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Manulife US REIT IPO
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pasttime
Supreme |
04-Dec-2023 11:53
Yells: "gold silver are real money. not others iou." |
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Feels like a setup to get asset cheap. Should just do a new united issue to current units holder. At least units holders can ride out the rough and get much better return. Any white knights that can at the same time change the manager. Cannot to do work as proven by to the current sad state. No vested interest yet | ||||
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Joelton
Supreme |
04-Dec-2023 11:15
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Proposal to rescue Manulife US Reit falls flat
Its sponsor group should perhaps repackage its assets under a new fund or trust somewhere else
THE market delivered a crystal clear verdict this past week on the much-anticipated proposal by Manulife US Real Estate Investment Trust (MUST) to remedy a breach of its loan covenants and place itself on a stronger financial footing.
On Nov 30 &ndash a day after unveiling a proposal to shrink its property portfolio and take on a loan from its sponsor group at a double-digit rate of interest &ndash units in MUST fell more than 42.8 per cent to US$0.052.
MUST had climbed strongly during the first three weeks of last month &ndash to a closing high of US$0.103 on Nov 22 &ndash after its manager said in its Q3 2023 business update that its sponsor group had assembled a support package for the beleaguered US office property trust.
At its Friday (Dec 1) close of US$0.058, MUST is down 40.8 per cent for the week but up 16 per cent since the beginning of last month.
Disappointing as the bailout package is, however, unitholders of MUST should support the deal when it is put before them at an extraordinary general meeting on Dec 14.
Not doing so would leave MUST at the mercy of its bankers, which have the right to call its outstanding loans of more than US$1 billion. This could lead to a liquidation of MUST&rsquo s portfolio at distressed prices.
The proposed asset sales and support package from its sponsor could help MUST stay afloat until 2025 &ndash when the US office property market might begin recovering. In this scenario, the market value of MUST could rebound significantly from its currently depressed levels.
Investors should not expect MUST to recover to the levels at which it traded last year, of course. A lot of value has already been lost, and the proposed deal unveiled last week will result in MUST having a smaller property portfolio and more expensive debt.
The expectation of a big equity fund raising exercise could also weigh on MUST&rsquo s market price &ndash at least until the US office property slump begins to show signs of coming to an end.
The big question is whether MUST will ever garner a market valuation sufficient to function as an effective asset securitisation vehicle once more.
My own view is that MUST will not easily win back the confidence of the local market.
Under the circumstances, MUST&rsquo s sponsor group should perhaps offer to acquire its entire property portfolio at close to book value with a view to eventually repackaging these assets in a new fund or trust somewhere else.
This would immediately unlock value for MUST&rsquo s unitholders, and spare its sponsor group the potentially impossible task of shepherding MUST back into the good graces of Singapore investors.
Deal buys time for MUST
The deal hammered out by MUST&rsquo s sponsor group and its bankers has three key elements.
The first is the repayment of US$285 million of MUST&rsquo s debt. This will be largely funded by the sponsor providing MUST a six-year unsecured loan of US$137 million, and taking a property in Chandler, Arizona known as Park Place off its books for US$98.7 million.
The remaining US$50 million will come out of MUST&rsquo s existing cash holdings.
Secondly, MUST will raise at least US$328.7 million from the sale of its remaining properties over the next two years, in order to further strengthen its balance sheet and fund essential capital expenditure.
MUST will prioritise the sale of assets with the highest occupancy risks and capital expenditure requirements, and the lowest total return potential. These so-called Tranche 1 assets constitute 28.4 per cent of its portfolio, and include: Centrepointe in Fairfax, Virginia Diablo in Tempe, Arizona Figueroa in Los Angeles, California and Penn in Washington DC.
MUST may also explore selling its Tranche 2 properties, which include Capitol in Sacramento, California Exchange in Jersey City, New Jersey Peachtree in Atlanta, Georgia and Plaza in Secaucus, New Jersey.
