Manulife US REIT · SGX:BTOU
Manulife US REIT — Manulife US Real Estate Investment Trust — FY2016 Earnings Presentation
50 slides from Manulife US REIT's earnings presentation, Feb 13, 2017
Slide 1: FY2016 Financial Results
FY2016 Financial Results (20 May 2016 to 31 Dec 2016) 13 February 2017
Slide 2: Important Notice
Important Notice This presentation shall be read in conjunction with Manulife US REIT’s financial results announcement dated 13 February 2017 published on SGX Net. This presentation is for information purposes only and does not constitute or form part of an offer, invitation or solicitation of any o
Slide 3: Contents
Contents 1 Key Highlights 2 Financial Highlights 3 Portfolio Performance 4 Moving Forward 5 Appendix 3
Slide 4: Key Highlights
Peachtree, Atlanta, Georgia Key Highlights
Slide 5: Impressive FY2016 Results
Impressive FY2016 Results Key Financial Highlights for FY2016 4Q20161 FY20162 Net Property Income US$12.4m US$30.0m 0.2% above forecast3 1.0% above forecast3 Distributable Income US$9.7m US$22.3m 3.6% above forecast3 4.8% above forecast3 Distribution per Unit 1.54 US cents 3.55 US cents 3.6% above f
Slide 6: Portfolio Highlights for FY2016
Portfolio Highlights for FY2016 Portfolio Performance Occupancy Rate Portfolio Valuation 97.0% US$833.8m 7.2% from Listing Date1 WALE Gearing 5.8 years 33.8% from 36.8% on Listing Date1 Rental Reversions Net Asset Value +10.5% US$0.87 per Unit from 1 Jan 2016 to 31 Dec 2016 11.5% from Listing Date1
Slide 7: Financial Highlights
Figueroa, Los Angeles, California Financial Highlights
Slide 8: FY2016 DPU Exceeded Forecast by 4.8%
FY2016 DPU Exceeded Forecast1 by 4.8% For period 4Q2016 4Q2016 4Q2016 FY2016 FY2016 FY2016 20 May 2016 to Actual Forecast1 Change Actual Forecast1 Change 31 Dec 2016 (US$’000) (US$’000) (%) (US$’000) (US$’000) (%) Gross Revenue2 19,314 19,726 (2.1) 47,510 48,234 (1.5) • Rental and Other Income 14,50
Slide 9: Distribution Schedule
Distribution Schedule First Distribution of 3.55 US cents per Unit to be Paid on 30 March 2017 Distribution per Unit 3.55 US cents For period 20 May 2016 to 31 December 2016 Annualised Distribution per Unit 5.75 US cents Ex-Distribution Date 17 February 2017 Books Closure Date 21 February 2017 Distr
Slide 10: Portfolio Valuation Increased by 7.2% since Acquisition
Portfolio Valuation Increased by 7.2% since Acquisition Valuation Increases Underpinned by Positive Fundamentals in US Office Market Change in Portfolio Value as at 31 Dec 2016 Acquisition Valuation Valuation Price Change since Change since Current as at as at Property as at 30 Sep 2016 20 May 2016
Slide 11: Robust Balance Sheet
Robust Balance Sheet As at 30 Sep 2016 As at 31 Dec 2016 (US$’000) (US$’000) Investment Properties 813,200 833,800 Total Assets 852,485 875,223 Borrowings 294,1021 294,1862 Total Liabilities 326,801 328,218 Net Asset Attributable to 525,684 547,005 Unitholders NAV per Unit (US$ per unit) 0.84 0.87 (
Slide 12: Proactive Capital Management
Proactive Capital Management 100% Fixed Rate Loans with No Near-term Refinancing Gearing Ratio Reduced Increasing Debt Head Room As at 3Q2016 As at 4Q2016 Gross Borrowings US$296.0 million US$296.0 million Gearing Ratio 34.7%1 33.8%1 Weighted Average Interest 2.46% p.a. 2.46% p.a. Rate Debt Maturity
Slide 13: Resilient Portfolio with Visible Growth
Resilient Portfolio with Visible Growth Debt Maturity Profile1 99.2%2 of Leases have Rental Escalations 0.8% US$ m 13.2% 150 121.0 Michelson 108.0 Figueroa 100 67.0 Peachtree 50 86.0% Annual rental escalations which average around 3% 0 Mid-term or periodic rental increases Jul 2019 Jul 2020 Jul 2021
Slide 14: Portfolio Performance
Michelson, Irvine, California Portfolio Performance
Slide 15: Diversified Portfolio
