Manulife US REIT · SGX:BTOU
Manulife US REIT — FY2018 Earnings Presentation
34 slides from Manulife US REIT's earnings presentation, Feb 11, 2019
Slide 1: FY 2018 Financial Results
FY 2018 Financial Results (1 Jan 2018 to 31 Dec 2018) 11 February 2019
Slide 2: Important Notice
Important Notice This presentation shall be read in conjunction with Manulife US REIT’s financial results announcement dated 11 February 2019 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 of
Slide 3: Contents
Contents 1 Key Highlights 2 Financial Highlights 3 Portfolio Performance 4 Looking Forward 5 Appendix • About Manulife US REIT • U.S. Updates 3
Slide 4: Key Highlights
Figueroa, Los Angeles, California Key Highlights
Slide 5: Growing from Strength to Strength
Growing from Strength to Strength Acquisitions of Penn and US$ m US cents Phipps for US$387.0 m FY +55.4% FY +3.6% ADJUSTED DPU contributed from 2Q 2018 90.7 6.05 2018 YoY 2018 YoY NPI FY FY 2017 58.4 2017 5.84 FY FY 4 5 16 leases1 signed in FY 2018; 2016 4 30.0 2016 3.55 rental reversions +8.9%2 0
Slide 6: Financial Highlights
Michelson, Irvine, California Financial Highlights
Slide 7: FY 2018 Adjusted DPU Increased 3.6% YoY
FY 2018 Adjusted DPU1 Increased 3.6% YoY 4Q 2018 4Q 2017 Change FY 2018 FY 2017 Change (US$’000) (US$’000) (%) (US$’000) (US$’000) (%) Gross Revenue 40,501 29,264 38.4 144,554 92,040 57.1 Net Property 25,491 18,418 38.4 90,665 58,351 55.4 Income Net Income 20,509 18,943 8.3 64,520 57,964 11.3 Distri
Slide 8: Strong Balance Sheet
Strong Balance Sheet As at 31 Dec 2018 Figueroa, Los Angeles, California (US$’000) Investment Properties 1,738,700 Total Assets 1,802,865 Borrowings 667,2001 Total Liabilities 738,802 Distribution Schedule Net Assets Attributable to 1,064,063 DPU 3.04 US cents Unitholders For period 1 July 2018 to 3
Slide 9: Disciplined and Prudent Capital Management
Disciplined and Prudent Capital Management Gross Borrowings Well-Spread Debt Maturity Profile1 US$670.8 m US$ m 300 Gearing Ratio 250 37.2%2 As at 31 Dec 2018 In advanced talks with 216.5 200 local and foreign banks 95.5 172.0 Penn Weighted Average Interest Rate 150 132.0 110.0 Exchange Figueroa 105
Slide 10: Portfolio Performance
Peachtree, Atlanta, Georgia Portfolio Performance
Slide 11: Minimal Leases Due in 2019; Long WALE of 5.8 Years
Minimal Leases Due in 2019; Long WALE of 5.8 Years Renewed Hyundai’s Lease in Michelson Lease Expiry Profile as at 31 Dec 20181 (%) 51.1% 48.7% Renewed Hyundai’s lease of ~97,000 sq ft in Jan 2019 16.6% 16.7% 8.4% 9.2% 9.6% 8.0% 7.1% 7.3% 5.5% 4.6% 4.6% 2.7% 2019 2020 2021 2022 2023 2024 and beyond
Slide 12: Organic Growth Driven by Rental Reversion and Escalation
Organic Growth Driven by Rental Reversion and Escalation Rental Reversions1 for FY 2018 Leases Signed Positive Rental Reversion 2 16 4.9% of Portfolio by NLA 8.9% Rental Escalations as at 31 Dec 2018 94% of Leases by Gross Rental 6% Income have Rental Escalations Annual Rental Escalations which aver
Slide 13: Well-Diversified Tenant Base
Well-Diversified Tenant Base Gross Rental Income Breakdown No Tenant Contributing more than by Trade Sector 7.5% of Gross Rental Income Accommodation and Food Services, Top 10 Tenants by Gross Rental Income (GRI) 1.0% Other, 2.3% Manufacturing, 1.6% Architectural and Legal, 22.0% Tenant Sector % of
Slide 14: Cap Rates Stable; Portfolio Valuation +2.3%
Cap Rates Stable; Portfolio Valuation +2.3% Increase in Valuation due to Proactive Leasing and Continued Strength of Submarkets Implied Cap Valuation Rates2 Property 31 Dec 30 Jun 6M 31 Dec YoY 31 Dec 2018 31 Dec 2018 2018 2018 Change 2017 Change (US$ per sq ft1) (%) (US$ m) (US$ m) (%) (US$ m) (%)
Slide 15: Limited Supply in Our Cities
Limited Supply in Our Cities Majority of our Properties are 5% - 10% Below Market Rents New 12 Month Gross Net Net Properties 4Q 2018 RBA Vacancy Rent Delivery Asking Rent Absorption Delivery Under Class A Market (mil sq ft) (%) Growth1 Year (US$) (‘000 sq ft) (‘000 sq ft) Construction (%) (‘000 sq
Slide 16: Looking Forward
Plaza, Secaucus, New Jersey Looking Forward
Slide 17: Poised for Growth
Poised for Growth 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 Macro Environment Micro Environment 1 U.S. economy remained strong despite 1 Continue to drive leasing and asset global slowd
Slide 18: For enquiries, please contact
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 8 Cross Street, #16-03 Manulife Tower, Singapore 048424 http://www.manulifeusreit.sg
