Manulife US REIT 1H21 net property income slid nearly 10 percent

U.S. one-dollar currency notes; taken September 2018.U.S. one-dollar currency notes; taken September 2018.

Manulife US REIT reported Thursday its first half net property income dropped 9.8 percent on-year to US$56.07 million on lower rental income from the Michelson, Centrepointe and Capitol properties due to higher vacancies, Covid-related rent abatements to tenants and lower portfolio carpark income.

Gross revenue for the January-to-June period declined 7.9 percent on-year to US$90.80 million, the REIT said in a filing to SGX.

The distribution per unit (DPU) slid to 2.70 U.S. cents, down 11.5 percent from 3.05 U.S. cents in the year ago period, MUST said. The DPU is expected to be paid on 27 September.

As of end-June, MUST’s occupancy was stable at 91.7 percent, and average rental reversions in the first half were a positive 1.3 percent, the filing said.

Physical occupancy of MUST’s nine buildings has been rising, with some reaching 50 percent in early August, the filing said. As of end-June, the REIT has collected 99 percent of rents and provided 0.3 percent deferment and 2.4 percent abatement, mainly to retail and food and beverage tenants which saw their operations hurt by the pandemic, the filing said.

“With the U.S. remaining open and more office workers returning, such rent relief and provisions for expected credit loss are also projected to decline,” MUST said.

Jill Smith, CEO of the REIT’s manager, issued an upbeat outlook.

“Our year-on-year occupancy and DPU levels suffered from the full brunt of the pandemic, given that the impact was only felt in the U.S. from April 2020. 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 in the statement. “As we look ahead, some 60 percent of our tenants have indicated their plans to return to the office from September, lifting revenue such as car park income.”

She added the REIT’s properties are seeing increased leasing volume and digital/physical tours.

Read more details on the REIT’s results.