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Manulife US Reit denies reported 200 billion won figure for sale of its manager
MANULIFE US Reit : BTOU +1.89% on Friday (Mar 17) denied reports of a 200 billion won (S$206.4 million) figure for the sale of its manager to Korean asset manager Mirae Asset Global Investments.
In its latest statement, Manulife US Reit&rsquo s manager clarified that Mirae&rsquo s non-binding proposal &ldquo does not contain reference to such a figure&rdquo and that the only monetary amount in the proposal relates to the purchase price of the manager&rsquo s shares.
The real estate investment trust (Reit)&rsquo s manager was responding to an earlier report by The Business Times, which quoted Maeil Business News Korea saying that Mirae is the preferred bidder to buy Manulife US Real Estate Management for 200 billion won, as well as part of a stake in the Reit.
The 200 billion won amount appears significant. Manulife US Real Estate Management collected US$8.8 million in fees for the management of Manulife US Reit in FY2022, which it chose to receive in units.
In 2019, Vibrant sold a 51 per cent stake in the entity that wholly owns the manager of Sabana Reit for around S$20.5 million, with an adjustment sum of around S$1.3 million. This implies a valuation of around S$42.7 million for the manager.
The manager, Sabana Real Estate Investment Management, collected S$4.6 million in fees for the management of Sabana Reit in FY2018, before the sale of the stake.
The Reit manager has also reiterated in its latest statement that the proposal from Mirae involves the subscription of new units of Manulife US Reit and does not include any offer to acquire existing units.
Due diligence is ongoing, which applies to the number of new units Mirae and its affiliates will be able to subscribe to in order for Manulife US Reit to maintain its US Reit qualification.
In order to be exempted from US withholding tax, no single investor can hold more than 9.8 per cent of all issued units. Some Reits have overcome this hurdle by using multiple unrelated funds, said RHB analyst Vijay Natarajan in a report on Thursday.
Assuming Mirae subscribes for its maximum 9.8 per cent stake, which translates to 174 million new units, the deal could work out to a new issuance share price of US$0.48, which is a 13 per cent discount to Manulife US Reit&rsquo s net asset value (NAV).
This could result in an FY2022 distribution per unit and NAV dilutions of 9 per cent and 1 per cent respectively, Natarajan estimated.
Mirae&rsquo s potential bid for Manulife US Reit&rsquo s manager could be panacea for the Reit&rsquo s issues, RHB&rsquo s research team noted. This comes after a challenging year for the US-focused office Reit, which experienced declines in both portfolio occupancy and asset values.
Mirae could also use its expertise, networks and US real estate assets to help the Reit diversify and strengthen its portfolio across different asset classes and locations in both the mid to long term, RHB said.
Manulife US Reit up on report of manager being acquired
SHARES of Manulife US Reit : BTOU +1.89% hit a near-two-week high on Wednesday (Mar 15), amid reports that its manager is exploring a sale to Korean asset manager Mirae Asset Global Investments.
In its response to media reports, the real estate investment trust&rsquo s (Reit) manager Manulife US Real Estate Management confirmed that it is currently in discussions with Mirae Asset regarding a potential transaction which may involve the acquisition of its own shares, and the subscription of new shares in Manulife US Reit.
Mirae Asset is said to be buying the Reit&rsquo s manager for some 200 billion won (S$206.4 million), Maeil Business News Korea reported.
Following the report, Manulife US Reit&rsquo s counter reached a high of US$0.275 as at 10.16 am, jumping 3.8 per cent or US$0.01, and sustained at this level for a good part of the day, before ending at US$0.27, with 8.2 million units changing hands. There were no married deals recorded, ShareInvestor data showed.
Manulife US Reit&rsquo s manager emphasised that there was no certainty or assurance that any definitive agreements or transactions would materialise from present discussions.
Mirae Asset beat out four to five other candidates to be picked as the preferred bidder, Maeil said, citing multiple sources.
Founded in 1997, Mirae Assets is the asset management arm of Mirae Asset Financial Group. It currently invests over US$198 billion on behalf of its clients as at Dec 31, 2022.
It has a presence in 13 markets: China, South Korea, Japan, Australia, Vietnam, India, Hong Kong, Canada, the US, the UK, United Arab Emirates, Brazil and Colombia. The potential deal, if successful, will allow the asset manager to expand its overseas presence.
The biggest problem with MUST is that their debt ratio is too high.. if US takes a shake out.. they may spiral into difficulties.
More negative news?
