Manulife US Reit to sell Plaza office building for US$40 million as H2 distributable income falls 57.6%
Revenue for the half year falls 25.5% to US$80.8 million
THE manager of Manulife US Real Estate Investment Trust (MUST) on Thursday (Feb 20) said it is selling 500 Plaza in New Jersey for a net consideration of about US$40 million, as it looks to pare down its debt.
The sale of the office building is expected to be completed by this quarter. The latest independent valuation of the asset, done last Dec 31, was US$43.7 million.
MUST completed the acquisition of the 11-storey, Class-A office building for US$115 million in July 2017.
The sum was partly funded by a private placement of some 97 million new units in the trust at US$0.83 apiece to raise gross proceeds of US$80.5 million.
The manager said the net proceeds of about US$39 million from the Plaza divestment, coming on the heels of the sale of its Capitol for a net consideration of US$110 million, would enable the Reit to pay off US$130.7 million in loans maturing in 2025, and get an early start on paying down debts maturing in 2026.
“We are currently in divestment discussions on additional properties which would further contribute towards debt repayment,” said John Casasante, chief executive officer and chief investment officer of the manager.
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“Upon repayment of our 2026 debts, we will leverage our sponsor’s global real estate platform to focus on growth opportunities through accretive acquisitions to deliver sustained value to unitholders,” he added.
Assuming that the 500 Plaza divestment was completed as at Dec 31, 2024, and net sale proceeds were fully used to repay existing loans, MUST’s pro forma aggregate leverage is expected to improve to 59.8 per cent, from 60.8 per cent.
For the six months ended Dec 31, 2024, MUST reported a 57.6 per cent drop in distributable income to US$15.4 million, from US$36.3 million in the year-earlier period, with its revenue and net property income (NPI) declining.
H2 distributable income per unit to fell to US$0.0087, from US$0.0205 in the corresponding year-earlier period.
The full-year adjusted distributable income per unit declined 43.9 per cent to US$0.0215 from US$0.0383 the year before.
No distribution was declared for the second half – unchanged from the previous corresponding period – as the Reit manager will halt distributions until end-2025, following the Reit’s recapitalisation plan that unitholders approved in 2023.
Revenue for H2 FY2024 fell 25.5 per cent to US$80.8 million from US$108.5 million the prior year; NPI decreased 37.4 per cent to US$37.1 million from US$59.2 million previously.
For the full year, revenue was down 19.4 per cent at US$167.6 million from US$208 million; NPI fell 30.3 per cent to US$79.9 million from US$114.6 million.
Units of closed 3.1 per cent or US$0.003 lower at US$0.093 on Thursday.
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