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COMMERCIAL PROPERTY | Staff Reporter, Singapore

Manulife US REIT's NPI surged 55.4% to $122.97m in 2018

The increase was due to high contributions from its Penn and Phipps acquisition.

Manulife US REIT’s (MUST) net property income (NPI) leapt 55.4% YoY to $122.97m (US$90.67m) in 2018 from $79.14m (US$58.35m), an announcement revealed. Its revenue also climbed 57.1% YoY to $196.06m (US$144.55m) from $124.83m (US$92.04m).

In Q4, the firm’s NPI rose 38.4% YoY from $24.98m (US$18.42m) to $34.57 (US$25.49m), whilst revenue also grew 38.4% YoY to $54.93m (US$40.5m) from $39.69m (US$29.26m) in Q4 2017.

The increase in NPI was attributed to higher contributions from MUST’s properties that were acquired in FY17 and FY18, although these were partially offset by higher finance expenses and lower property fair value gain.

Also read: Manulife US REIT buys Pennsylvania Avenue property for $238.72m

Distributable income to unitholders also climbed 51.9% YoY to $96.27m (US$70.98m) from $63.36m (US$46.72m) in 2018. Distribution per unit (DPU) on the other hand slipped 3.5% YoY to $0.0557 from $0.0577 on the back of a drag from the enlarged unit base from the issuance of preferential offering to partially fund the MUST’s Penn and Phipps acquisitions.

As of December 2018, the REIT has a healthy balance sheet with a net asset value (NAV) per unit of US$0.83, the firm revealed. The firm’s occupancy rate also stood at 96.7%, with a long weighted average lease to expiry (WALE) by net lettable area (NLA) of 5.8 years.

“In addition, 60.7% of the portfolio’s leases by NLA will expire only in 2023 and beyond,” MUST noted in its financial statement. “Hyundai at Michaelson with a NLA of approximately 97,000 sqft has been renewed in January 2019. Excluding Hyundai, we have minimal 5.5% of leases by GRI expiring in 2019.”

Following the firm’s acquisitions of Penn and Phipps in June 2018, the REIT’s portfolio comprises of seven Trophy and Class A assets across the US with a total NLA of 3.7 million sqft.

Also read: Manulife US REIT Q1 NPI up 54% to US$19.65m

Meanwhile, the firm noted that management commenced asset enhancement initiatives (AEI) at Figueroa and Exchange which are expected to be completed in Q4 2019 and Q1 2020, respectively, to future-proof its properties and leases. Figueroa is a 35-storey Class A office building with almost 700,000 sq ft of lettable area located in the South Park district of Downtown Los Angeles, whilst Exhange is a 30-storey class A office building with approximately 730,000 sqft of NLA, located in Jersey City, New Jersey, directly on the Hudson River Waterfront.

An estimated $10.85m (US$8m) was allocated to Figueroa’s AEI primarily to refurbish its lobby, install new ganties, seating areas, modernise the exterior entrance and add a cafe. Approximately $16.28m (US$12m) was allocated to Exchange’s AEI works which will include new flooring, a security desk, LED lighting, glass features, and exterior and interior painting.

Amidst the continued trade tensions between the US and China, broader geopolitical uncertainties and a slowing global economy, MUST remains positive on its US market outlook.

“We remain confident of the growth in the world’s largest real estate market, and are delighted to see US REIT’s seeking Singapore Exchange (SGX) listing and Singapore corporates expanding into the US alongside us,” Jill Smith, executive officer of Manulife US Real Estate Management, said in a statement. “Moving into 2019, we will drive leasing and seek acquisitions opportunistically in strong growth movements.” 

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