Manulife US REIT · SGX:BTOU
Manulife US REIT — Q1 2017 Earnings Presentation
38 slides from Manulife US REIT's earnings presentation, May 2, 2017
Slide 1: 1Q2017 Financial Results
1Q2017 Financial Results (1 Jan 2017 to 31 Mar 2017) 2 May 2017
Slide 2: Important Notice
Important Notice This presentation shall be read in conjunction with Manulife US REIT’s financial results announcement dated 2 May 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 offer t
Slide 3: Contents
Contents 1 Key Highlights 2 Financial Highlights 3 Portfolio Performance 4 Moving Forward 5 Appendix 3
Slide 4: Key Highlights
Michelson, Irvine, California Key Highlights Figueroa, Los Angeles, California
Slide 5: Key Highlights for 1Q2017
Key Highlights for 1Q20171 Net Property Income Distribution per Unit US$12.8 million 1.65 US cents outperformed projection2 by 2.7% outperformed projection2 by 8.6% Occupancy Net Rate WALE Gearing Asset Value 97.2% 5.6 34.2% US$0.85 years per Unit (1) 1Q2017 is defined as the period from 1 Jan 2017
Slide 6: Financial Highlights
Financial Highlights Peachtree, Atlanta, Georgia
Slide 7: 1Q2017 DPU Exceeded Projection by 8.6%
1Q2017 DPU Exceeded Projection1 by 8.6% 1Q2017 1Q2017 For period Change Actual Projection1 1 Jan 2017 to 31 Mar 2017 (%) (US$’000) (US$’000) Gross Revenue2 19,833 20,090 (1.3) • Rental and Other Income 14,663 14,513 1.0 • Recoveries Revenue 5,170 5,577 (7.3) Net Property Income 12,763 12,431 2.7 Net
Slide 8: Robust Balance Sheet
Robust Balance Sheet As at 31 Dec 2016 As at 31 Mar 2017 (US$’000) (US$’000) Investment Properties 833,800 834,244 Total Assets 875,223 864,569 Borrowings 294,1861 294,2822 Total Liabilities 328,218 329,859 Net Asset Attributable to 547,005 534,710 Unitholders NAV per Unit (US$) 0.87 0.85 Adjusted N
Slide 9: Stable Capital Structure
Stable Capital Structure 100% Fixed Rate Loans with No Near-term Refinancing As at 4Q2016 As at 1Q2017 Gross Borrowings US$296.0 million US$296.0 million Gearing Ratio1 33.8% 34.2%2 Weighted Average Interest 2.46% p.a. 2.46% p.a. Rate Debt Maturity 3.6 years 3.3 years (weighted average) Interest Cov
Slide 10: Resilient Portfolio with Visible Growth
Resilient Portfolio with Visible Growth Debt Maturity Profile1 99.0%2 of Leases have Rental Escalations 1.0% 13.2% US$ m 150 121.0 Michelson 108.0 Figueroa 100 67.0 Peachtree 50 85.8% Annual rental escalations which average around 3% 0 Mid-term or periodic rental increases Jul 2019 Jul 2020 Jul 2021
Slide 11: Portfolio Performance
Portfolio Performance Michelson, Irvine, California
Slide 12: Diversified Portfolio
Diversified Portfolio Portfolio Summary as at 31 Mar 2017 Total NLA 1,783,948 sq ft WALE by (NLA) 5.6 years Occupancy 97.2 % Land Tenure 100% freehold No. of Tenants 71 Peachtree Peachtree 24.4% 22.4% Figueroa 33.0% Figueroa 37.5% US$834.2m2 US$48.6m1 Portfolio PY2017 NPI Value Michelson Michelson 4
Slide 13: Strategically Located in Key U.S. Cities
Strategically Located in Key U.S. Cities Portfolio Markets Progressing Steadily Rental Cycle, CBD U.S. Markets 1 Rental Cycle, Suburban U.S. Markets 1 (1) Source: JLL Research as at Q1 2017 13
Slide 14: Favourable Lease Profile with WALE of 5.6 Years
Favourable Lease Profile with WALE of 5.6 Years 67.0% of Leases Expire in 2022 and Beyond Lease Expiry Profile as at 31 Mar 2017 (%) 67.0 63.6 14.6 10.9 9.2 8.6 4.8 5.0 5.9 6.5 1.9 2.0 2017 2018 2019 2020 2021 2022 and beyond Cash Rental Income Net Lettable Area 14
Slide 15: Increase in Passing Rents
Increase in Passing Rents Average Property Gross Rent (US$ psf per year) As at 31 Dec 2016 As at 31 Mar 2017 Change Property (US$) (US$) (%) Figueroa 36.78 38.63 5.0 Michelson 49.27 50.20 1.9 Peachtree 31.01 31.53 1.7 Weighted Average 38.84 40.01 3.0 15
Slide 16: 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 10.6% of Income1 Top 10 Tenants by Cash Rental Income (CRI) Administrative Services Engineers/ Leased Area 2.6% Architects Tenant1 Sector % of CRI1 Business Service
Slide 17: 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 Mar 2017 NLA 695,403 sq ft Property Value US$312.9 m Occupancy Rate 98.0% WALE 5.5 Years Lease Expiry Profile as at 31 Mar 2017 (%) 73.1 73.4 12.1 12.4 6.2 6.2