Slide 19: Appendix: About Manulife US REIT
Exchange, Jersey City, New Jersey Appendix: About Manulife US REIT
Slide 20: Reputable Sponsor with Proven Track Record in Property Management
Reputable Sponsor with Proven Track Record in Property Management Vertically-Integrated Real Estate Platform: Global Real Estate AUM of US$17.8 b Vancouver Sponsor Calgary Kitchener/Waterloo Edmonton Toronto Canada Ottawa US$7.0 B Montreal AUM AUM Halifax 72% of Real Estate in Office US$863 B U.S. A
Slide 21: Key Milestones since IPO
Key Milestones since IPO 20 May 2016 FY 2016 1H 2017 FY 2017 1H 2018 FY 2018 Listed on SGX DPU exceeded DPU exceeded Restated DPU Adjusted DPU Adjusted DPU forecast by projection by exceeded increased increased 4.8% 8.0% projection by 1.8% by 2.4% YoY by 3.6% YoY 2016 Feb Jun 2017 Aug Sep Feb Apr 20
Slide 22: Superior Quality of Trophy and Class A Assets
Superior Quality of Trophy and Class A Assets Exchange, Figueroa, Jersey City Los Angeles Plaza, Secaucus Peachtree, Atlanta Penn, Michelson, Washington, D.C. Irvine Phipps, Atlanta Click to watch videos! As at 31 Dec 2018 Figueroa Michelson Peachtree Plaza Exchange Penn Phipps Portfolio NLA (sq ft)
Slide 23: Located in Cities with Strong Growth Factors and Live, Work, Play Environment
Located in Cities with Strong Growth Factors and Peachtree, Atlanta, Georgia Live, Work, Play Environment Downtown Los Angeles Irvine Atlanta • Surrounded by entertainment • Considered the “CBD” of Orange • International Gateway - venues such as Staples Center, County Headquarters for 15 Fortune 500
Slide 24: Located in Cities with Strong Growth Factors and Live, Work, Play Environment
Located in Cities with Strong Growth Factors and Peachtree, Atlanta, Georgia Live, Work, Play Environment Secaucus Jersey City Washington, D.C. • Nation’s capital, government hub, • Affordable office and residential • Outstanding location across the heart of CBD alternative to Manhattan attracts Hud
Slide 25: Investment Strategy
Investment Strategy Vast Choice of Yield-Accretive Assets in the World’s Largest Real Estate Market Investment Criteria Long WALE High Occupancy Live, Work, Play Environment Strong Economic Fundamentals Notes: Trophy/ States MUST is in are highlighted in green Class A Assets Class A cap rates highli
Slide 26: Ongoing Asset Enhancement Initiatives
Ongoing Asset Enhancement Initiatives Artist’s Impression Artist’s Impression Figueroa Exchange Lobby Old Lobby Gantries Security Desk New Café LED Lighting Old Budget: Up to US$8 m Budget: Up to US$12 m Expected to complete in 4Q 2019 Expected to complete in 4Q 2019/1Q 2020 26
Slide 27: Engaging Communities
Engaging Communities Investors Media and Analysts Manulife US REIT Day for Nominee Investors U.S. Thought Leadership Programme Local Tenants Community Volunteers at St. Luke’s Hospital Tenant Appreciation: “Ice Cream Social” 27
Slide 28: Awards and Sustainability
Awards and Sustainability IR Magazine Awards – South East Asia 2018 Winner: Second Place: • Best Investor Relations Officer (Small to Mid-cap) • Best Overall Investor Relations (Small to Mid-cap) • Best Investor Event • Best in Country – Singapore • Best in Sector – Real Estate Governance Index for
Slide 29: Tax Structure
Tax Structure1 Predominantly Supported by Four Pillars Sponsor Unitholders Parent US REIT Structure Manulife (9.8% limit)4 1 • Tax transparency – Dividends distributed are deductible 0% Tax • Income shielded by interest expense and depreciation US Portfolio Interest Exemption Rule 2 • No 30%2 withho
Slide 30: Appendix: U.S. Updates
Phipps, Atlanta, Georgia Appendix: U.S. Updates
Slide 31: Steady Economic Growth
Overall U.S. Outlook Steady Economic Growth +3.4% 2.3% 3.9% 762k 312k 3Q 20181 GDP growth 2017 GDP Growth1 Unemployment Jobs created Non-farm jobs added increased2 4Q 20182 in December2 • Economy maintains momentum and expected to continue in 2019 • Strong consumer confidence continues; driven in pa
Slide 32: 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 (YoY %)1 U.S. Unemployment (%)2 9.9 2.5 9.3 3.4 8.5 2.7 7.9 2.4 2.6 2.2 2.3 7.3 1.8 1.6 1.7 1.6 6.7 -0.3 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 5.0 5.6 Q3 5
Slide 33: 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 Employment (YoY %)1 and Occupancy Rate (%)2 30.0 91 90.1 90.2 2.4 2.5 2.5 2.4 89.8 89.8 89.8 89.7 89.7 89.7 2.3 1.9 1.8 2.1 25.0 90 1.3 20.4 20
Slide 34: 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