UNITHOLDERS of Manulife US Real Estate Investment Trust : BTOU 0% (MUST) on Thursday (Dec 14) voted overwhelmingly in favour of the recapitalisation plan proposed by its manager.

Over 97 per cent of the votes present at the extraordinary general meeting (EGM) on Thursday were in favour of each of the three inter-conditional resolutions.

The first resolution – which was to approve the divestment of the Reit’s Park Place property to the sponsor for US$98.7 million – saw 97.7 per cent or 545.6 million votes in favour.

Meanwhile, 97.6 per cent or 543.9 million votes were for the second resolution, which involved obtaining a six-year unsecured sponsor-lender loan of US$137 million at an effective interest rate of 10 per cent per annum.

Unitholders also approved the third resolution to adopt a disposition mandate, which authorises the disposal of any one or more of the existing properties. Some 98.1 per cent or 701.3 million votes were for this resolution.

MUST had almost 1.8 billion issued and paid-up units as at Jun 30, 2023.

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Last month, the manager of MUST unveiled the recapitalisation plan involving asset sales and taking a sponsor loan to remedy its financial covenant breach.

MUST breached existing financial covenants in July after portfolio valuations fell 14.6 per cent, affecting its ability to pay out distributions.

The Reit’s proportion of unencumbered debt to unencumbered assets exceeded the 60 per cent threshold, while its aggregate leverage also crossed the 50 per cent regulatory gearing limit.

The recapitalisation plan sought to “revitalise” the Reit, and provide more time for the manager to sell assets and realise value. 

As part of the plan, the lenders have agreed to waive past and existing breaches, and have provided a temporary relaxation of financial covenants until December 2025.

Distributions, however, would continue to be halted until December 2025. These could resume if the Reit meets “early reinstatement conditions” which are similar to the regulatory leverage limits in Singapore.

Units of MUST rose 16.4 per cent to US$0.078 during the morning session on Thursday, before a trading halt was called ahead of the EGM.