Comprising 43.3 per cent of its portfolio, these assets have moderate occupancy risks, capital expenditure requirements and total return potential.
MUST has also not ruled out the possible sale of its Tranche 3 properties &ndash which have the lowest occupancy risks and capital expenditure needs and highest total return potential. These properties account for 28.3 per cent of its portfolio, and include Michelson in Irvine, California and Phipps in Atlanta, Georgia.
Finally, MUST&rsquo s lenders will waive its loan covenant breaches and extend the maturities of all existing loans by one year. The lenders will also temporarily revise the ceiling for MUST&rsquo s unencumbered gearing from 60 per cent to 80 per cent, and the floor for its interest coverage ratio from two times to 1.5 times.
Taken together, the three elements of the deal will provide MUST with much needed breathing room and an opportunity to begin repositioning its portfolio. It would also better position MUST to raise equity to further optimise its balance sheet.
Notably, MUST will have no loans maturing next year. On a pro forma basis, the sponsor-supported repayment of debt and sale of Tranche 1 assets would reduce MUST&rsquo s gross borrowings as at Jun 30 from just over US$1 billion to US$654.5 million.
MUST&rsquo s aggregate leverage would be lowered from 56.5 per cent to 49.4 per cent, while its net asset value (NAV) would fall from US$0.40 per unit to US$0.34 per unit.
Investor expectations of sponsors
So, why did the market baulk at this deal last week? What more could MUST&rsquo s sponsor have done?
The main gripe appears to be that MUST&rsquo s sponsor is not being generous enough. For one thing, the US$137 million loan from the sponsor will cost 7.25 per cent per annum plus an exit premium of 21.16 per cent. This amounts to an effective interest rate of approximately 10 per cent.
There is also a risk of MUST&rsquo s portfolio being hollowed out of its best assets under the proposed plan. Given the tough conditions in the US office property sector, it may be its Tranche 2 and Tranche 3 assets that are most easily sold.
MUST&rsquo s sponsor could have reduced this risk by taking all of its Tranche 1 assets off its books, in addition to Park Place.
Many investors would also have appreciated a lower rate of interest on the sponsor loan, especially since MUST will continue to halt its half-yearly distributions until end-2025 as part of the proposed deal.
Not surprisingly, MUST&rsquo s sponsor group sees things differently. Marc Feliciano, chairman of MUST&rsquo s manager, said last week that there is currently very little appetite in the market for US office property loans and that some &ldquo alternative lenders&rdquo are asking for 18 per cent per annum.
Deloitte & Touche Corporate Finance, the independent financial adviser to MUST&rsquo s manager, said the sponsor loan is on &ldquo normal commercial terms&rdquo and is &ldquo not prejudicial&rdquo to the interests of MUST and its minority unitholders, given the specific circumstances facing MUST.
Yet, benchmarking MUST&rsquo s sponsor group to the most usurious lenders in the market will probably not sit well with some investors. After all, the external manager model adopted by Singapore-listed Reits is not normal commercial practice in most developed markets.
This model has been accepted in Singapore partly because of what leading local sponsor groups bring to the table: pipelines of assets that hold up well during economic downturns as well as capital when required.
If MUST is to have a future in the Singapore market, its sponsor group needs to raise its game.
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Joelton
Supreme |
04-Dec-2023 11:14
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Proxy advisor says vote FOR for all three resolutions at Manulife US REIT&rsquo s EGM
Proxy advisor Glass Lewis has advised institutional investors to vote FOR all three resolutions, which are interdependent, to be tabled on Dec 14 at Manulife US REIT' s (MUST) EGM.
The EGM is to approve a recapitalisation plan to solve the breach of the financial covenant in the existing facilities. The plan was negotiated between the sponsor, manager and 12 lenders. The recapitalisation enables MUST to pay down US$285.0 million ($380.08 million) in debt and all loan maturities of the existing facilities would be extended by one year.
