MANULIFE US REIT (SGX:BTOU)
KEPPEL-KBS US REIT (SGX:CMOU)
PRIME US REIT (SGX:OXMU)
US Office REITs - Comparison Of Manulife US REIT, Keppel-KBS US REIT, Prime US REIT
- Comparing MANULIFE US REIT (SGX:BTOU) with KEPPEL-KBS US REIT (SGX:CMOU), we find that Manulife US REIT has a very high-quality asset portfolio with higher occupancy, longer WALE, and bigger blue chip tenants – thus offering a more defensive and stable earnings profile.
- On the other hand, Keppel-KBS US REIT’s campus-style portfolio offers more growth potential over the near term, with room for occupancy improvements and rental adjustments on the back of strong tech-driven office demand in its key markets like Seattle and Austin. Taking into account portfolio sizes, stock liquidity and historical track records, we believe Manulife US REIT’s portfolio deserves to trade at a 75-100bps yield spread over Keppel-KBS US REIT.
Key comparison of US office REITs
| No. | Factors | MANULIFE US REIT (SGX:BTOU) | KEPPEL-KBS US REIT (SGX:CMOU) | PRIME US REIT (SGX:OXMU) |
|---|---|---|---|---|
| Asset and sponsor details | ||||
| 1 | Total number of assets | 8 freehold properties | 13 freehold properties | 11 freehold properties |
| 2 | Asset Size (USD bn) | 1.9 | 1.1 | 1.2 |
| 3 | Asset Class | Trophy & Class A | Class A & Class B | Trophy & Class A |
| 4 | Market locations (as % of AUM) |
Atlanta (22% of AUM), Secaucus (6%), Jersey City (18%), Los Angeles (18%), Irvine (19%), Fairfax (7%) and Washington D.C. (10%) |
Seattle (53%), Denver (12%), Austin (8%), Orlando (9%), Houston (11%), Atlanta (4%) and Sacramento (3%) |
California (10%), Utah (17%), Denver (19%), Missouri (7%), Dallas (6%), San Antonio (6%), Washington D.C. (13%), Pennsylvania (8%) and Atlanta (14%) |
| 5 | Key Tenants (Top 3) | The William Carter Co. – 7.3% TCW Group – 5.0% Kilpatrick Townsend – 4.8% |
Ball Aerospace – 2.9% Oculus VR, LLC – 2.4% Zimmer Biomet Spine – 2.3% |
Charter Communications – 8.9% Goldman Sachs – 6.0% Sodexo Operations – 5.9% |
| 6 | Key Trade Sector | Legal – 20.6%, Finance – 20.1%, Retail Trade – 14.5% |
Professional Services –37.5%, Technology – 24.1%, Finance and Insurance – 18.9%. |
Finance – 16.5%, Legal – 13.3% Communications – 11.9%. |
| 7 | Sponsor | Manulife | Keppel Capital and KBS Pacific Advisors | KBS Asia Partners Pte. Ltd. |
| 8 | Sponsor stake (%) | Manulife – 6.4% | KBS SOR – 6.9% , Keppel Capital – 7.7% |
KBS Units – 24.7% |
| 9 | Sponsor size AUM | Global Real Estate AUM – USD 17.4bn | KBS AUM – USD 11.6bn | KBS AUM – USD 11.6bn |
| Operating metrics | ||||
| 10 | Occupancy (%) | 97.6% | 92.1% | 96.7% |
| 11 | Total tenants (based on latest available data) | 138 | 422 | 180 |
| 12 | Rent Escalations | 2.5% - 3%p.a | ~3%p.a | 1 - 3%p.a, Average 2.1% |
| 13 | WALE (years) - by cash rental income | 6.1 years | 3.9 years | 5.5 years |
| 14 | Gearing (%) | 36.8% | 38.1% | 37.0% |
| 15 | Debt Profile | Fixed – 98.2%, Floating – 1.8% |
Fixed – 77%, Floating – 23% |
Fixed – 85.1%, Floating – 14.9% |
| 16 | Weighted Average Debt Maturity | 2.5 years | 3.6 years | 5.6 years |
| 17 | Debt Cost (%) | 3.28%p.a | 3.76%p.a | 3.45%p.a |
| Valuation metrics | ||||
| 18 | Market Cap (USD m) | 1,238 | 644 | 813 |
| 19 | Dividend Yield - FY19F (%) | 6.7 | 7.9 | 7.4 |
| 20 | NAV, P/BV |
NAV – 0.80, P/B –1.1 |
NAV – 0.78, P/B – 1.0 |
NAV – 0.84, P/B – 1.05 |
| 21 | Free Float (%) | 91% | 77% | 75% |
Note:
Manulife US REIT - Based on latest available data including acquisitions in May 2019.
Keppel-KBS US REIT - Based on 1Q19 data.
Prime US REIT - Based on IPO prospectus.
See also report:
Vijay Natarajan
RHB Securities Research
|
https://www.rhbinvest.com.sg/
2019-07-12
SGX Stock
Analyst Report
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