In contrast, another Singapore-listed US office REIT, Prime US REIT, which reduced distributions to just 10% in 2HFY2023, has, since 2HFY2025, raised the distributable income payout ratio to 50%, and subsequently to 65%.
Over-geared because of a series of untimely acquisitions, Manulife US REIT (MUST), the first US office REIT to be listed in Asia, has been struggling to get back on its feet. Since its IPO at 83 US cents, the REIT is a shadow of its former self at just 6 US cents at its last close on March 19.
From 2017 to 2019, dizzy on flat-bottomed interest rates, MUST expanded from three assets at IPO to 12 by end-2021. The strain became evident when rates surged, and the US office market slumped, forcing the REIT to suspend distributions since its 1HFY2023 after breaching financial covenants. The REIT had no choice but to lighten up by selling its properties to meet conditions imposed by its lenders. Unfortunately, it is being forced to do so as a distress seller.
