Manulife US Real Estate Investment Trust’s Latest Earnings: What Investors Should Know
Manulife US Real Estate Investment Trust (SGX: BTOU) is the first pure-play U.S. office real estate investment trust (REIT) listed in Asia. It went public in May 2016 at a price of US$0.83. The REIT’s sponsor is Manulife, which is part of a leading Canada-based financial services group.
This morning, the REIT announced its financial results for the second quarter ended 30 June 2017 (2Q2017). The reporting period was from 1 April 2017 to 30 June 2017.
Here’s a quick rundown on the financial figures from the earnings release:
1. Gross revenue for 2Q2017 came in at US$19.9 million, down 0.3% as compared to the initial public offering (IPO) projection. The decline was due to lower recoveries income, but slightly offset by higher rental and other income mainly arising from rental escalations and higher car park income.
2. Net property income (NPI) was US$12.8 million, up 3.7% versus the IPO projection.
3. The reporting quarter’s distribution per unit (DPU) was at 1.58 US cents, up from 1.47 cents that was projected. The DPU for the quarter increased mainly due to higher property income and lower interest costs.
For the first half of 2017 (1H 2017), DPU was at 3.23 US cents as compared to the projection of 2.99 US cents.
4. The net asset value (NAV), as at 30 June 2017, was US$0.84 per unit.
The portfolio occupancy rate stood at 95.9% based on committed leases, and weighted average lease expiry was at 5.3 years with limited percentage of leases expiring this year.
As at 30 June 2017, the REIT had a gearing ratio of 30.4%. This is an improvement as compared to the first quarter where the gearing ratio stood at 34.2%. The weighted average interest rate was at 2.46% while the weighted average debt maturity came in at 3.1 years. The REIT has no near-term refinancing need, and 100% of its loans are on fixed rate.
Ms Jill Smith, Chief Executive Officer of the REIT’s Manager, commented on the latest results:
“We continue to deliver a strong set of results by outperforming our 1H 2017 DPU projection by 8.0%. Our latest portfolio valuation increase of 2.8% further affirmed the inherent strength of our initial portfolio underpinned by the strong fundamentals of the U.S. commercial real estate market.
During this period, we announced our maiden acquisition of 500 Plaza located in New Jersey. This acquisition demonstrates growth and scalability, and will start to contribute from 3Q 2017 onwards. Post our first acquisition, we will continue to seek yield accretive deals to grow the REIT in a sustainable manner.”
Manulife US REIT signed off by saying the following:
“Market conditions continue to be generally favourable in the three markets that Manulife US REIT has invested in, with minimal new supply and rising market rents.”
The office REIT opened for trading at US$0.925 this morning, giving a historical price-to-book ratio of 1.1.