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Manulife US REIT declares flat 4Q17 DPU of 1.42 US cents on rights issue

PC Lee
PC Lee2/6/2018 08:00 AM GMT+08  • 2 min read
Manulife US REIT declares flat 4Q17 DPU of 1.42 US cents on rights issue
SINGAPORE (Feb 6): The manager of Manulife US REIT has announced a 4Q17 DPU of 1.42 US cents, matching its IPO forecast.
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SINGAPORE (Feb 6): The manager of Manulife US REIT has announced a 4Q17 DPU of 1.42 US cents, matching its IPO forecast.

This brings FY17 DPU to 5.77 cents or 1.7% lower than forecast an enlarged number of units due to the rights issue last October.

Restated for the rights issue, 4Q17 and FY17 DPU would have been 7.6% and 1.8% higher than forecast.

Gross revenue of US$29.3 million for 4Q17 was 51.5% higher than 4Q16. This was mainly due to revenue growth from contributions from the acquisitions of Plaza and Exchange and higher rental and other income from the IPO portfolio.

Property operating expenses increased by US$3.9 million mainly due to the enlarged portfolio.

As a result, net property income of US$18.4 million was 48.9% higher than 4Q16.

Finance expense increased by US$1.2 million or 58.1% mainly due to incremental borrowings used to partially fund the acquisitions.

Net fair value gains of US$13.0 million in investment properties largely arose from Exchange appraisals coming in higher than acquisition cost.

Net income of US$18.9 million and distributable income of US$14.6 million were higher than 4Q16 largely due to higher net property income from the enlarged portfolio.

For FY17, net income and net property income came in 94.9% and 16% higher than forecast.

As at Dec 2017, AUM grew 57.4% to US$1.3 billion while occupancy hit 95.9% with positive rental reversions of 12.2%.

The REIT also maintained a low gearing ratio of 33.7%, with 100.0% fixed rate loans, average debt maturity of 3.4 years and a weighted average interest cost of 2.83% per annum.

Looking ahead, Manulife US Real Estate Management says it will continue to optimise its capital structure and increase the financial flexibility of the REIT by adopting certain capital management initiatives, such as launching an Euro medium-term note (EMTN) programme, a Distribution Reinvestment Plan (DRP) and unencumbering the property level mortgages.

As for the upcoming US tax changes, the manager says the REIT has undergone some restructuring to address its effects but does not expect the costs of the restructuring to have a material impact on the consolidated net tangible assets or DPU of the REIT.

Units in Manulife US REIT closed 5 cents lower at 92 cents on Monday.

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