Manulife US Reit occupancy drops to 94.3% on known expiries, slowdown in new leasing

MANULIFE US Real Estate Investment Trust's (Manulife US Reit) manager on Wednesday said portfolio occupancy declined to 94.3 per cent for the three months ended Sept 30.

This was largely due to known expiries unrelated to the Covid-19 pandemic and a slowdown in new leasing nationwide, according to a business update.

Rental collection, excluding deferment and abatement, stood at 94 per cent for Q3 and 98 per cent for the year to date ended September. The Reit provided rental deferment of 0.3 per cent and abatement of 0.2 per cent based on year to date September 2020 income.

Slow rent collections came mainly from the food and beverage, lifestyle and retail sectors.

The Reit executed leases of about 217,300 square feet in net lettable area for the year to date ended September, with a 7.9 per cent increase in rental reversion.

Its balance sheet "remains strong" with undrawn committed facilities of US$134.5 million, the manager said. Gross borrowings stood at US$844.2 million while the Reit's gearing ratio is 39.9 per cent.

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Moving forward, the manager has started negotiations for 2021 loans and expects cost savings. It added there is no direct impact on the Reit's tax structure post-US elections and unitholders can expect a full distribution payout for fiscal 2020.

The manager will also focus on 2021 expiries targeting high-growth sectors and using a variety of leasing options. It said the acquisition landscape is active and that it will target desirable locations focusing on high-growth technology and healthcare sectors.

Manulife US Reit units closed up 4.2 per cent or US$0.03 to US$0.74 on Wednesday.