PhillipCapital analyst Natalie Ong is optimistic on Manulife US REIT (MUST)’s portfolio due to its positive rental reversions of 7.9% for 1H20, minimal rent abatement and deferments, as well as zero requests from its tenants to right-size their assets so far.

For 1H20 ended June, the REIT also posted a long weighted average lease expiry (WALE) of 5.7 years, low expiries, a low expiry rate in FY20/21, as well as quality tenants and a tight comparable supply in the markets the REIT has a presence in.

On this, Ong has maintained her “buy” call with a higher target price of 90 US cents ($1.23), previously 80 US cents.

"We lower our beta to reflect the relative resilience of US office asset class, owing to the resilience of office-using tenants and long WALEs. Our higher TP is mainly due a lower cost of equity assumption of 9.1% (prev. 10.0%),” she says in a report dated August 5.

Ong has estimated a distribution per unit (DPU) of 6.39 cents, gross revenue of $201 million, and a distribution yield of 8.04 for FY20e.

Units in MUST closed flat at 79.5 US cents on August 6.