SINGAPORE (Nov 5): The manager of Manulife US REIT (MUST), the first pure-play U.S. office REIT listed in Asia, declared a 3Q DPU of 1.51 US cents, 33.6% higher than a year ago cents.
Gross revenue of US$40.4 million ($55.5 million) was 75.3% higher than 3Q`7 largely due to revenue contribution from the four trophy and Class A quality office properties acquired in 2017 (Plaza and Exchange) and 2018 (Penn and Phipps).
Property operating expenses increased by US$6.6 million mainly due to incremental property expenses from properties acquired in 2017 and 2018.
Accordingly, net property income of US$25.1 million was 74.9% higher than 3Q17.
Finance expenses of US$5.9 million increased by US$3.5 million mainly due to incremental borrowings used to partially fund the properties acquired in 2017 and 2018.
Net fair value loss in investment properties of US$0.9 million largely arose from straight line rent accounting treatment.
The tax expense was higher than 3Q17 largely due to higher deferred tax expense resulting from the enlarged portfolio.
Net income of US$13.5 million was higher than 3Q17 largely due to higher net property income, partly offset by higher finance expenses and tax expense.
As at Sept 30, the portfolio has an elevated committed occupancy of 96.5% and a long WALE by NLA of 6.0 years.
Looking ahead, although the US economy is doing well despite the trade conflict with China, sector-specific risks are increasing and the higher degree of uncertainty could ultimately be reflected in more modest business investment than expected, says the manager of MUST.
In an RHB Research flash note, lead analyst Loke Peihao says MUST’s 3Q results came in line with expectations.
“We have a ‘buy’ recommendation with a target price of US$1.06/share, based on DDM. More details to come after the analyst briefing this morning.”
As at 9,59am, units in MUST are up a cent at 76 US cents.
