Manulife Us Reit · SGX:BTOU
Manulife Us Reit — FY2020 Earnings Presentation
36 slides from Manulife Us Reit's earnings presentation, Feb 8, 2021
Slide 1: FY 2020 Financial Results
FY 2020 Financial Results 8 February 2021
Slide 2: Important notice
Important notice This presentation shall be read in conjunction with Manulife US REIT’s financial results announcement dated 8 February 2021 published on SGXNet. This presentation is for information purposes only and does not constitute or form part of an offer, invitation or solicitation of any off
Slide 3: Content
Content 01 Key Highlights 02 Financial Highlights 03 Portfolio Performance 04 Looking Forward 05 Appendix: U.S. Outlook 06 Appendix: ESG Highlights 07 Appendix: About MUST Peachtree, Georgia
Slide 4: Key Highlights
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Slide 5: Weathered FY 2020 with a quality portfolio
Weathered FY 2020 with a quality portfolio Distributable income Distribution per Unit Strong collections Gearing US$89.0 m 5.64 US Cents 97%1 41.0% Increased 6.8% YoY Decreased 5.4% YoY Deferment 0.6%2, Well below MAS Financials abatement 0.5%2 50% limit High occupancy Executed leases Low subleasing
Slide 6: Financial Highlights
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Slide 7: FY 2020 distributable income increased by 6.8% YoY
FY 2020 distributable income increased by 6.8% YoY 2H 2020 2H 2019 Change FY 2020 FY 2019 Change (US$’000) (US$’000) (%) (US$’000) (US$’000) (%) Gross 95,682 94,514 1.2 194,312 177,853 9.3 Revenue Net Property Higher FY 2020 NPI and 53,664 58,434 (8.2) 115,837 110,776 4.6 Income (NPI) DI YoY mainly
Slide 8: Delivering robust income through fortified portfolio
Delivering robust income through fortified portfolio NPI (US$ m) +4.6% NPI growth mainly due to contributions from Centerpointe and Capitol acquired in 2019, partially offset by: 115.8 • Lower carpark income 110.8 • Lower rental income due to higher vacancies in Michelson and Peachtree • Provision f
Slide 9: Strong balance sheet; 100% pay-out for FY 2020 distributions
Strong balance sheet; 100% pay-out for FY 2020 distributions As at 31 Dec 2020 Distribution schedule Investment Properties (US$’000) 1,992,800 Upcoming DPU: Total Assets (US$’000) 2,088,059 2.59 US Cents Borrowings (US$’000) 852,2871 Total Liabilities (US$’000) 930,171 Ex-Distribution Date Net Asset
Slide 10: Advanced negotiations on sustainability-linked loan for 2021 refinancing
Advanced negotiations on sustainability-linked loan for 2021 refinancing Gross Borrowings Gross Borrowings Debt maturity profile as at 31 Dec 2020 (US$ m) US$856.5 US$856.5 m m Total Undrawn Committed Total Undrawn Facilities Facilities 17.3 US$115.0 US$115.0 m m Gearing Ratio Gearing 95.5 cost 41.0
Slide 11: Portfolio Performance
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Slide 12: Solid leasing in the face of COVID-19 storm
Solid leasing in the face of COVID-19 storm Leases executed in FY 2020 Renewed Case study: ~279,000 sq ft 51,000 sq ft Allen Matkin’s (legal) • 5.9% of portfolio by NLA renewal & expansion Expanded • Mainly from legal, real estate, information, finance and insurance • Rental reversion +0.1%1 (+4.7%
Slide 13: Long WALE of 5.3 years by NLA; minimal expiries in 2021
Long WALE of 5.3 years by NLA; minimal expiries in 2021 Lease expiry profile as at 31 Dec 2020 (%) 2021 and 2022 expiries 48.1 47.3 • Mainly from Figueroa, Penn and Capitol － Legal, finance and insurance, information and government • Active negotiations with tenants on upcoming expiries 17.8 18.1 9.
