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At any rate, peak Covid is probably over in the US. However, it has wreaked some damage on MUST. Centrepointe in Fairfax County Virginia, had a lease renewal in 4Q2020 that resulted in a double digit decline in rental reversions. “In 4Q2020, we had a double digit negative reversion due to one tenant in Centrepointe that was marked to market. That was a huge [negative reversion] similar to Hyundai’s in Michelson in 2019,” Smith explains. “If we strip out the single tenant, rental reversions for the year would be a positive 4.7%,” she adds.
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Ever the optimist, Smith prefers looking forward, to continued portfolio growth, with an emphasis on accretive acquisitions. However, MUST is taking a pivot. Business parks are in its sights, and the manager would consider a portfolio with the view of the portfolio vendor becoming a partner. As an example, ARA LOGOS Logistics Trust (ALOG) placed out $70 million worth of units to Ivanhoé Cambridge China Inc, a fund manager which owns stakes in two funds acquired by ALOG. Since the start of this year, ALOG’s unit price is up more than 18%. “We’ve always been Class A and trophy. We’ve built a solid portfolio with government tenants, but there are different growth sectors. So we can go up to 20% for these high quality [tech] tenants who maybe in business parks,” Smith says. MUST’s unit price closed at 71 US cents, down 5% since Jan 4 and translating into a yield of 7.9%.