Manulife US REIT reports 3Q19 net property income climbed 12 percent

Manulife US REIT agreed to acquire Centrepointe office towers located in Fairfax, Virginia. Credit: Manulife US REITManulife US REIT agreed to acquire Centrepointe office towers located in Fairfax, Virginia. Credit: Manulife US REIT

Manulife US REIT reported Monday its third quarter net property income grew 11.8 percent on-year to US$28.12 million on the contributions from the newly acquired Centrepoint property, partly offset by higher property operating expenses due to a larger portfolio.

Gross revenue for the quarter ended 30 September increased 13.3 percent on-year to US$45.73 million, the U.S. office REIT said in a filing to SGX.

The distribution per unit (DPU) fell 2 percent on-year to 1.48 U.S. cents for the quarter, compared with 1.51 U.S. cents in the year-ago quarter, the filing said.

The DPU includes an advanced distribution for the 1 July to 29 September period on 1.40 billion units, and distributable income for 30 September on an enlarged base of 1.57 billion units after the issuance of shares from a private placement and preferential offering to finance the Capital acquisition, the filing said.

“Backed by its strong sponsor, Manulife, the REIT now owns nine premier Trophy and Class A buildings,” Jill Smith, CEO of the REIT’s manager, said in the statement.

“At every step, we have aimed to fortify the portfolio through diversification of income. We have maintained a long WALE of 6.0 years and a high occupancy of 97.3 percent by consciously increasing the trade sectors without compromising on the quality of the tenants,” she added.

“Since its IPO, the REIT has steadily attracted a significant institutional investor base that will put it in good stead to remain the U.S. REIT of choice – especially with the FTSE EPRA Nareit Index inclusion in sight,” Smith said.

For the nine-month period, MUST reported net property income increased 23.5 percent on-year to US$80.47 million on gross revenue of US$129.07 million. The DPU for the nine-month period was 4.52 U.S. cents, up 11.9 percent from 4.04 U.S. cents in the year-ago period, MUST said.

In its outlook, MUST had some words of caution.

“Increased global trade tensions [are] hampering business confidence and taking a toll on investments, particularly in manufacturing segments. Despite softening of the U.S. economy, dollar continued to strengthen, as general uncertainty and search for yield fueled demand for dollar denominated assets,” the REIT said.

Office absorption in the U.S. remained strong, with the national vacancy rate at 14.2 percent in the September quarter, MUST said, citing JLL data.

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