Half-yearly distributions to unitholders are to be halted till Dec 31, 2025. Lenders will waive all past and existing breaches in for the loans. Financial covenants will be relaxed till Dec 31, 2025. In the meantime, the manager with agreements with the lenders will dispose of the properties in tranche 1 by end-2025 for not lower than the minimum sum.
The recapitalisation plan comprises aggregate funding by the sponsor of US$235.7 million via the acquisition of Park Place in Arizona for US$98.7 million, a sponsor-lender loan of US$137 million and US$50 million from MUST&rsquo s own cash holdings.
Finally, the sponsor, manager and lenders have agreed to put to unitholders a disposition mandate. The portfolio has been placed into three buckets. Of these, the proposal is to divest of four properties in tranche 1 for a minimum of US$328.7 million by end-2025. The minimum sum represents a 25% discount to the June 30 valuation of these properties.
Glass Lewis has recommended that unitholders vote for Resolution 1, which is the divestment of Park Place in Arizona to be sold to the sponsor for US$98.7 million.
&ldquo The proposed cash consideration is the higher of the two independently appraised valuations received by the board of directors. As such, and given the reasonable rationale presented by the board, we believe this proposal is in the interests of the company and shareholders. We recommend that shareholders vote FOR this proposal,&rdquo Glass Lewis says.
Resolution 2 is to approve the sponsor-lender loan of US$137 million at 7.25% a year, for six years, with a success fee of 21.17% which translates into around 10% a year. The sponsor-lender loan agreement is subject to certain conditions, including the execution of the master restructuring agreement.
&ldquo We do not find any significant cause for shareholder concern. We note that in the opinion of Deloitte & Touche Corporate Finance, an independent financial adviser, the proposed transaction and consideration are entered into on normal commercial terms and in the ordinary and usual course of business of the company, [they are] fair and reasonable, and are in the interest of the company and its shareholders. If any of the proposal is not approved, the existing facilities would remain in breach and the lenders have the right to accelerate the payment of all US$1,023.7 million of loans immediately. The trust does not have sufficient cash and would need to liquidate its portfolio,&rdquo Glass Lewis says, adding that it recommends unitholders vote FOR resolution 2.
Resolution 3 is the disposition mandate, to divest four properties in tranche 1 for a minimum of US$328.7 million by end-2025. The manager has classified the portfolio in three catergories based on the order and priority for the manager for the disposition mandate. Glass Lewis has recommended that unitholders vote FOR this resolution.
In the event that unitholders do not approve any of the resolutions, the existing facilities would remain in breach and the lenders have the right to accelerate the payment of all the loans immediately. As a result, the lenders will control the outcome of MUST and they have the right to make an application to liquidate the trust.
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Steroid
Member |
04-Dec-2023 09:35
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As l pointed out MUST DID NOT breach any Leverage Cap so the proposals are unnecessary. I will vote NO. Voting YES makes it worse, even fatal | ||||
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Goldfinger
Supreme |
04-Dec-2023 08:56
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Zero - and it was the exact same Trustee as MUST.
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Cadence88
Veteran |
04-Dec-2023 08:48
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Did Egle Trust holders get anything out of the liquidation ?
