Manulife US REIT · SGX:BTOU
Manulife US REIT — FY2019 Earnings Presentation
39 slides from Manulife US REIT's earnings presentation, Feb 5, 2020
Slide 1: FY 2019 Financial Results
FY 2019 Financial Results 1 Jan 2019 to 31 Dec 2019 5 February 2020 1
Slide 2: Important Notice
Important Notice This presentation shall be read in conjunction with Manulife US REIT’s financial results announcement dated 5 February 2020 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: Contents
Contents 01 Key Milestones 05 Looking Forward 02 Financial Highlights 06 Appendix: U.S. Outlook 03 Portfolio Performance 07 Appendix: About MUST 04 ESG Highlights 3
Slide 4: Key Milestones
Capitol, Sacramento Key Milestones 01 4
Slide 5: FY 2019 Key Milestones
FY 2019 Key Milestones JAN MAY MAY JUL MAY AUG MAY AUM: US$1.7 b Completed acquisition Refinanced and Governance Index for Trusts Market Cap: US$982.8 m of Centerpointe for unencumbered (GIFT) 2019 – 6th out of 46 Unit Price: US$0.77 US$122.0 m Figueroa at 3.25% REITs and Business Trusts SEP OCT DEC
Slide 6: Growing Responsibly From Strength to Strength
Growing Responsibly From Strength to Strength DPU (US Cents) Occupancy Rate (%) AUM (US$ b) +7.0% YoY +20.5% YoY 5.96 95.9 96.7 95.8 2.1 5.77 5.57 1.7 1.3 FY 2017 FY 2018 FY 2019 FY 2017 FY 2018 FY 2019 FY 2017 FY 2018 FY 2019 NPI (US$ m) WALE (Years) ESG – GRESB (Score) +22.2% YoY 5.7 5.8 5.9 93 11
Slide 7: Financial Highlights
Gross Borrowings Figueroa, Los Angeles US$816.9 m Gearing Ratio 37.7%1 Weighted Ave. Interest Rate 3.37% Weighted Ave. Debt Maturity 2.8 years 02 Financial Highlights Interest Coverage 3.8 times2 Data as at 31 Dec 2019 (1) Based on gross borrowings as percentage of total assets 7 (2) Based on net in
Slide 8: FY 2019 DPU Increased by 7.0% YoY
FY 2019 DPU Increased by 7.0% YoY 4Q 2019 4Q 2018 Change FY 2019 FY 2018 Change (US$’000) (US$’000) (%) (US$’000) (US$’000) (%) Gross FY 2019 NPI, DI and DPU higher YoY due to: 48,782 40,501 20.4 177,853 144,554 23.0 Revenue • Accretive acquisitions • Higher recoveries income Net Property 30,311 25,
Slide 9: Delivering Robust Income through Fortified Portfolio
Delivering Robust Income through Fortified Portfolio NPI (US$ m) 110.8 +22.2% Strong NPI growth driven by acquisitions in 2018 and 2019; partially offset by lower income from Michelson 90.7 19.0 20.3 21.0 21.1 16.0 16.1 13.0 12.6 13.2 9.0 8.8 10.2 5.2 6.6 6.8 2.6 Portfolio Figueroa Michelson Peachtr
Slide 10: Strong Balance Sheet and Proactive Capital Management
Strong Balance Sheet and Proactive Capital Management As at 31 Dec 2019 95.1% Fixed Rate Loans Investment Properties (US$’000) 2,095,000 Total Assets (US$’000) 2,166,461 Borrowings (US$’000) 812,0241 Total Liabilities (US$’000) 908,283 Net Assets Attributable to Unitholders (US$’000) 1,258,178 Units
Slide 11: Portfolio Performance
Peachtree, Atlanta AUM US$2.1 b Occupancy 95.8%1 WALE 5.9 years Leases Executed ~445.2k sq ft Portfolio Performance 03 Rental Escalation 2.0% p.a. Data as at 31 Dec 2019 11 (1) Including leases signed in Jan 2020, the occupancy will be 96.4%
Slide 12: Fortified Portfolio of Trophy/Class A Assets – Strength from Diversity
Fortified Portfolio of Trophy/Class A Assets – Strength from Diversity 9.6 16.1 5.9 10.5 AUM by Property (%)1 16.5 9.0 US$2.1 b 10.1 16.6 5.7 11.9 12.5 8.6 NPI by 14.9 2,3 10.4 Property (%) US$110.8 m 10.2 8.0 AUM: US$2.1 b Scan for videos NLA: 4.7 m sq ft 7.0 16.5 Figueroa Michelson Peachtree Plaza
Slide 13: Long WALE of 5.9 Years by NLA
Long WALE of 5.9 Years by NLA Lease Expiry Profile as at 31 Dec 2019 (%) 53.8 54.4 Renewed ~41,000 sq ft lease at Plaza in Jan 2020 16.8 16.7 7.9 7.9 8.4 8.6 7.2 6.7 0.7 0.9 5.2 4.8 2020 2021 2022 2023 2024 2025 and beyond Gross Rental Income Net Lettable Area 13
Slide 14: Strong Leasing Momentum – High-Quality Tenants Signing Long Leases
