Manulife US REIT points to a “slow and bumpy return to office” as occupancy declined slightly to 91.7% in 1QFY2022 ended March 31, 2022. Weighted average lease expiry (WALE), meanwhile, declined to 5.0 years.
This is compared to 92.3% and 5.1 years respectively as at the end of 2021.
The dip is due to two tenants “giving back more than 20,000 sq ft of space”, says management. A legal tenant vacated its space in Class A office building Peachtree in Atlanta due to downsizing and an information company left the sector completely, returning its space at 10 Exchange Place in New Jersey.
That said, the REIT says 54% of the 68,000 sq ft in leases signed in 1QFY2022 are new. For the full year 2021, the REIT executed leases amounting to 654,000 sq ft.
Physical building occupancy across Manulife US REIT’s properties stands at 32.0% as at May 2022, up from 25.3% for 1QFY2022. This is more than double the 11.1% seen last year in 1QFY2021.
“This trend is good news for us and we hope to see that number increasing more,” says CEO Tripp Gantt in the REIT’s 1QFY20222 operational update on May 9.
See also: Can Manulife US REIT avoid buyer's remorse?
Weighted average interest rate inched slightly higher to 2.86% this quarter from 2.82% as at Dec 31, 2021. Weighted average debt maturity over the same period, too, inched higher to 2.6 years from 2.4 years.
“Every 1% increase in interest rate will impact DPU by 0.075 US cents,” notes Manulife US REIT.
As at March 31, gearing stands unchanged from the previous quarter at 42.8%, below the regulatory gearing limit of 50%. Management says they hope to keep gearing below an “internal benchmark” of 45%.
Manulife US REIT announced on May 4 that former CEO Jill Smith will be retiring after close to seven years with the company. Replacing her as CEO of Manulife Real Estate Management, the manager of Manulife US REIT, is Singapore-based William David Gantt III, also known as Tripp.
See also: PropertyGuru's net loss in 2QFY2024 surges to $16.1 million
Gantt, 52, has over 23 years of real estate experience, says the REIT, including 16 years overseeing real estate operating companies on behalf of the Washington State Investment Board, a US pension fund. He was formerly the deputy CEO of Manulife US REIT.
As at 10.12am, units in Manulife US REIT are trading 0.5 US cents lower, or 0.81% down, at 61 US cents.