This counter is acting like a bottomless pit
Looking back, a bit regret didn' t sell when it hit 81 cents 2 years back
Looking back, a bit regret didn' t sell when it hit 81 cents 2 years back
2.14 US cents dividend against 30 US cent price
Any takers?
Any takers?
Manulife US REIT reports 18.6% lower 2HFY2022 DPU of 2.14 US cents after capital retention
Manulife US REIT (MUST) has reported a distribution per unit (DPU) of 2.14 US cents (2.835 cents) for the 2HFY2022 ended Dec 31, 2022, 18.6% lower than the DPU of 2.63 US cents reported in the 2HFY2021.
This comes after the REIT decided to retain US$3.8 million from its distributable income in the 2HFY2022 for general corporate and working capital purposes on the back of the &ldquo volatile macroeconomic environment&rdquo and decline in asset valuation. The payout ratio for the 2HFY2022 still stands at 91%. According to the REIT, the implementation of its payout ratio comes as MUST seeks to improve its financial flexibility.
On a like-for-like basis, MUST&rsquo s DPU for 2HFY2022 fell by 10.3% y-o-y to 2.36 US cents.
The REIT&rsquo s distributable income fell by 10.6% y-o-y to US$38.1 million mainly due to higher finance expenses and following the capital retention. On a like-for-like basis, the REIT&rsquo s distributable income fell by 1.7% y-o-y to US$41.9 million before the retention.
2HFY2022 gross revenue increased by 8.3% y-o-y to US$102.1 million mainly due to contributions from Tanasbourne, Park Place and Diablo that were acquired in December 2021. The higher gross revenue was also due to higher carpark income and lower rent abatements provided to tenants during the pandemic.
Net property income (NPI) for the period increased by 3.9% y-o-y to US$55.5 million due to the higher gross revenue and offset by higher operating expenses.
During the 2HFY2022, MUST reported a net loss of US$192.5 million compared to the net income of US$32.7 million mainly due to the net fair value loss on investment properties and higher finance expenses.
The REIT, on Dec 30, 2022, reported that the real estate valuation of its portfolio fell by 10.9% y-o-y to US$1.95 billion based on its year-end valuations for 2022. (https://www.theedgesingapore.com/news/reits/manulife-us-reits-aggregate-leverage-now-49-based-updated-asset-valuations)
FY2022
For the FY2022, the REIT&rsquo s DPU fell by 10.9% y-o-y to 4.75 US cents after the capital retention in the 2HFY2022. On a like-for-like basis, the REIT&rsquo s full-year DPU fell by 6.8% y-o-y to 4.97 US cents over an enlarged unit base following its private placement in December 2021.
Gross revenue for the FY2022 increased by 9.4% y-o-y to US$202.6 million mainly due to contributions from its newly-acquired properties in December 2021.
NPI for the full year increased by 3.3% y-o-y to US$113.2 million due mainly to the higher gross revenue and offset by higher property operating expenses.
For the FY2022, MUST saw a net loss of US$129.7 million compared to the net income of US$39.4 million in the FY2021 primarily due to the net fair value loss on properties.
Distributable income for the FY2022 increased by 2.7% y-o-y to US$87.9 million mainly due to contributions from the REIT&rsquo s new properties.
&ldquo We have reported an improvement in distributable income in FY2022, coupled with a steady portfolio occupancy of 88.0% and weighted average lease expiry (WALE) by net lettable area (NLA) of 4.7 years, in spite of the challenges in our submarkets,&rdquo says Tripp Gantt, CEO of MUST.&rdquo
&ldquo Cognisant of our gearing level, we will continue exploring funding and strategic options for the REIT,&rdquo he adds. &ldquo Since our financial advisor Citi began discussions with potential partners from mid-January 2023 in relation to our strategic review, we have seen healthy interest from a broad range of counterparties including local and international real estate developers, REITs and private equity players. We look forward to providing more updates in due time.&rdquo
As at Dec 31, 2022, MUST&rsquo s gearing ratio rose by 6.0 percentage points y-o-y to 48.8%, below the regulatory gearing limit of 50.0%, due to the decline in its valuations. Its interest coverage ratio (ICR) and weighted average interest rate stood at 3.1 times and 3.74% respectively as at Dec 31, 2022.
As at Dec 31, 2022, 77.3% of the REIT&rsquo s gross borrowings are on fixed rate loans, down from the 86.5% as at Dec 31, 2021.
The REIT&rsquo s net asset value (NAV) per unit stood at 57 US cents as at Dec 31, 2022, down from 67 US cents in the year before.
