Manulife US REIT Review @ 21 February 2022

Basic Profile & Key Statistics

Manulife US REIT (MUST) is an office REIT that owns 12 properties in U.S.

Performance Highlight

Gross revenue and NPI decreased slightly YoY due to lower rental income but partially offset by higher carpark income and newly acquired properties in December. Distributable income and DPU on the other hand, increased slightly YoY.

Rental Reversion

Rental reversion is at -0.8%

Acquisition

In December 2021, MUST has completed the acquisition of the 3 properties in Phoenix, Arizona and Portland, Oregon.

 

Related Parties Shareholding

• REIT sponsor's shareholding is low at 8.542%
• REIT manager's shareholding is low at 0.467%
• Directors of REIT manager's shareholding is moderate at 0.105%

Lease Profile

• Occupancy is slightly low at 92.3%
• WALE is long at 5.1 years
• Highest lease expiry within 5 years is low at 13.5% which falls in 2025
• All properties are freehold

Debt Profile

• Gearing ratio is high at 42.8%
• Cost of debt is high at 2.82%
• Fixed rate debt % is high at 86.5%
• Unsecured debt% is low at 36.4%
• WADM is short at 2.4 years
• Highest debt maturity within 5 years is low at 25.6%, which falls in 2026
• Interest coverage ratio is low at 3.4 times

Diversification Profile

• Top geographical contribution is low at 39.1% 
• Top property contribution is low at 16.2% 
• Top 5 properties contribution is moderate at 65.2% 
• Top tenant contribution is low at 5.9% 
• Top 10 tenants contribution is low at 34.6%

Key Financial Metrics

• Property yield is moderate at 5.3% 
• Management fees over distribution is low at 10% in which unitholders receive US$ 10 for every dollar paid 
• Distribution on capital is high at 4.1%
• Distribution margin is moderate at 46.2%

Trends

• Slight Downtrend - Property Yield
• Downtrend - DPU, NAV per Unit, Interest Coverage Ratio, Distribution on Capital, Distribution Margin

Relative Valuation

• P/NAV - Below -1SD for 1y & 3y; Below average for 5y
• Dividend Yield - Above +1SD for 1y, 3y and 5y

Author's Opinion

Favorable	Less Favorable
Long WALE	Low REIT Sponsor's Shareholding
Well Spread Lease Expiry	Low REIT Manager's Shareholding
100% Freehold Properties	High Gearing Ratio
High Fixed Rate Debt %	High Cost of Debt
Well Spread Debt Maturity	Low Unsecured Debt %
Low Top Geographical Contribution	Short WADM
Low Top Property Contribution	Low Interest Coverage Ratio
Low Top Tenant & Top 10 Tenants Contributions	DPU Downtrend
Competitive Management Fees	NAV per Unit Downtrend
High Distribution on Capital	Interest Coverage Ratio Downtrend
	Distribution on Capital Downtrend
	Distribution Margin Downtrend

The occupancy has seen improvement in the latest quarter. With the contribution from the 3 recently acquired properties, MUST performance is expected to improved moving forward. Note that MUST is currently trading at the 52 weeks low range.

You could also refer below for more information:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview and Detail of Singapore REIT

REIT Analysis - List of previous REIT analysis posts

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*Disclaimer: Materials in this blog are based on my research and opinion which I don't guarantee accuracy, completeness, and reliability. It should not be taken as financial advice or a statement of fact. I shall not be held liable for errors, omissions and loss or damage as a result of the use of the material in this blog. Under no circumstances does the information presented on this blog represent a buy, sell, or hold recommendation on any security, please always do your own due diligence before any decision is made.