SINGAPORE (July 5): DBS Group Research has started coverage of Manulife US real estate investment trust (REIT) with a buy recommendation and a target price of 91 cents.

According to lead analyst Mervin Song, the REIT provides investors with the opportunity to invest freehold properties in US.

Manulife’s initial portfolio includes three Class A or Trophy buildings, namely Figueroa in Los Angeles, Michelson in Orange County, and Peachtree in Atlanta.

The REIT offers a weighted average lease expiry of 5.7 years and about 15.7% of its leases are due to expire in FY2016 and FY2017. The REIT also enjoys positive rental reversions of between 2.5% and 3.5% for over 80% of its leases.

“Manulife US REIT is projected to deliver 8% DPU growth which compares favourably to the average 2% growth on offer by the S-REIT market,” says Song.

Furthermore, the pair added that the REIT has a strong sponsor in Manulife Financial Group, which has 70 years of experience managing US real estate.

“Leveraging on its sponsor’s skill sets across the real estate value chain as well as strong acquisition track record, [the REIT] is well placed to take advantage of acquisition opportunities,” adds Song.

Manulife units were trading at 83.5 cents at 11.25am.