Slide 14: Well-diversified tenant base with top sectors outperforming U.S. unemployment
Well-diversified tenant base with top sectors outperforming U.S. unemployment Trade sector by gross rental income (GRI) (%) Legal 21.4 Unemployment % of Apr 2020 Dec 2020 Finance and insurance 18.1 Rate1 GRI (%) (%) Retail trade 13.8 Real estate 7.4 U.S. average - 14.8 6.7 Information 7.1 Public adm
Slide 15: 5.6-year WALE for top tenants; majority HQ/listed/govt
5.6-year WALE for top 10 tenants; majority HQ/listed/govt Top 10 tenants by gross rental income (GRI) Headlines of top tenants Lease NLA % of Yahoo Finance, 11 Jan 2021 Tenant Sector Expiry (sq ft) GRI Baby Apparel Market to Reach USD 82.54 Billion The William Carter Retail trade Apr-2030 304,013 6.
Slide 16: Lower valuations mainly due to higher vacancies & leasing costs
Lower valuations mainly due to higher vacancies & leasing costs Valuation Implied Cap Rates2 Property 31 Dec 2020 30 Jun 2020 Change 31 Dec 2020 31 Dec 2020 30 Jun 2020 (US$ m) (US$ m) (%) (US$ Per Sq Ft1) (%) (%) Figueroa 320.0 329.1 (2.8) 448.3 5.0 5.2 Michelson 319.0 335.0 (4.8) 598.1 4.0 4.3 Pea
Slide 17: Limited supply and positive rent growth forecast
Limited supply and positive rent growth forecast MUST cities’ projected 12 months rent growth 1.2% outperforms U.S. average 1.0% New Gross Projected Net Net Last 12 Properties FY 2020 RBA Vacancy Asking 12 Months Delivery Absorption Delivery Months Rent Under Class A Market (mil sq ft) (%) Rent Rent
Slide 18: Work from home? Bosses to employees: See you back in office
Work from home? Bosses to employees: See you back in office Latest survey: 75% of bosses surveyed expect more than half to WFO by Jul 2021 Hybrid model preferred Physical office remains in demand • ~70% bosses expect employees to WFO at least 3 days/week • ~70% bosses require same or more space post
Slide 19: MUST to capitalise on post-COVID-19 themes
MUST to capitalise on post-COVID-19 themes 52% of AUM exposed to tech, entertainment and 48% of AUM exposed to population migration – cloud security tailwinds lower density, affordable, live-work-play tailwinds ATL’s phenomenal growth in tech funding1 Atlanta (ATL): Strong residential rent growth in
Slide 20: Looking Forward
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Slide 21: Ready, get set, go!
Ready, get set, go! Proactive Leasing Click to read Chase occupancy with U.S. to Rebound flexible leasing options • Vaccine – road to U.S. recovery ✓ Biden ‘150 m vaccines in 100 days’ ✓ > 33 m given – exceed total cases Capital Management 27.2 m ~67% of portfolio to be unencumbered post 2021 Indepe
Slide 22: Thank You!