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machidrain
Veteran |
04-Dec-2023 07:37
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time to vote for yes | ||||
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moonsun
Veteran |
04-Dec-2023 07:09
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The Business Times
Proposal to rescue Manulife US Reit falls flat THE market delivered a crystal clear verdict this past week on the much-anticipated proposal by Manulife US Real Estate Investment Trust (MUST) to remedy a breach of its loan covenants and place itself on a stronger financial footing. Wonder if they try this stunt is usa? |
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Goldfinger
Supreme |
03-Dec-2023 23:36
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Ok, I managed to extract the Soft Copy of hte Proxy Form and just submitted a digital signed copy. Hope this will suffice. | ||||
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Goldfinger
Supreme |
03-Dec-2023 22:24
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Anyone knows if we can submit digital pdf form? I am away and want to vote. | ||||
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Goldfinger
Supreme |
03-Dec-2023 22:14
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Yes, heavens MUsT Trsitee is DBST - better mot liiquidation. The Trustee makes a lot of decisions. Can be terrible ones. | ||||
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Goldfinger
Supreme |
03-Dec-2023 22:04
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My take - vote to support. The reason Eagle Trust failed was failure to pass the EGM and then liquidation wiped out the Trust. Recall it was also DBST? | ||||
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eddyeddy
Master |
03-Dec-2023 18:34
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The manager will not be that silly to break their own rice bowl , they want to continue earn risk free easy money at the expenses of the unit holders. | ||||
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Steroid
Member |
03-Dec-2023 18:12
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Actually there are no shortage of buyers with resonable offers. But all of them have one thing in common - they don' t want this lame duck Manager. All of them want to be their own Manager. l wonder what gives this Manager the right to turn down reasonable offers just because they don' t want to loose their job. There are three simple measures that can be implemented without screwing up the finance and without paying a hefty price- 1. A minor re-structuring of loan to give the Co. more time since by end 2025 the Co. will have an extra distribution profit of $330m. Likely by end 2024 things should have normalised 2. A rights issue 3. 1 + 2 |
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Steroid
Member |
03-Dec-2023 16:12
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Shareholders should reject outright the proposals and consider replacing the Manager for their incompetence. MUST did not breach any Leverage cap as of now. Also if there is sale of assets the Manager gets a commission so there is conflict of interest here. Manager doesn' t have to do a valuation at half year but engineered one resulting in a technical breech of 0.2% and all these stupid " problems" . 1. MAS 45% cap. MAS already confirmed a breach due to asset depreciation is not considered a breach. Refer Business Times 19.09.23 2. LTV cap of 60%. Co. breached the cap by a mere 0.2%. In monetary term a mere $4m. Manager is telling us they cannot find the $4m. HY23 distribution income is already $55m. Suspending distribution for 3 years means the Co. will have an extra $330m. Also who are they kidding telling us the valuation can be accurate down to $4m out of total assets of $1,821m. As pointed out LTV is now brought down to 56.4% so there is no breach at all. So as of now there is no breach of leverage and this proposal is totally unnecessary, grossly against shareholders interest, only benefit the Manager and Sponsor. Manager is telling us they expect a breach at full year. We will decide when the time comes. There are plenty of solutions without resorting to these ill conceived proposals. As a example what is required is just a very minor re-structuring of loans which is routinely used. Agreeing to an exorbitant 10% interest will bring down Interest Coverage Ratio. It was stupid of the Manager to agree to a cap of 60%. This is unprecendented. Here if a Co is profitable and pays interest on time lenders have no grounds to demand a sale of assets. The Co is profitable with no interest arrears. I note that lenders have agreed to raise the cap to 80% if shareholders agree to these proposals. Why can' t they raise the cap to 80% now without the proposals? Also lenders has absolutely no legal basis objecting to sale of Phipps. That the Manager agrees to play along is shocking. Since there is no breach Co can continue to pay dividends. Suspending payment of dividends is a mistake. It means a large portion will be taxed away. They can opt to pay in Units so that the cash will be retained by the Co. As l pointrd out earlier the Co can collect $330m from 3 years of distribution income
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Kandee
Senior |
03-Dec-2023 14:29
