Manulife US Reit's H1 DPU drops 11.5% to 2.7 US cents

Singapore

US-FOCUSED office property landlord Manulife US Real Estate Investment Trust (Manulife US Reit) on Thursday announced a distribution per unit (DPU) of 2.7 US cents for the six months ended June 30, down 11.5 per cent from the year-ago period.

Distributable income fell 10.4 per cent to US$43 million, largely due to lower rental income from Michelson, Centerpointe and Capitol arising from higher vacancies, rent abatements to tenants, and lower portfolio car park income.

Portfolio occupancy rates dipped to 91.7 per cent as at end-June, down 0.3 point from 92 per cent in Q1 2021. On a year-on-year basis, portfolio occupancy was 4.5 percentage points lower.

"We have slowed the rate of decline to almost nothing," said Jill Smith, chief executive officer of the manager, in a briefing.

In H1, the Reit executed leases amounting to around 305,000 square feet (sq ft), or 6.5 per cent of the portfolio by net lettable area (NLA), at an average positive rental reversion of 1.3 per cent. Another 2.9 per cent of leases by NLA will expire in the remainder of 2021.

"The good news is that our leasing momentum is actually accelerating quite fast into the second half," Ms Smith said, noting that 127,000 sq ft is expected to be signed in the third quarter.

Manulife US Reit's gross revenue fell 7.9 per cent to US$90.8 million, while net property income was 9.8 per cent lower at US$56.1 million.

"Having weathered the worst of the pandemic and with leasing accelerating, we have a clearer path towards the recovery of our office portfolio," she said.

"As we look ahead, some 60 per cent of our tenants have indicated their plans to return to the office from September, lifting revenue such as car park income."

The H1 DPU of 2.7 US cents will be paid out on Sept 27.

Looking ahead, the manager said it was exploring avenues for growth, both with its sponsor, as well as with third parties.

Units of Manulife US Reit closed flat at 76.5 US cents on Thursday.