Cash and cash equivalents as at Dec 31, 2022, stood at US$112.9 million.
Looking ahead, the REIT manager says it continues to see a &ldquo strong demand for new and repositioned offices in attractive locations&rdquo . In addition, it expects to see an improved operating environment for REITs as the Fed seeks to taper its interest rate hikes.
Filing chapter 11 is very common for Us Management
simpleguy123 ( Date: 18-Jan-2023 11:03) Posted:
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Hope you didn't get into a sunk cost fallacy situation.
PhillipTan ( Date: 08-Jan-2023 23:00) Posted:
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I have DCA-ed, not sure if it is wise to continue doing so
Especially with this news now...
If instead of considering selling assets, and they come up with a rights issue to pay off debt
(don' t really think that would happen as it is way way below NAV)
I may still consider if this falling knife is worth catching
Because I caught it once with Sabana and that decision helped me reached a breakeven point a few years later
If I hadn' t caught that Sabana falling knife, with my avg price almost hitting a dollar, maybe I would need to wait for a couple of decades to break even lol
(Inflation not factored in yet)
Especially with this news now...
If instead of considering selling assets, and they come up with a rights issue to pay off debt
(don' t really think that would happen as it is way way below NAV)
I may still consider if this falling knife is worth catching
Because I caught it once with Sabana and that decision helped me reached a breakeven point a few years later
If I hadn' t caught that Sabana falling knife, with my avg price almost hitting a dollar, maybe I would need to wait for a couple of decades to break even lol
(Inflation not factored in yet)
Goldfinger ( Date: 08-Jan-2023 08:54) Posted:
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Would you DCA now into MUsT?
PhillipTan ( Date: 08-Jan-2023 02:08) Posted:
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This reminds me of Sabana when I bought at more than 1.20 per share back in 2013
And then drop until like 20 cents
Took me almost 9 years of dividends and DCA reach a breakeven point
Would still be in deep red if inflation is factored in
And then drop until like 20 cents
Took me almost 9 years of dividends and DCA reach a breakeven point
Would still be in deep red if inflation is factored in
Holding 22k shares here with almost 59% drop in my average purchase price
Highest purchased price was 74.5 cents more than 2 years ago
Cannot even break even with around 1k in dividends over 2 years
Really shaking my head...
Selling assets at a loss? Can' t see how that is the best solution though
How about a rights issue to reduce gearing and see who will be willing to catch this falling knife?
Really chui...
Highest purchased price was 74.5 cents more than 2 years ago
Cannot even break even with around 1k in dividends over 2 years
Really shaking my head...
Selling assets at a loss? Can' t see how that is the best solution though
How about a rights issue to reduce gearing and see who will be willing to catch this falling knife?
Really chui...
investshare ( Date: 02-Jan-2023 21:49) Posted:
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RHB lowers target price for Manulife US Reit amid sharp valuation decline
RHB Research has slashed its target price on Manulife US Real Estate Investment Trust (Reit) : BTOU -10% to US$0.43 from US$0.64 on concerns of sharp valuation declines in the Reit&rsquo s portfolio, as the US office market remains in a &ldquo state of flux&rdquo .
The research house maintained a &ldquo buy&rdquo call on the Reit.
On Tuesday (Jan 3), analyst Vijay Natarajan noted that the Reit traded at a more than 40 per cent discount to its marked-down book value.
Natarajan also highlighted the &ldquo worse-than-expected&rdquo 10.9 per cent decline in the valuation of the Reit&rsquo s portfolio as at end-2022, along with the subsequent rise in the Reit&rsquo s gearing ratio to near regulatory limits.
With the Reit&rsquo s gearing ratio at 49 per cent &ndash just below the 50 per cent limit mandated by the Monetary Authority of Singapore &ndash Natarajan expects one possible area of support to be the Reit&rsquo s sponsor, Manulife.
A positive outcome from the Reit&rsquo s ongoing strategic review would be Manulife providing financial assistance through acquisitions or equity funding, Natarajan said.
He added: &ldquo We believe possible options for the sponsor are (to) set up a real estate fund to buy some of Manulife US Reit&rsquo s assets, or take a stake in the assets based on their latest valuations.&rdquo
&ldquo It could also underwrite equity fund-raising at a premium, although the maximum 10 per cent stake cap limits such options.&rdquo
The analyst lowered his FY2023 to FY2024 distribution per unit estimates by 15 per cent, after factoring in the need for Manulife US Reit to conserve cash by trimming the dividend payout ratio to 90 per cent, from 100 per cent currently. Occupancy rate and financing assumptions were similarly revised.
