The lower valuations were also attributed to the “continued weakening of occupational performance in the submarkets” where MUST’s properties are located. The continued weakening was due to the slowdown in demand and leasing activity, which is leading to higher concession package assumptions needed to attract new or retain tenants, giving rise to higher leasing costs, says the REIT manager.
The manager of Manulife US REIT (MUST) announced, on Dec 30, that the real estate valuation of its portfolio has declined by 10.9% to US$1.95 billion ($2.62 billion) based on the year-end valuations for 2022. This is compared to the US$2.18 billion valuation as at Dec 31, 2021.
The lower valuations were attributed to the higher discount rates and capitalisation rates for some of the REIT's properties. This is on the back of the volatile macroeconomic environment and “idiosyncratic” risks at the property level such as higher vacancy rates and, or weak submarket fundamentals.