Strong Leasing Momentum – High-Quality Tenants Signing Long Leases 96% of Portfolio by Income has Rental Escalations, Averaging 2.0% p.a. Leases Executed in FY 2019 Leases Executed in January 2020 • Executed 9.5% of portfolio’s leases by NLA • Executed 1.5% of portfolio’s leases by NLA ~445,200 sq f
Slide 15: 6.7 Years WALE by Top 10 Tenants; Majority Listed/HQ Location
6.7 Years WALE by Top 10 Tenants; Majority Listed/HQ Location Trade Sector by Gross Rental Income (GRI) Top 10 Tenants by Gross Rental Income (GRI) Legal NLA Tenant Sector % of GRI (sq ft) Finance and Insurance 1.2 2.3 1.6 The William Carter Co. Retail Trade 304,013 5.9% 1.7 Retail Trade Finance and
Slide 16: Underlying Markets Remain Strong as Reflected by Valuation
Underlying Markets Remain Strong as Reflected by Valuation Valuation Implied Cap Rates Property 31 Dec 2019 30 Jun 2019 31 Dec 2019 31 Dec 20192 30 Jun 20192 Change (%) (US$ m) (US$ m) (US$ Per Sq Ft1) (%) (%) Figueroa 337.6 329.9 2.3 480 4.8 4.5 Michelson 345.0 345.0 0.0 647 4.6 4.7 Peachtree 210.7
Slide 17: Strong Growth Markets with Limited Supply
Strong Growth Markets with Limited Supply Rent Growth Potential In-Place Rent (US$) Average Market Rent MUST's Rent • Majority of properties below market rents 60.0 • Irvine: Not comparable as data includes Class A while Michelson is Trophy 40.0 • Sacramento: Asking rents closer to US$43.80 based on
Slide 18: ESG Highlights
Plaza, Secaucus ESG Highlights 04 18
Slide 19: Our ESG Focus Areas
Our ESG Focus Areas “ESG Investing is defined as the consideration of environmental, social and governance factors alongside financial factors in the investment decision-making process” – MSCI ESG Research Understand the needs of Reduce environmental impact E of buildings – sustainable Sustainable S
Slide 20: 5-Star Global Real Estate Sustainability Benchmark (GRESB)
Global Real Estate Sustainability Benchmark (GRESB) Majority of our buildings are either LEED or Energy Star Certified GRESB Rating 2019 Score 2018 Score Peer Group Peer Ranking Average Peer Score 5-Star 93 85 USA | Office | Listed 3/12 72 ESG Breakdown Top Strengths Identified GRESB Rankings 1. Com
Slide 21: ESG Accolades
ESG Accolades LEED Platinum Capitol Awarded 5 Green Stars with a Awarded Best (Investor Relations) in LEED Gold Michelson, Exchange, Phipps score of 93; ranked 3rd out of 12 Country – Singapore and Best Investor listed U.S. office REITs Relations Officer (Small to Mid-cap) by Energy Star Figueroa, M
Slide 22: Looking Forward
Capitol, Sacramento Looking Forward 05 22
Slide 23: Safe Haven - On the Right Track for the New Decade
Safe Haven - On the Right Track for the New Decade Trophy/Class A Assets Provide Strong Income in Upcycles and Remain Resilient during Market Turmoil as compared to Class B & Lower Class Business Park Assets 1 Riding through Market/Economic 2 Institutionalised Investor Base Promotes Volatility with
Slide 24: Contact and Investor Relations details
Scan for MUST’s website Manulife US Real Estate Management Pte. Ltd. For enquiries, please contact: Ms Caroline Fong, Head of Investor Relations (Company registration no. 201503253R) Direct: (65) 6801 1066 Email: carol_fong@manulifeusreit.sg 8 Cross Street, #16-03 Manulife Tower, Singapore 048424 24
Slide 25: Appendix: U.S. Outlook
Exchange, Jersey City Appendix: U.S. Outlook 06 25
Slide 26: Benefitting from Growth of World's Largest Economy
Benefitting from Growth of World’s Largest Economy U.S. GDP Growth (YoY %)3 2.3% 3.5% 1.6 2.2 2019 Low unemployment2 2.6 2.9 GDP Growth1 2.5 2.4 2.3 2.3 1.7 1.6 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 -0.3 -2.8 U.S. Unemployment (%)4 553k 145k Jobs created Non-farm jobs 4Q 20192
Slide 27: Favourable U.S. Office Real Estate Outlook