Thank You! For enquiries, please contact: Ms Caroline Fong Head of Investor Relations and Chief Capital Market Strategist carol_fong@manulifeusreit.sg (65) 6801 1066 Manulife US Real Estate Management Pte. Ltd. (Company registration no. 201503253R) 8 Cross Street, #16-03 Manulife Tower, Singapore 04
Slide 23: Appendix: U.S. Outlook
Manulife US REIT 05 Appendix: U. S. Outlook
Slide 24: World's largest economy bouncing back
World’s largest economy bouncing back • December unemployment continues positive trend down from September’s 7.9% 4.0%1 • Professional and Business Services, Retail Trade, and Construction led December job gains 4Q 2020 GDP growth1 U.S. GDP Growth (%)3 2.9 0.9m2 -0.3 2.5 1.6 2.2 1.7 2.4 2.6 1.6 2.3
Slide 25: U.S. office real estate activity remains muted
U.S. office real estate activity remains muted • Quarterly occupancy loss of 40.6 m sq ft largest on record 17.1%1 • 68.7% of Q4 leasing deals were renewals, of which 43% were five years or less in duration 4Q 2020 vacancy U.S. Office Employment YoY (%)2 +0.5%1 1.7% 2.6% 2.7% 2.6% 2.6% 2.6% 1.9% 1.9
Slide 26: Best-in-class properties exceed market occupancies
Best-in-class properties exceed market occupancies Occupancy (%) 100.0 99.2 96.7 93.0 94.8 94.3 93.3 Meadowlands 91.7 Vacancy includes old/ 90.4 89.2 incomparable buildings 86.4 84.4 82.0 81.3 81.9 81.2 Fairfax Center 77.9 Supply of quality office 76.7 product in submarket is limited. Downtown LA Ir
Slide 27: MUST markets better insulated from sublease dynamics
MUST markets better insulated from sublease dynamics Sublease market as at 31 Dec 20201 (%) MUST’s Markets MUST’s Cities Notable Gateways 31.6% 30.5% 28.4% 21.2% 14.9% 9.1% 7.9% 7.1% 6.4% Atlanta Los Angeles New Jersey Orange County Sacramento Washington DC San Francisco Seattle New York Source: JLL
Slide 28: Appendix: ESG Highlights
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Slide 29: Our ESG structure and approach
Our ESG structure and approach Sustainability steering committee Our sustainability focus Committee was established in 2017 to drive sustainability Sustainable properties strategies/action plans, set targets, oversee monitoring Create value for tenants by reducing the environmental impact of our pro
Slide 30: Taking care of stakeholders during COVID-19
Taking care of stakeholders during COVID-19 Investors Employees ✓ First S-REIT to hold virtual AGM ✓ Provided employees with ✓ Met with ~1,700 investors, thermometers, surgical and analysts and media reusable masks ✓ Produced ‘on-the-ground’ video to ✓ Delivered fruit baskets to showcase Downtown LA
Slide 31: Achieving ESG excellence
Achieving ESG excellence Global Real Estate Sustainability Benchmark 2020 Certifications Public Real Estate Green Disclosure A Assessment 5 Stars LEEDTM Platinum Ranked 1st out of 10 peers Ranked 4th out of 15 peers Capitol (Asia | Office) (U.S. | Listed | Office) Governance Index for Trust 2020 4th
Slide 32: Appendix: About MUST
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Slide 33: Portfolio overview
Portfolio overview Figueroa Michelson Peachtree Plaza Exchange Penn Phipps Centerpointe Capitol Location Los Angeles Irvine Atlanta Secaucus Jersey City Washington, D.C. Atlanta Virginia Sacramento Property Type Class A Trophy Class A Class A Class A Class A Trophy Class A Class A Completion Date 19
Slide 34: Keeping Figueroa and Exchange relevant and refreshed with AEIs
Keeping Figueroa and Exchange relevant and refreshed with AEIs Figueroa: US$10 m Lobby Renovation New ceiling, lighting, flooring, access control system, cameras, security desk and entrance signage, + new café opening soon Old New Exchange: US$8 m Lobby Renovation New ceiling, lighting, flooring, ac
Slide 35: MUST's tax advantage
MUST’s tax advantage For illustrative purposes only US REIT S-REIT1 MUST • No U.S. corporate taxes (21%) DPU Yield 3.9%2 7.8% 7.8%3 U.S. Withholding Taxes (1.2%) - - • No U.S. withholding taxes (30%) Net Yield – 2.7% 7.8% 7.8% Singapore Retail Investor • No Singapore corporate taxes on Net Yield – d
Slide 36: Additional Disclaimer
Additional Disclaimer CoStarPS does not purport that the CoStarPS Materials herein are comprehensive, and, while they are believed to be accurate, the CoStarPS Materials are not guaranteed to be free from error, omission or misstatement. CoStarPS has no obligation to update any of the CoStarPS Mater