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'Here comes the sun' for Manulife US REIT after slight 3Q21 dip in occupancy and WALE

Jovi Ho
Jovi Ho11/3/2021 09:12 AM GMT+08  • 2 min read
'Here comes the sun' for Manulife US REIT after slight 3Q21 dip in occupancy and WALE
“How do I view the outlook of our portfolio? After the darkness of last year, here comes the sun,” says MUST CEO Jill Smith.
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Manulife US REIT (MUST) occupancy dipped slightly to 90.9% for 3QFY2021 ended September, down from 91.7% at 1HFY2021 and 92% in the first quarter.

That said, MUST notes that occupancy increased to 91.6% post-3QFY2021, as of Oct 25.

On the occupancy dip, MUST’s chief investment officer Patrick Browne points to a “long-term tenant with a long-term lease” in Atlanta choosing to terminate their lease for an entire floor, which formerly housed their IT department.

In its quarterly operational update on Nov 3, MUST notes that weighted average lease expiry (WALE) also dipped to 5.1 years for the quarter, from 5.3 years in 1HFY2021.


See: Manulife US REIT to have stronger 2H as leasing momentum improves: analysts

62.5% of MUST’s leases have in-place rental escalations of 2.7% per annum.

See also: Second Chance Properties doubles net profit in 1HFY2023 with sale of seven properties

For the first nine months of 2021, MUST executed about 453,000 sq ft of leases, or about 9.7% of MUST’s portfolio. This is up 76% from some 279,000 sq ft in FY2020.

Of this figure, approximately 149,000 sq ft leases were executed in 3QFY2021.


See: Manulife US REIT sees lower DPU of 2.7 US cents for 1H21

See also: Moomoo Singapore’s user base exceeds 25% of market share as parent company’s FY2022 gross profit grows by 12.0% y-o-y

See also: Manulife US REIT says portfolio 'remains stable' in 1Q21 operational update

Meanwhile, gearing stands at 42.0% as at 3QFY2021, holding steady from 42.1% in the previous quarter.

The weighted average interest rate, too, was maintained at 3.01% for the quarter, compared to 2.99% in the previous quarter.

“How do I view the outlook of our portfolio? After the darkness of last year, here comes the sun,” says MUST CEO Jill Smith.

Limited supply is set to improve 12-month rent growth in MUST’s markets, notes the REIT. CoStar projects 12-month rent growth of negative 0.4%, compared to earlier projections of negative 1.2% in July 2021 and negative 2.5% in April 2021.

“It’s still a tenant’s market, not a landlords’ market, but certainly the pendulum is swinging away,” adds Smith.

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US office green shoots are growing strongly, notes MUST, pointing to higher leasing volume and longer tenure, TIs and free rent starting to ease, increasing base rents and net effective rents, and subleasing declining for the first time since Covid-19.

Shares in Manulife US REIT closed 1.5 US cents higher, or 2.14% up, at 71.5 US cents on Nov 2.

Photo: MUST

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