Diversified Portfolio Portfolio Summary as at 31 Dec 2016 Total NLA 1,783,079 sq ft WALE by (NLA) 5.8 years Occupancy 97.0 % Land Tenure 100% freehold No. of Tenants 71 Peachtree Peachtree 24.4% Figueroa 22.4% Figueroa 33.0% 37.5% US$833.8m US$48.6m Portfolio PY2017 NPI Valuation Michelson Michelson
Slide 16: Strategically Located in Key U.S. Cities
Strategically Located in Key U.S. Cities Portfolio Markets Progressing Steadily Rental Cycle, CBD U.S. Markets 1 Rental Cycle, Suburban U.S. Markets 1 (1) Source: JLL as at 4Q2016. Retrieved from http://www.us.jll.com/united-states/en-us/research/7982/us-office-outlook-q4-2016-jll 16
Slide 17: High Occupancy and Tenant Retention Rate
High Occupancy and Tenant Retention Rate High Occupancy of 97.0%1 Exceeds New Tenants/Renewals U.S. Market Average of 87.6%2 Portfolio 97.0% Occupancy Rate Tenant 70.5%3 Retention Rate (1) As at 31 Dec 2016 (2) Source: Colliers International, United States Research Report, Office Market Outlook (Q32
Slide 18: Favourable Lease Profile with WALE of 5.8 Years
Favourable Lease Profile with WALE of 5.8 Years Minimal Near Term Lease Expiries in the Next 2 Years Lease Expiry Profile as at 31 Dec 2016 (%)1 67.8 64.3 14.6 10.9 9.4 8.6 5.3 5.5 4.8 5.4 1.7 1.9 2017 2018 2019 2020 2021 2022 and beyond Cash Rental Income Net Lettable Area (1) Amounts may not sum t
Slide 19: Positive 10.5% Rental Reversion Across Portfolio
Positive 10.5% Rental Reversion Across Portfolio Rental Reversions (%) based on New Leases Signed from 1 Jan 2016 to 31 Dec 2016 Percentage of Net Lettable Area Rental Reversion Property Total NLA (sq ft) (%) Figueroa 14.3% 99,127 11.6 Michelson 0.7% 3,889 9.9 Peachtree 5.0% 27,870 5.8 Total 7.3% 13
Slide 20: Increase in Passing Rents
Increase in Passing Rents Average Property Gross Rent (US$ psf per year) As at 31 Dec 2015 As at 31 Dec 2016 Change Property (US$) (US$) (%) Figueroa 35.10 36.78 4.8 Michelson 47.50 49.27 3.7 Peachtree 30.00 31.01 3.4 Total 37.20 38.84 4.4 20
Slide 21: Quality, Diversified Tenant Base Across Multiple Sectors
Quality, Diversified Tenant Base Across Multiple Sectors Cash Rental Income1 Breakdown by No Tenant Contributing more than Trade Sector 10.7% of Income1 Top 10 Tenants by Cash Rental Income (CRI) Engineers/ Administrative Business Architects Services Services 2.6% 2.6% Leased Area 2.7% Tenant1 Secto
Slide 22: Figueroa: Located in the Heart of Downtown LA
Figueroa: Located in the Heart of Downtown LA (DTLA) Influx of Millennials has Transformed DTLA into a Live, Work, Play Destination As at 31 Dec 2016 NLA (sq ft) 694,534 Valuation US$312.5 million (US$450 psf) Net Property Income US$9.7 million WALE (by NLA) 5.8 years No. of Tenants 30 Occupancy Rat
Slide 23: Michelson: State-of-the-Art Trophy Building
Michelson: State-of-the-Art Trophy Building Irvine - Abundant Amenities Available within the Vicinity As at 31 Dec 2016 NLA (sq ft) 532,603 Valuation US$334.6 million (US$628 psf) Net Property Income US$12.7 million WALE (by NLA) 5.4 years No. of Tenants 16 Occupancy Rate 99.1% Lease Expiry Profile
Slide 24: Peachtree: Prominent Building in International Gateway
Peachtree: Prominent Building in International Gateway Atlanta – Headquarters for 18 Fortune 500 firms including Coca Cola, Delta Air Lines, Home Depot and UPS As at 31 Dec 2016 NLA (sq ft) 555,942 Portfolio Value US$186.7 million (US$336 psf) Net Property Income US$7.6 million WALE (by NLA) 6.2 yea
Slide 25: Office Market Overview
Office Market Overview Limited Supply and Strong Rental Growth for the Three Cities in 2017 New 12 Month Gross Net Properties RBA1 Vacancy Rent Property Delivery Market Asking Absorption Under (mil sq ft) (%) Growth Name Year Rent (‘000 sq ft) Construction (%) (‘000 sq ft) Office Plaza Downtown 39.6
Slide 26: Moving Forward
Michelson, Irvine, California Moving Forward
