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Manulife US Reit Q4 DPU up 7.7% to 1.53 US cents

MANULIFE US Reit’s fourth-quarter distribution per unit (DPU) rose almost 8 per cent, boosted by contributions from properties acquired in 2017 and 2018.

The pure-play US office Reit’s (real estate investment trust) DPU for the three months ended Dec 31 grew 7.7 per cent to 1.53 US cents, from 1.42 US cents a year ago.

However, adjusted DPU - which normalises the impact of an enlarged unit base from a rights issue and preferential offering which took place in 2017 and 2018 respectively - was up 1.3 per cent to 1.54 US cents, from 1.52 US cents.

For the quarter, the Reit's distributable income grew 33.8 per cent to US$19.6 million from US$14.6 million a year earlier.

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Net property income (NPI) also increased by 38.4 per cent to US$35.5 million, as gross revenue rose by the same percentage to US$40.5 million.

For the full year, NPI rose 55.4 per cent to US$90.7 million, while distributable income grew 51.9 per cent to US$71 million.

DPU for the year fell 3.5 per cent to 5.57 US cents, largely due to the enlarged unit base from the issuance of its preferential offering. Proceeds from the offering were used to partially fund its 2018 acquisition of the Penn property in Washington DC, and the Phipps property in Atlanta.

Nonetheless, adjusted DPU rose 3.6 per cent to 6.05 US cents.

As at Dec 31, portfolio occupancy stood at 96.7 per cent, while the weighted average lease expiry (WALE) by net lettable area (NLA) was 5.8 years.

The Reit's gearing of 37.2 per cent is also below the regulatory limit of 45 per cent, while weighted average debt maturity is 2.7 years, and debt expiry is spread across the Reit's seven properties from 2019 to 2023. Additionally, 98.6 per cent of its debt are fixed rate loans, which mitigates any near-term interest rate risk on existing debt, Manulife US Reit said.

Looking ahead, the Reit has a positive outlook on the US market, though it noted that continued trade tensions between the US and China, as well as broader geopolitical uncertainties could weigh on growth.

The Reit's manager expects that US tax regulations will not have any impact on the Reit's net tangible assets or DPU.

Separately, Jill Smith, CEO of Manulife US Reit, said: "We remain confident of the growth in the world's largest real estate market, and are delighted to see US Reits seeking SGX (Singapore Exchange) listing, and Singapore corporates expanding into the US alongside us.

"We continue to distinguish ourselves through our high-quality portfolio of Trophy and Class A assets, which will provide strong income in upcycles, and remain resilient during down cycles as compared to Class B and lower class business park properties. Moving into 2019, we will drive leasing and seek acquisitions opportunistically in strong growth markets."

Following the acquisitions of Penn and Phipps in June 2018, the Reit’s portfolio now comprises seven Trophy and Class A assets across the US, with a total NLA of 3.7 million square feet. The valuation of these properties stood at US$1.7 billion as at Dec 31. 

Units in Manulife US Reit closed at US$0.85 apiece on Friday, down 0.6 per cent, or 0.5 US cent.