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Manulife US Reit posts 2% fall in Q3 DPU on enlarged unit base

MANULIFE US Reit on Monday posted a 2 per cent fall in its third-quarter distribution per unit (DPU) to 1.48 US cents for the three months ended Sept 30, from 1.51 US cents a year ago. 

This was mainly due to an enlarged unit base following a placement and preferential offering to partially fund its US$198.8 million acquisition of 400 Capitol Mall. 

Gross revenue rose 13.3 per cent to US$45.7 million from US$40.4 million last year, largely due to contributions from the acquisition of two office towers in Virginia for US$122 million. In May this year, the Reit (real estate investment trust) unveiled plans to buy Centerpointe I & II in Fairfax, Virginia, about 30 kilometres west of the US capital of Washington, DC.

Net property income for the quarter also increased 11.8 per cent to US$28.1 million, on the back of its acquisitions, which included Centrepointe, 1750 Pennsylvania Avenue also in Washington DC, and the Phipps Tower in Buckhead, Atlanta.

Distributable income was up 7.8 per cent to US$20.8 million, from US$19.3 million last year.

The Reit's third-quarter DPU of 1.48 US cents comprises an advanced distribution of 1.47 US cents to be paid on Nov 29, while the remaining DPU of 0.01 US cent will be paid with its Q4 DPU in the first quarter next year, it said. 

On Sept 30 2019, Manulife US Reit issued about 91.3 million new units in connection with the Capitol private placement. The manager declared an advanced distribution for the period from July 1 to Sept 29, being the day prior to the day when the new units were issued.

This was to ensure that the total amount available for distribution, accrued by Manulife US Reit up to the day prior to the date on which the new units were issued, was only distributed to the existing unitholders, it said. 

Jill Smith, chief executive of the manager, said: "Backed by its strong sponsor, Manulife, the Reit now owns nine premier Trophy and Class A buildings. Including the recent acquisition of Capitol, Manulife US Reit's AUM (asset under management) has increased 20.4 per cent year on year to US$2.1 billion. At every step, we have aimed to fortify the portfolio through diversification of income. We have maintained a long WALE (weighted average lease expiry) of six years and a high occupancy of 97.3 per cent by consciously increasing the trade sectors without compromising on the quality of the tenants. 

"Our properties have been carefully selected for their location in capital cities and top MSAs (Metropolitan Statistical Areas) that are expected to remain resilient through property cycles over the long term. Since its IPO (initial public offering), the Reit has steadily attracted a significant institutional investor base that will put it in good stead to remain the US Reit of choice – especially with the FTSE EPRA NaReit Index inclusion in sight."

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