LIKE in the previous half-year period, no distribution was declared for Manulife US Real Estate Investment Trust’s (Manulife US Reit) second half ended December 2023, as the Reit manager will be halting distributions until end-2025.
On Thursday (Feb 8), Manulife US Reit’s manager reported a net loss of US$132.3 million for H2 FY2023, narrowing from the previous year’s H2 net loss of US$192.5 million.
This was mainly due to higher net property income (NPI) and a lower fair value loss on investment properties, partially offset by fair value loss on derivatives, higher finance expenses, and lower tax income.
The Reit’s net loss for FY2023 stood at US$380 million, almost treble its FY2022 net loss of US$129.7 million.
Revenue for H2 FY2023 grew 6.2 per cent to US$108.5 million from US$102.1 million, while NPI improved by 6.7 per cent on the year to US$59.2 million from US$55.5 million.
Distributable income, however, fell 13.3 per cent to US$36.3 million from US$41.9 million in H2 FY2022.
For the full year, revenue was up 2.7 per cent to US$208 million with NPI rising 1.3 per cent to US$114.6 million.
Distributable income declined 15.5 per cent to US$74.3 million, as higher lease termination fees and car park income in FY2023 were more than offset by lower rental and recoveries income amid higher vacancies and increased property expenses.
The manager also attributed the full-year decline in distributable income to higher finance costs because of rising interest rates, as well as the recent divestments of the Reit’s Tanasbourne and Park Place assets.
As at Dec 31, 2023, the Reit’s aggregate leverage ratio stood at 58.3 per cent. Its earlier breach of financial covenant was waived upon execution of the Reit’s master restructuring agreement.
With Manulife US Reit’s recapitalisation plan now approved by both lenders and unitholders, the manager’s chief executive Tripp Gantt said its priorities for 2024 would focus on asset dispositions and maximising proceeds to further reduce indebtedness and fund capital expenditure.
The manager is targeting asset disposals of about US$100 million by the second or third quarter of 2024.
“To improve the operational performance of the portfolio, we will aim to maximise the returns of our Tranche 2 and 3 assets through our leasing and portfolio optimisation efforts, including the (estimated) US$18 million modernisation of Peachtree,” said Gantt.
“On the capital management front, we will also continue to maintain efficient spending on our essential capex, while managing liquidity to address our 2025 debt maturities.”
Looking ahead, the manager reminded all unitholders to continue submitting US withholding forms and certificates – as the Reit would “have to bear the burden” of withholding tax based on the proportion of unitholdings of those who fail to do so.
“This would adversely impact (the Reit’s) income retained,” said the manager.
Units of Manulife US Reit ended Wednesday US$0.003 or 5.4 per cent higher at US$0.059.