Natarajan derived the target price of US$0.43 after lowering the Reit&rsquo s terminal growth assumption to 1.5 per cent, down from 2 per cent previously.
Some ppl thought that as long as they can hold, they can wait for price recovery. But selling asset at low price is permanent damage.
cloudy.mountain ( Date: 31-Dec-2022 12:56) Posted:
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Manulife US Reit gearing a whisker shy of 50% regulatory limit after asset valuation decline
THE real estate valuation of Manulife US Real Estate Investment Trust : BTOU -3.23% (Manulife US Reit)&lsquo s portfolio has fallen by 10.9 per cent to US$1.9 billion, from US$2.2 billion as at end-2021.
This was attributed to higher discount rates and capitalisation rates for certain properties. The manager said this was reflective of risks posed by a volatile macroeconomic environment as well as idiosyncratic risks at the property level, such as higher vacancy or weak submarket fundamentals.
The decline in valuation was also due to continued weakening of occupational performance in submarkets where the properties are located, said the manager on Friday (Dec 30).
It explained that a slowdown in demand and leasing activity had led to rising concession package assumptions to attract new or retain tenants, which resulted in higher leasing costs.
&ldquo (The decline in valuations) was largely due to the challenging market dynamics in our submarkets,&rdquo Tripp Gantt, chief executive officer of the manager of Manulife US Reit, said at a briefing following the announcement.
For example, Gantt pointed out that at the Reit&rsquo s Figueroa building, terminal cap rates used in the appraisal increased by 100 basis points (bps) while discount rates used in the discounted cash flow analysis rose by 150 bps.
Figueroa saw the largest decline in valuation compared with the rest of the properties in the Reit&rsquo s portfolio, down 33.1 per cent to US$211 million as at end-2022, compared with US$315.2 million the year before. The Grade A office building in Los Angeles made up 44 per cent of the portfolio valuation decline for the period.
According to the manager, Figueroa&rsquo s valuation plunge was largely due to a shift in occupancy plans of two of its largest tenants, Quinn Emanuel and TCW Group. The former has executed a renewal and downsize, while the latter plans to vacate at the end of its lease term by end-December 2023.
The lower portfolio asset valuation brings Manulife US Reit&rsquo s aggregate leverage to 49 per cent &ndash just slightly under the 50 per cent limit for Singapore Reits imposed by the Monetary Authority of Singapore, if the Reit has a minimum adjusted interest coverage ratio of 2.5 times.
Manulife US Reit&rsquo s projected interest coverage ratio as at end-December will be about 3.1 times.
Net asset value is projected to fall by US$237.4 million, or US$0.13 per unit.
In its bourse filing, the manager assured that financial covenants in respect of the Reit&rsquo s existing loans are not expected to be breached, despite the decline in valuation.
The Reit manager added that it is exploring options to reduce the aggregate leverage.
&ldquo We are absolutely prioritising dispositions right now,&rdquo Gantt said. &ldquo We&rsquo ve actually been actively looking at this for quite some time. We&rsquo re in that process now and our intent is to execute a disposition as soon as possible.&rdquo
However, he added that transaction markets are likely to thaw out only when interest rates start stabilising.
&ldquo It&rsquo s a difficult time to be selling properties in the US right now,&rdquo Gantt said. &ldquo The markets are frozen right now because banks aren&rsquo t lending &ndash they&rsquo re waiting to see where things settle out &ndash and borrowers obviously need that money and that debt to execute transactions.&rdquo
The Reit manager added that it would need to raise US$170 million to pay down debt, in order to bring its aggregate leverage down to 45 per cent.
sounds very likely...as shareholder this is very sad news...
investshare ( Date: 31-Dec-2022 10:19) Posted:
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Need to raise fund to bring down the gearing ?
Strategic review -> mark down asset price-> sell asset at lower valued price -> losses locked in
The manager of Manulife US REIT (MUST) announced, on Dec 30, that the real estate valuation of its portfolio has declined by 10.9% to US$1.95 billion ($2.62 billion) based on the year-end valuations for 2022. This is compared to the US$2.18 billion valuation as at Dec 31, 2021.
The lower valuations were attributed to the higher discount rates and capitalisation rates for some of the REIT's properties. This is on the back of the volatile macroeconomic environment and ?idiosyncratic? risks at the property level such as higher vacancy rates and, or weak submarket fundamentals.