Slide 27: Moving Forward
Moving Forward U.S.A. Still Poised for Growth in 2017 Resilient Portfolio Opportunities for Growth Minimal lease expiries till 2019; Reduced gearing of 33.8% 67.8% of leases expire in 2022 provides greater flexibility and beyond Well spread debt maturity profile with Target to acquire accretive deal
Slide 28: Thank You
Thank You For enquiries, please contact: Ms Caroline Fong, Head of Investor Relations Direct: (65) 6801 1066 / Email: carol_fong@manulifeusreit.sg MANULIFE US REAL ESTATE INVESTMENT TRUST 51 Bras Basah Road, #11-00 Manulife Centre, Singapore 189554 http://www.manulifeusreit.sg
Slide 29: Appendix
Peachtree, Atlanta, Georgia Appendix Confidential, Not for Further 29
Slide 30: Portfolio Overview
Portfolio Overview Figueroa Michelson Peachtree Portfolio Location Los Angeles Irvine Atlanta Property Type Class A Trophy Class A Completion Date 1991 2007 1991 Last Refurbishment 2015 - 2015 Property Value1 US$312.5 million US$334.6 million US$186.7 million US$833.8 million Net Property Income2 US
Slide 31: MUST Distribution Yield vs. Other Investments
MUST Distribution Yield vs. Other Investments Included in the MSCI Singapore Small Cap Index with effect from 1 Dec 2016 8.0% 7.0% 6.0% 6.7% MUST Distribution Yield is 6.1% 430 bps above 10-year US 5.0% Government Bond Yield 4.0% 3.0% 3.5% 2.0% 2.4% 2.2% 1.0% 0.4% 0.1% 0.0% MUST FTSE REIT STI Index
Slide 32: Strong Returns since Listing Date
Strong Returns since Listing Date Unit Price Increased by 8.9%; USD/SGD Increased by 2.6% since Listing Date1 Unit Price Performance2,3 against Peers and STI Since 20 May 2016 115.0 MUST: + 8.9% 110.0 S-REIT: + 3.0% STI: +11.1% 105.0 100.0 95.0 90.0 7-Oct 4-Nov 2-Dec 9-Dec 1-Jul 8-Jul 5-Aug 2-Sep 9-
Slide 33: Accolades and Sustainability
Accolades and Sustainability Accolades Alpha Southeast Asia’s 10th SIAS’ 17th Investors’ Choice Awards Leadership in Energy and Best Deal & Solution Awards 2016 Awarded runner-up in the Most Transparent Environmental Design (LEED) GOLD Awarded Best REIT Deal of the Year in Company Award (New Issues
Slide 34: Reputable Sponsor with Strong Real Estate Management Capabilities Globally
Reputable Sponsor with Strong Real Estate Management Capabilities Globally Vertically-Integrated Real Estate Platform with Global Real Estate AUM of US$15.6b Vancouver Sponsor Calgary Kitchener/Waterloo Edmonton Toronto Canada Ottawa US$6.4B Montreal AUM AUM Halifax 74% of Real Estate in Office US$7
Slide 35: Tax Efficient Structure of Manulife US REIT
Tax Efficient Structure of Manulife US REIT Sponsor Manulife Unitholders No 30%1 withholding tax on interest and principal on shareholder’s loan - US Portfolio Interest 0% Tax Exemption Rule Zero tax in Singapore - Foreign sourced income not subject to tax Distribution from US to Singapore through 1
Slide 36: U.S. Outlook
Michelson, Irvine, California Michelson, Irvine, California U.S. Outlook
Slide 37: Overall U.S. Outlook
Overall U.S. Outlook 1 Steady Economic Growth • GDP growth rate was 1.9%1 in Q4 2016 and 1.6%1 for 2016 • Positive employment with 12 month average of about 183,000 new jobs created per month • Unemployment rate in Dec 2016 decreased by 20 bps to 4.7%2 vs. 4.9%2 in Sep 2016 • U.S. likely to remain s
Slide 38: Downtown Los Angeles
Downtown Los Angeles Boom in Residential Development Creates Live, Work, Play Environment Population 10.2 million1 Median household income US$56,1962 11,868 residential units under construction with an additional 19,054 units currently proposed3 Current residential inventory is 36,964 units3 Holds o
Slide 39: Greater Downtown Los Angeles – Market Overview
