEO of the REIT’s manager, warns of a “once-in-a generation upheaval” in office use, with the preference for “hybrid mode of work” likely to be the “new normal”.
Such shifts are taking place amid inflation woes and worries over a recession in the US.
“This secular shift has resulted in a general leasing slowdown, as well as a desire for flexibility from tenants, as employers assess their space needs for the future,” he adds.
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Yet, the REIT has identified new trends it thinks it can ride on, such as “hotelisation” of the office, where offices with premium amenities in great locations are those most likely to attract top tenants.
“We believe this will be a winning formula for many office owners and we are reviewing our assets to determine which are most suitable for these improvements,” says Gantt.
Next, tenants want more flexibility in their space requirements and the REIT will work with more flexible workspace operators to meet this demand.
“Formulating the optimal mix of traditional, flex and turnkey space will enable us to stay ahead of the curve amidst the uncertain leasing environment,” says Gantt.
Manulife US REIT closed on Aug 3 at 60 US cents, up 0.85% for the day, down 11.19% year to date.