Favourable U.S. Office Real Estate Outlook U.S. Office Employment (YoY %)2 14.3%1 +3.1%1 1.7 2.6 2.7 2.6 2.6 2.6 1.9 1.9 2.3 1.8 4Q 2019 Annual vacancy steady increase in rents 2009Q4 2010Q4 2011Q4 2012Q4 2013Q4 2014Q4 2015Q4 2016Q4 2017Q4 2018Q4 2019Q4 -4.9 +13.0M1 16.0M1 40.0 U.S. Office Net Absor
Slide 28: Diversified and Resilient Portfolio with Highest Population and Strongest GDP
Diversified and Resilient Portfolio with Highest Population and Strongest GDP MUST’s Properties Located in Top 10 Largest MSAs out of 383 in the U.S. with High Median Household Income Median 2 Ranked by 3 Ranked by MSA 1 Population GDP Household Income Population GDP U.S. 57,652 327,167,434 - 20,494
Slide 29: Located in Cities with Strong Growth Factors and Live, Work, Play Environment
Located in Cities with Strong Growth Factors and Live, Work, Play Environment Downtown Los Angeles Jersey City • Surrounded by entertainment venues such as Staples Center, • Located across Hudson River from Manhattan the LA Convention Center and LA Live • Affordable office and residential alternativ
Slide 30: Limited Supply in Our Cities
Limited Supply in Our Cities Majority of our Properties are Below Market Rents New Properties Gross Net Net 12 Month 4Q 2019 RBA Vacancy Under Delivery Asking Rent Absorption Delivery Rent Growth1 Class A Market (mil sq ft) (%) Construction Year (US$) (‘000 sq ft) (‘000 sq ft) (%) (‘000 sq ft) Downt
Slide 31: Appendix: About MUST
Penn, Washington, D.C. Appendix: About MUST 07 31
Slide 32: Supported by Reputable Sponsor with Proven Track Record
Supported by Reputable Sponsor with Proven Track Record Vertically-Integrated Real Estate Platform: Global Real Estate AUM of US$18.5 b Vancouver Calgary Kitchener/Waterloo Toronto Canada Edmonton Ottawa US$7.5 B Montreal AUM AUM US$881 B Halifax 71% of Real Estate in Office U.S. Others Asia 3% Reta
Slide 33: Portfolio Overview
Portfolio Overview Figueroa Michelson Peachtree Plaza Exchange Penn Phipps Centerpointe Capitol Washington, Location Los Angeles Irvine Atlanta Secaucus Jersey City Atlanta Virginia Sacramento D.C. Property Type Class A Trophy Class A Class A Class A Class A Trophy Class A Class A Completion Date 19
Slide 34: Tax Advantaged Tax Structure
Tax Advantaged Tax Structure 1 MUST’s tax advantage For illustrative purposes only US REIT S-REIT1 Manulife US REIT • No U.S. corporate taxes (21%) DPU Yield 2.9%2 5.8% 5.8%3 • No U.S. withholding taxes (30%) U.S. Withholding Taxes (0.9%) - - Net Yield – 2.0% 5.8% 5.8% • No Singapore corporate taxes
Slide 35: Tax Structure
Tax Structure Predominantly Supported by Four Pillars i Parent U.S. REIT Structure Sponsor Unitholders Manulife (9.8% limit)3 • Tax transparency – Dividends distributed are deductible 0% Tax • Income shielded by interest expense and depreciation ii U.S. Portfolio Interest Exemption Rule • No 30%1 wi
Slide 36: ESG: External Relations and Human Capital
ESG: External Relations and Human Capital Investment Local Employees Community Community • Organised panel discussions with fund • Incorporated monthly ‘Breakfast on the House’ • Regular engagement with elderly community managers, analysts, regulators and lawyer at to gather feedback from employees
Slide 37: Delivering Stellar Total Shareholder Return in FY 2019
Delivering Stellar Total Shareholder Return in FY 2019 FY2019 Total Shareholder Return (%) 66.0 52.6 51.5 46.2 43.9 42.1 41.0 36.1 35.0 32.0 31.9 31.5 30.8 29.5 28.9 27.7 27.7 25.9 24.3 20.5 19.2 17.4 17.0 15.6 14.1 EAGLEHT 13.8 13.4 13.2 12.3 11.1 SBREIT 10.2 9.9 8.9 ARAUS 8.0 7.8 5.7 2.1 FCT CCT F
Slide 38: MUST Read
MUST Read Coronavirus: What Does It Mean for Investors? Manulife US REIT – Life After Entering the Index Published on 4 Feb 2020 by Manulife Investment Management Published on 5 Feb 2020 by ProButterfly “As we head into February, we see three key macroeconomic themes “In 2019, many S-REITs have anno
Slide 39: 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