Greater Downtown Los Angeles – Market Overview Limited New Supply Supports Rising Rental Rates Class A Statistics as at 4Q2016 Gross Net Net Under Class A asking RBA1 Vacancy Asking Availability Absorption Delivery Construction rents up by 1% (mil sq ft) Rent (‘000 sq ft) (‘000 sq ft) (‘000 sq ft) f
Slide 40: Figueroa: No New Class A Office Space in Past 23 Years
Figueroa: No New Class A Office Space in Past 23 Years and None Until 2017 Excellent Location and Amenities Located in the South Park submarket Excellent access to the LA freeway system Figueroa Close proximity to 7th Street Metro Station Free shuttle to surrounding areas of Downtown Nokia Theatre L
Slide 41: Irvine, Orange County
Irvine, Orange County Attractive Corporate Location with Diversified Economy Population 3.2 million1 Median household income US$76,5092 Irvine is considered the “CBD” of Orange County Strong labour pool with senior executives, middle managers and administrative personnel all living within Orange Cou
Slide 42: Irvine, Orange County – Market Overview
Irvine, Orange County – Market Overview Limited New Supply Leading to Strong Rent Growth Class A Statistics as at 4Q2016 Gross Net Under Class A asking RBA1 Net Vacancy Asking Availability Absorption Construction rents up by 2% (mil sq ft) Delivery Rent (‘000 sq ft) (‘000 sq ft) from the previous qu
Slide 43: Michelson: Best Building in a Highly Amenitised Office Park
Michelson: Best Building in a Highly Amenitised Office Park Excellent Location and Amenities Near the 405 San Diego freeway 4km away from international airport, John Wayne Airport Surrounded by hotel developments, high-end condominiums and apartments, restaurants and a wide range of retail offerings
Slide 44: Atlanta
Atlanta Attractive Corporate Location Leads to Superior Job Growth Population 5.7 million1 Median household income US$57,0002 Ranked #22 city in US by percentage job growth; 175,500 jobs added over the last two years Home to 18 Fortune 500 companies, including: Coca Cola, Delta Airlines, Home Depot,
Slide 45: Midtown Atlanta – Market Overview
Midtown Atlanta – Market Overview Demand Far Exceeds Supply, Supporting Forecast for Continued Rent Growth Class A Statistics as at 4Q2016 Gross Net Under Significant net RBA1 Net Vacancy Asking Availability Absorption Construction absorption in (mil sq ft) Delivery Rent (‘000 sq ft) (‘000 sq ft) Cl
Slide 46: Peachtree: Located in Atlanta; World's Busiest Airport
Peachtree: Located in Atlanta; World’s Busiest Airport (Hartsfield-Jackson International) Excellent Location and Amenities Easily accessible to business district via two freeways – Interstate 75 and Interstate 85 Close proximity to Midtown and Arts Center Metro Stations 20 minutes from Atlanta Harts
Slide 47: Depth of Top U.S. Office Markets
Depth of Top 151 U.S. Office Markets Seattle-Bellevue Chicago New York Boston • Inventory: 94.5m sq ft • Inventory: 243.7m sq ft • Inventory: 449.9m sq ft • Inventory: 166.9m sq ft • Occupancy: 90.8% • Occupancy: 86.0% • Occupancy: 89.6% • Occupancy: 86.4% • Median Household • Median Household • Med
Slide 48: Benefitting from the Growth of the World's Largest Economy
Benefitting from the Growth of the World’s Largest Economy Exposure to Growth of U.S. Economy and USD U.S. GDP Growth (y-o-y %)1 U.S. Unemployment (%)2 2.5 2.7 9.6 2.6 9.3 2.3 2.4 2.3 8.9 1.8 1.7 1.6 1.6 8.1 -0.3 7.4 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017F 6.2 5.8 5.3 5.0 4.6 4.
Slide 49: Favourable U.S. Real Estate Outlook
Favourable U.S. Real Estate Outlook Demand for Office Space Driven by Technology and Other Creative Sectors U.S. Office Net Absorption (m sq ft) U.S. Office Employment1 (y-o-y %) and Occupancy Rate (%)2 89.3 89.4 89.6 3.0 3.0 88.9 89.1 89.1 88.6 88.7 2.3 2.4 2.4 1.6 29.5 0.5 26.2 23.0 22.4 22.7 20.7
Slide 50: 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
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