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New acquisitions boost Manulife US Reit’s Q2 DPU to 1.53 US cents

CONTRIBUTIONS from its newly acquired properties lent a boost to Manulife US Reit's second-quarter distribution per unit (DPU), which rose to 1.53 US cents from 1.3 US cents a year ago.

The acquisitions include Centrepointe, a two-tower Class A office building in Washington DC, 1750 Pennsylvania Avenue also in Washington DC, and the Phipps Tower in Buckhead, Atlanta.

The drag on the year-ago quarter was also partly because of the enlargement in unit base which resulted from the preferential offering of close to 228 million units issued in June 2018 to partially fund the Penn and Phipps acquisitions.

Gross revenue in Q2 rose 33.2 per cent to US$43.3 million, while net property income rose 33.8 per cent to US$27.3 million. Income available for distribution rose 25 per cent to US$20.6 million.

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For the six-month period, DPU was higher at 3.04 US cents versus 2.53 US cents a year ago. This comprised an advanced distribution of 2.14 US cents for the period from the start of the year to May 8, 2019. This distribution will be paid on July 30, 2019. 

There will be another upcoming DPU of 0.9 US cent for the period from May 9, 2019 to June 30, 2019 which will be paid to the enlarged unit base on Sept 27, 2019.

Jill Smith, CEO of the Reit manager, said: "During this period, the Reit renewed close to 367,000 sq ft of leases with long tenures averaging 8.6 years and 2.8 per cent rental escalations per annum." 

She added that she believes the Reit's "established track record and institutionalised investor base" will enable it to enter the FTSE EPRA NAREIT Index in due course.

As at end-June 2019, Manulife US Reit's gearing had improved from 37.6 per cent in Q1 2019 to 37.1 per cent in Q2 2019. 

It has also fixed the rates of 96.1 per cent of its outstanding loans, resulting in a weighted average interest rate of 3.32 per cent.

As at end-June, the Reit's occupancy rate dipped slightly to 97.2 per cent from 97.4 per cent as at end-March 2019.

Units of the Reit closed one cent higher at US$0.885 on Tuesday.