SINGAPORE (June 19): Manulife US REIT (MUST) currently has a portfolio of eight trophy and class A office properties located in Los Angeles, New York, Washington DC and Atlanta, with a total net lettable area (NLA) of 4.16 million sf and valued at US$1.86 billion ($2.54 billion).

According to statistics, these four cities rank among the top 10 in the US in terms of GDP growth, population and median household income.

In an unrated report by CGS-CIMB, MUST has caught the attention of analyst Lock Mun Yee after she visited MUST’s properties in Atlanta and New Jersey.

According to US property consultants, supportive US macroeconomic outlook, as well as robust demand-supply dynamics with limited supply should continue to drive the office sector in these locations.

Currently, the REIT’s portfolio has a strong occupancy of 97.6% with only 4.82%/7.7% of its gross rental income due to be re-contracted in FY19/20, providing it with strong earnings visibility.

As at 1Q19, a majority of MUST’s properties saw passing rents that were 5-14% below market rents, according to management. This provides the REIT with potential earnings upside from lease renewals.

Furthermore, its portfolio has a weighted average lease expiry (WALE) of 6.1 years, with around 68.5% of its tenants in the legal, financial and insurance, retail trade, information and public administration sectors.

“As at 1Q19, MUST had a well-spread debt expiry profile with only 16.3% of its debt due to be refinanced in 2019. Around 98.2% of its debt is on fixed rates with a weighted average debt cost of 3.28%,” says Lock.

The REIT recently acquired Centrepointe I & II and completed its US$94 million private placement in June 2019, causing its gearing to improve to 36.8%.

MUST’s sponsor is The Manufacturers Life insurance Company (Manulife), part of the Manulife Group. The sponsor’s parent company Manulife Financial Corporation (MFC) is a leading international financial services group.

As at 1.00pm, units in MUST are trading at 87 US cents.