Manulife US REIT - Maybank Kim Eng 2021-12-01: Growing Growth AUM

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MANULIFE US REIT (SGX:BTOU)

Manulife US REIT - Growing Growth AUN

Adding three assets at +4.4% DPU accretion

• Manulife US REIT (SGX:BTOU) is adding three properties for US$201.6m at undemanding 5.8-7.0% cap rates, and delivering on its well-articulated acquisition strategy, with its latest deal. Post-deal, ‘growth markets’ concentration is set to rise from 21% to 28% of its AUM, with assets in Phoenix and Portland backed by long WALE and quality high-growth tech and healthcare sector tenancies.
• Management is eyeing further AUM growth, but with gearing at 44%, we expect divestments could be prioritised.

Eyeing growth fundamentals in sunbelt/magnet cities

• The portfolio includes two suburban office campuses - Diablo Technology Park and Tanasbourne Commerce Center, and Park Place, which comprises two class-A office buildings, in Phoenix (Arizona) and Portland (Oregon), which are among the US’ high-growth (lower-cost) magnet cities, expected to continue capturing an in-migration of STEM/TAMI talent pools.
• Limited new competing supply in the respective submarkets, together with in-place rents that are at 9.3-14.7% below market rents (source: CoStar), are expected to support an average +12.3% rental reversion for the portfolio.

Assets backed by strong tenancies, long WALE

• The properties are 93.4% occupied, and embedded its WALE extends from 5.1 to 5.2 years.

Gearing to hit 44%, potential capital recycling

• Manulife US REIT is raising US$80m in new equity and expects to achieve a price of US$1.00 (COE: 7.6%, long-term growth: 2.0%).
• See
  • Manulife US REIT's Share Price,
  • Manulife US REIT's Target Price,
  • Manulife US REIT's Analyst Reports,
  • Manulife US REIT's Dividend History,
  • Manulife US REIT's Announcements,
  • Manulife US REIT's Latest News.

Chua Su Tye Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2021-12-01

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