Manulife US Reit proposes US$92.5 million sale of Los Angeles property to trim debt
Divestment of 35-storey office property known as Figueroa will see S$10 million net loss
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[SINGAPORE] Manulife US Reit (MUST) is proposing the sale of its Figueroa office property in Los Angeles to trim its debt.
It plans to sell the 35-storey building to the City of Los Angeles – a municipal corporation – for US$92.5 million, with net proceeds of US$82.4 million, its manager said in a statement on Monday (Mar 30).
The sale is priced at the book value of US$92.5 million, and will see a net loss of about US$10.1 million after expenses.
MUST’s manager said the proceeds will go to the early repayment of a loan due in 2026 and partial repayment of loans due in 2027. It will also improve the financial ratios of the real estate investment trust (Reit) and “pave the way for portfolio diversification and growth”, it added.
Long-suffering unitholders of MUST in December grilled its manager on its recovery plan, including the interest the sponsor is charging the Reit and why its asset pivot does not include markets beyond the US.
Some unitholders also aired a proposed asset sale and delisting of the Reit, saying that it was not achieving the deliverables of a Reit.
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The proposed divestment of Figueroa will fulfil the terms of the disposition mandate obtained by MUST’s manager last year, as detailed in a circular, it said.
With the sale of Figueroa, the distribution per unit (DPU) of MUST would have dropped 2.1 per cent to US$0.0141 if the transaction had been completed at the start of 2025. DPU would have fallen 7.8 per cent to US$0.0133 including the debt repayments.
Distributions to unitholders have been suspended since 2023 as part of recapitalisation plans and the signing of a master restructuring agreement.
The net asset value per unit of MUST would have inched down from US$0.19 to US$0.18 had the sale been completed as at Dec 31 last year.
While the sale is set to be fully completed in the second quarter of 2026, MUST reminded investors that the purchase and sale agreement has not been signed by the buyer and there is no assurance that it will be executed.
The property, with a 45.6 per cent occupancy and a weighted average lease expiry of 4.9 years by net lettable area, is set to be bought by the Los Angeles Department of Water and Power, added MUST.
Units of MUST closed flat at US$0.057 on Friday.
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