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Proxy advisor says vote FOR for all three resolutions at Manulife US REIT&rsquo s EGMThe Edge SingaporeSat, Dec 02, 2023 &bull 08:53 PM GMT+08 &bull &bull 5 min read
Proxy advisor Glass Lewis has advised institutional investors to vote FOR all three resolutions, which are interdependent, to be tabled on Dec 14 at Manulife US REIT' s (MUST) EGM. The EGM is to approve a recapitalisation plan to solve the breach of the financial covenant in the existing facilities. The plan was negotiated between the sponsor, manager and 12 lenders. The recapitalisation enables MUST to pay down US$285.0 million ($380.08 million) in debt and all loan maturities of the existing facilities would be extended by one year. Half-yearly distributions to unitholders are to be halted till Dec 31, 2025. Lenders will waive all past and existing breaches in for the loans. Financial covenants will be relaxed till Dec 31, 2025. In the meantime, the manager with agreements with the lenders will dispose of the properties in tranche 1 by end-2025 for not lower than the minimum sum. The recapitalisation plan comprises aggregate funding by the sponsor of US$235.7 million via the acquisition of Park Place in Arizona for US$98.7 million, a sponsor-lender loan of US$137 million and US$50 million from MUST&rsquo s own cash holdings. Finally, the sponsor, manager and lenders have agreed to put to unitholders a disposition mandate. The portfolio has been placed into three buckets. Of these, the proposal is to divest of four properties in tranche 1 for a minimum of US$328.7 million by end-2025. The minimum sum represents a 25% discount to the June 30 valuation of these properties. Glass Lewis has recommended that unitholders vote for Resolution 1, which is the divestment of Park Place in Arizona to be sold to the sponsor for US$98.7 million. &ldquo The proposed cash consideration is the higher of the two independently appraised valuations received by the board of directors. As such, and given the reasonable rationale presented by the board, we believe this proposal is in the interests of the company and shareholders. We recommend that shareholders vote FOR this proposal,&rdquo Glass Lewis says. Resolution 2 is to approve the sponsor-lender loan of US$137 million at 7.25% a year, for six years, with a success fee of 21.17% which translates into around 10% a year. The sponsor-lender loan agreement is subject to certain conditions, including the execution of the master restructuring agreement. &ldquo We do not find any significant cause for shareholder concern. We note that in the opinion of Deloitte & Touche Corporate Finance, an independent financial adviser, the proposed transaction and consideration are entered into on normal commercial terms and in the ordinary and usual course of business of the company, [they are] fair and reasonable, and are in the interest of the company and its shareholders. If any of the proposal is not approved, the existing facilities would remain in breach and the lenders have the right to accelerate the payment of all US$1,023.7 million of loans immediately. The trust does not have sufficient cash and would need to liquidate its portfolio,&rdquo Glass Lewis says, adding that it recommends unitholders vote FOR resolution 2. Resolution 3 is the disposition mandate, to divest four properties in tranche 1 for a minimum of US$328.7 million by end-2025. The manager has classified the portfolio in three catergories based on the order and priority for the manager for the disposition mandate. Glass Lewis has recommended that unitholders vote FOR this resolution. In the event that unitholders do not approve any of the resolutions, the existing facilities would remain in breach and the lenders have the right to accelerate the payment of all the loans immediately. As a result, the lenders will control the outcome of MUST and they have the right to make an application to liquidate the trust. |
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eddyeddy
Master |
03-Dec-2023 12:13
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What if there is another round of right issue after this one ? Better use our money to buy other reits wihch will give us DPU non stop . | ||||
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kelvinn
Member |
02-Dec-2023 19:55
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Friday night US office reit up.
Dow Jones U.S. Industrial & Office REITs Index: https://www.marketwatch.com/investing/index/djusio?countrycode=xx |
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tuntun
Veteran |
02-Dec-2023 17:59
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Thanks.. we still can do trading as usual right ?
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ZhuKoLiang
Member |
02-Dec-2023 10:36
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hi tuntun, the EGM voting day is 14 December 2023 2.30pm. If your shares are held inside CDP, u can vote on this day. or if u r sending in a proxy need to vote earlier and the proxy form must reach MUST by 11 December 2023 (Monday), 2.30 p.m For those holding shares in custodian account like moomoo, or standard chartered, moomoo told me is 7 working days before the EGM and that is 04 Decemer 2023 Monday 5pm, so this is very early, 2days later only. |
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