Manulife US Reit to sell Phipps Tower; exclusivity period for Mirae lapses

MANULIFE US Real Estate Investment Trust : BTOU 0% (Manulife US Reit) has entered into a letter of intent to sell Phipps Tower in Atlanta, Georgia, to The Manufacturers Life Insurance Company.

The purchase consideration should be no more than the average of two independent valuations commissioned by the Reit’s manager and its trustee, DBS Trustee.

On Wednesday (May 24), the Reit’s manager said its proposed divestment aims to “enhance unitholder value”. It intends to redeploy proceeds into debt repayment or capital expenditure such as tenant incentives.

The Reit’s manager said it plans to enter into a definitive agreement for Phipps Tower’s disposal by Jun 30. It will also waive the disposal fee.

Additionally, the Reit manager is considering proposals from other prospective partners for its potential sale. This comes as the exclusivity period with Mirae Asset Global Investments has lapsed.

Manulife US Reit previously announced it was in talks with Mirae for the proposed sale of its manager. The manager had noted that it was negotiating key terms and expected the transaction to be completed around Q2 or Q3 of 2023.

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The Reit also disposed of Tanasbourne, its property located in Hillsboro, Oregon, for US$33.5 million. Proceeds from the transaction will be used to lower its leverage, which stood at 48.8 per cent as at Dec 31, 2022.

Both the proposed sale of Manulife US Reit’s manager and its recent divestment of Tanasbourne come as part of the Reit’s ongoing strategic review.

Apart from these efforts, its manager said it is exploring other fundraising options. These include further asset dispositions to reduce gearing.

Proceeds from both divestments will be prioritised towards near-term loan maturities and essential capital expenditure, it added.

Units of Manulife US Reit rose as much as US$0.036 or 25.5 per cent to US$0.177 on Tuesday before the announcement, and closed at US$0.175.