Slide 18: Michelson: State-of-the-Art Trophy Building
Michelson: State-of-the-Art Trophy Building Irvine – Abundant Amenities Available within the Vicinity As at 31 Mar 2017 NLA 532,603 sq ft Property Value US$334.6 m Occupancy Rate 99.1% WALE 5.1 Years Lease Expiry Profile as at 31 Mar 2017 (%) 55.8 50.7 33.4 29.0 11.2 9.7 2.7 2.6 1.3 2.1 0.7 0.8 2017
Slide 19: 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 Mar 2017 NLA 555,942 sq ft Property Value US$186.7 m Occupancy Rate 94.4% WALE 6.0 Years Lease Expiry Profile as at 31 Mar 2017 (%)
Slide 20: Office Market Overview
Office Market Overview Limited Supply and Strong Rental Growth for the Three Cities in 2017 Class A Statistics as at 1Q2017 12 New Gross Net Month Properties RBA1 Vacancy Property Delivery Market Asking Absorption Rent Under (mil sq ft) (%) Name Year Rent (‘000 sq ft) Growth2 Construction (%) (‘000
Slide 21: Moving Forward
Moving Forward Figueroa, Los Angeles, California 21
Slide 22: Opportunities for Growth
Moving Forward U.S.A. Still Poised for Growth, Business Confidence Remains Strong Opportunities for Growth Minimal lease expiries till 2019; Organic: 99.0% of leases have Resilient Portfolio 67.0% of leases expire rental escalations that average in 2022 and beyond around 3% per year Well spread fixe
Slide 23: 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 24: Appendix
Appendix Peachtree, Atlanta, Georgia 24
Slide 25: 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$312.9 million US$334.6 million US$186.7 million US$834.2 million Net Property Income2 US
Slide 26: Figueroa: Dynamic South Park Submarket
Figueroa: Dynamic South Park Submarket has about 4,000 Apartments under Construction1 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 Noki
Slide 27: 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 28: 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 Subway Stations 20 minutes from Atlanta Hart
Slide 29: 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 30: U.S. Outlook
U.S. Outlook Michelson, Irvine, California
Slide 31: Overall U.S. Outlook
Overall U.S. Outlook 1 Steady Economic Growth • GDP growth rate was 2.1%1 in 4Q2016 and 1.6%1 for 2016 • Positive employment with an average of about 178,000 new jobs created per month during 1Q2017 • Unemployment rate in Mar 2017 decreased by 20 bps to 4.5%2 vs. 4.7%2 in Dec 2016 • U.S. likely to r
Slide 32: Greater Downtown Los Angeles – Market Overview
Greater Downtown Los Angeles – Market Overview Strong Demand Supports Rising Rental Rates Class A Statistics as at 1Q2017 Gross Net Net Under Class A asking RBA1 Vacancy Asking Availability Absorption Delivery Construction rents up by 3% (mil sq ft) Rent (‘000 sq ft) (‘000 sq ft) (‘000 sq ft) from p
Slide 33: Irvine, Orange County – Market Overview
Irvine, Orange County – Market Overview Limited New Supply Leading to Strong Rent Growth Class A Statistics as at 1Q2017 RBA1 Gross Net Net Under Last quarter’s Vacancy Asking Availability Absorption Construction negative (mil sq ft) Delivery Rent (‘000 sq ft) (‘000 sq ft) absorption reversed in the
Slide 34: Midtown Atlanta – Market Overview
Midtown Atlanta – Market Overview Demand Far Exceeds Supply, Supporting Forecast for Continued Rent Growth Class A Statistics as at 1Q2017 Gross Net Under Absorption slowed RBA1 Net Vacancy Asking Availability Absorption Construction to nil during the (mil sq ft) Delivery Rent (‘000 sq ft) (‘000 sq
Slide 35: Depth of Top U.S. Office Markets
Depth of Top 151 U.S. Office Markets Seattle-Bellevue Chicago New York Boston • Inventory: 96.4m sq ft • Inventory: 247.2m sq ft • Inventory: 451.2m sq ft • Inventory: 167.5m sq ft • Occupancy: 91.5% • Occupancy: 84.8% • Occupancy: 89.7% • Occupancy: 86.1% • Median Household • Median Household • Med
Slide 36: 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 1.6 9.6 2.6 9.3 2.5 2.4 2.5 8.9 2.3 2.3 1.8 1.7 8.1 1.6 7.4 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017F 2018F 6.2 5.8 -0.3 5.3 5.8 4.7 4
Slide 37: 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 Rate2 (%) 89.4 89.6 89.7 3.0 3.0 89.1 89.1 89.3 88.6 88.7 88.9 2.3 2.4 2.4 2.2 1.6 29.5 0.5 26.2 23.0 22.4
Slide 38: 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