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Manulife US REIT - OCBC Investment 2021-02-09: Riding The Recovery Of The US Economy

MANULIFE US REIT (SGX:BTOU) | SGinvestors.io 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






Chu Peng OCBC Investment Research | https://www.iocbc.com/ 2021-02-09
SGX Stock Analyst Report BUY MAINTAIN BUY 0.83 DOWN 0.840



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