MANULIFE US REIT (SGX:BTOU)
Manulife US REIT - Riding The Recovery Of The US Economy
- Manulife US REIT's 2H20/ FY20 DPU down 11.3%/ 5.4% y-o-y.
- FY20 rental reversion was +0.1%.
- 97% of rents collected for FY20.
Manulife US REIT's FY20 results below expectations on provisions of expected credit losses
- Manulife US REIT (SGX:BTOU)’s FY20 gross revenue and NPI grew 9.3% and 4.6% y-o-y to US$194.3m and US$115.8m respectively, mainly attributable to the acquisition of Centerpointe and Capitol in 2019, but partially offset by lower rental income from Michelson and Peachtree, lower carpark income caused by COVID-19, and provision of US$3.6m of expected credit losses in 2H20. As such, 2H20 DPU fell 11.3% y-o-y to US$0.0259.
- For FY20, Manulife US REIT's DPU was down 5.4% y-o-y to US$0.0564, which forms 95%/ 91% of our forecast/Bloomberg consensus.
Portfolio occupancy and rental collections remained healthy
- Manulife US REIT's portfolio occupancy was 93.4% (-0.9ppt q-o-q). As at 15 Jan 2021, rental collections for FY20 stood healthy at 97%. Manulife US REIT made provisions of US$3.6m of expected credit losses, mainly for tenants from retail and food services trade sectors. Management shared that the provision was for prudence purpose and the tenants have agreed to settle the arrears in full.
- Manulife US REIT's FY20 rental reversion was +0.1%, which was down from +7.9% in 3Q20, impacted by one mark-to-market lease from a long lease tenant at Centerpointe. Excluding this tenant, rental reversion would have been +4.7%.
Downside protection from minimal leases expiries in FY21
- We expect leasing momentum to remain soft in FY21 as tenants reassess their office space requirements, and plan for a very gradual re-entry to the office.
- Manulife US REIT has 5.8%/ 17.8% of leases by GRI due to expire in FY21/ FY22. Management has started advanced negotiations for leases expiring in FY22.
- Manulife US REIT’s minimal lease expiry profile in 2021, resilient portfolio with long WALE of 5.3 years, and annual rental escalation of 2.0% could limit downside risk and provide income stability. With the rollout of vaccines in the US, Manulife US REIT is poised to benefit from the gradual reopening and recovery of economy.
- See Manulife US REIT Share Price; Manulife US REIT Target Price; Manulife US REIT Analyst Reports; Manulife US REIT Dividend History; Manulife US REIT Announcements; Manulife US REIT Latest News.
- We lower our Manulife US REIT's DPU forecasts for FY21/ FY22 by 2%/ 1% on lower occupancy and rental growth assumptions. After adjustments, our fair value estimate for Manulife US REIT decreases marginally from US$0.84 to US$0.83.
- BUY.
Chu Peng
OCBC Investment Research
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https://www.iocbc.com/
2021-02-09
SGX Stock
Analyst Report
0.83
DOWN
0.840
