Net property income stands at US$30.2 million for the half-year, down 29.5% from US$42.8 million in the year-ago period

 

[SINGAPORE] The manager of Manulife US Real Estate Investment Trust (Reit) : BTOU -1.54% on Thursday (Aug 14) reported a distribution per unit for the first half of FY2025 of US$0.0084, down 34.9 per cent from US$0.0129 in the year-ago period. 

 

Revenue declined 30.4 per cent to US$60.4 million for the period, from US$86.7 million in H1 FY2024, largely due to the divestments of Capitol Mall in Sacramento in October 2024 500 Plaza in Secaucus, New Jersey, in February 2025 and Peachtree, a 28-storey Class A office building in Atlanta, Georgia, in May 2025. 

 

The proceeds from the two 2025 divestments have gone towards repayment of about US$160 million of the group&rsquo s 2026 debts. 

 

This is in addition to lower rental and recoveries income as a result of a higher portfolio vacancy rate, as well as lower recoveries income due to a reduction in current and prior years&rsquo property taxes. 

 

Net property income stood at US$30.2 million for H1, down 29.5 per cent from US$42.8 million in the year-ago period. 

 

Income available for distribution declined 34.7 per cent year on year to US$14.9 million, from US$22.9 million, mainly due to the loss of income from the sale of the three properties. This was partially offset by a decrease in finance expenses due to lower debt balances from repayments in 2024 and 2025 and lower base management fees.

 

Portfolio occupancy was at 68.4 per cent on a same-store basis, and rental reversions were at minus 10 per cent. The manager of the Reit noted, however, that eight of 10 of its leases signed were above market rates. Its portfolio weighted average lease expiry remained at 4.6 years as at Jun 30, 2025.

 

Aggregate leverage as at Jun 30 stood at 57.4 per cent, with an interest coverage ratio of 1.6 times. Its weighted average debt maturity was at 2.8 years. 

 

The manager of the Reit noted that &ldquo significant progress&rdquo has been made in debt repayments, as the Reit now focuses on recovery and growth. It has repaid all its 2025 debts and around 83 per cent of its 2026 debts, following an additional debt repayment of US$25 million in July 2025. 

 

Around US$465 million or 45 per cent of the Reit&rsquo s outstanding debt has been paid down since December 2023, which leaves US$559 million of debt maturing between 2026 and 2029. For 2026, it has US$35.6 million of debt maturing in July that year. The subsequent debt maturity is 20 months away in April 2027. 

 

John Casasante, chief executive officer and chief investment officer of the manager, said: &ldquo Future asset dispositions will align with our broader growth strategy as we evaluate liquidity across the portfolio to maximise proceeds. We remain disciplined in leasing to improve our income and book value. Our lenders have been supportive, and we continue to have discussions with them to explore strategies to mitigate risks.&rdquo  

Manulife US Real Estate Investment Trust has reported net property income of US$30.2 million, down 29.5% y-o-y for its 1HFY2025. Gross revenue in the same half year ended June was down 30.4% to US$60.4 million.

 

Income available for distribution declined by a similar magnitude of 34.7% to US$14.9 million.

 

The REIT attributes these lower numbers to the absence of contributions from three divested properties, but partially offset by lower financing costs.

 

On a same-store basis, MUST' s portfolio occupancy held steady at 68.4%.

 

In 1HFY2025, it signed around 125,000 sq ft of leases, comprising 3.5% of its portfolio net lettable area.

 

Despite rent reversion of negative 10%, eight in 10 of its leases signed were above market rates.

 

As at June 30, its portfolio weighted average lease expiry remained fairly steady at 4.6 years.

 

Thus far, MUST has divested three assets at some US$270 million in its active bid to cut debt. Proceeds from the sales will be used for future acquisitions as well.

 

For the half year ended June 30, its aggregate leverage ratio has improved to 57.4% from 59.4% three months ago.

 

Following an additional debt repayment of US$25 million in July 2025, MUST has repaid all its 2025 debts and around 83% of its 2026 debts.

 

Since December 2023, MUST has paid down some US$465 million or around 45% of its outstanding debt, leaving US$559 million of debt maturing between 2026 and 2029.

 

" Future asset dispositions will align with our broader growth strategy as we evaluate liquidity across the portfolio to maximise proceeds," says John Casasante, CEO and CIO of MUST.

 

" Our lenders have been supportive, and we continue to have discussions with them to explore strategies to mitigate risks. We remain disciplined in leasing to improve our income and book value,&rdquo he adds.