Manulife Us Reit · SGX:BTOU
Manulife Us Reit — Investor Presentation (January 2025)
19 slides from Manulife Us Reit's investor presentation, January 2025
Slide 1: MUST Insights: U.S. Office Outlook: Key Trends Shaping the Landscape
MUST Insights U.S. Office Outlook: Key Trends Shaping the Landscape January 2025 CAPITAL MARKETS
Slide 2: Key office sector themes
Key office sector themes By the numbers Tenant demand has Net absorption flips Rent momentum nearly returned to positive for first remains broadly 4.8 billion pre-pandemic levels quarter since 2021 positive Existing inventory (s.f.) • Office leasing volume has climbed for • The market experienced it
Slide 3: National re-entry rates reflect dominance of three-day workweek
National re-entry rates reflect dominance of three-day workweek; further gains in office attendance will likely be incremental as policies evolve more slowly Placer.AI weekly average attendance rate Fortune 100 Office Attendance Policies 80% Last “Normal” Datapoint before Holiday Travel Season 75.9%
Slide 4: Leasing volume establishes new post-pandemic high for third consecutive quarter
Leasing volume establishes new post-pandemic high for third consecutive quarter Gross leasing activity 2024 leasing Industry activity (m.s.f.) 80,000,000 Non-coworking Coworking Technology 35.2 Banking & Finance 28.6 70,000,000 Legal Services 17.8 57.1 million s.f. Health 11.0 +4.5% Government 9.9 6
Slide 5: Absorption flips marginally positive as new demand begins to eclipse downsizing
Absorption flips marginally positive as new demand begins to eclipse downsizing 40,000,000 Downsizing rate for major tenants 2021 2022 2023 2024 30,000,000 0% 20,000,000 -5% The average tenant over 25k s.f. 10,000,000 +194,072 s.f. facing an expiration over the last 12 months cut space by Net absorp
Slide 6: Flight to quality continues to drive occupancy gains in newer product
Flight to quality continues to drive occupancy gains in newer product; negative net absorption in older product elevated by conversions and redevelopments Net absorption by building vintage 2015-present 141.6 2010-2014 -10.7 2000s -81.9 Year of delivery 1990s -61.1 1980s -137.8 53 million s.f. of ne
Slide 7: Groundbreakings remain near all-time lows; pipeline has declined by over 75%
Groundbreakings remain near all-time lows; pipeline has declined by over 75% U.S. office groundbreaking volume Pipeline shrinking as deliveries are not replaced by new projects 30 160 25 140 -77% vs. 2019 Total under development (million s.f.) Groundbreakings (million s.f.) 120 20 100 15 Previous hi
Slide 8: Inventory removal volume is increasing by more than 20% annually since 2019
Inventory removal volume is increasing by more than 20% annually since 2019 Office inventory removed Conversion 40,000,000 Non-office Redevelopment Demolition 35,000,000 Total inventory removed (s.f.) 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000,000 0 1995 1996 1997 1998 1999 2000 20
Slide 9: Office market recovery is uneven across geographies
Office market recovery is uneven across geographies Market 2024 Net Total Direct Rent U/C Pipeline Absorption Vacancy (p.s.f.) (% inventory) (% inventory) Atlanta -1.4% 26.7% $33.65 0.3% Miami Austin 0.0% 25.2% $51.92 3.9% Boston -2.1% 22.7% $45.72 0.9% Washington, DC Charlotte 0.1% 22.4% $34.40 0.8
Slide 10: Office market forecast
Office market forecast Tenant demand Supply Vacancy rates Tenant demand has recovered over the last Construction activity remains near historical Availability has declined for two few quarters, with net absorption swinging lows and more office buildings are being consecutive quarters, pointing towar
Slide 11: State of the office capital markets
State of the office capital markets OFFICE SALES BEGIN TO REBOUND A “BOTTOM” HAS FORMED IN THE OFFICE PERFORMANCE BIFURCATION BY QUALITY & Preliminary 2024 FY volume reached $42.2B, which is an MARKET MICRO-LOCATION REMAIN AT ALL TIME HIGHS increase of 8% YoY, marking a “bounce” off the bottom. A co
Slide 12: Office lending activity remains obstacle to liquidity as 75% of trades go all-cash
Office lending activity remains obstacle to liquidity as 75% of institutional trades($50M+) go all-cash / incumbent lender financed in 2024 Office Origination Volume Refinance Activity by Lender Type Transaction Volume: Origination Volume: Money Center $24.4B / 192 Deals $21.8B / 251 Deals Bank $5.0
Slide 13: National office transaction activity | 2024 full-year volume
National office transaction activity | 2024 full-year volume TOTAL Total deal volume $50M+ volume $42.2B SEATTLE <$50M volume BOSTON Office Transactions ~250M TOTAL: $1,158M PHILLY TOTAL: $2,824M Square feet TOTAL: $402M 2000+ SAN FRANCISCO NEW YORK CITY Property Count CHICAGO SILICON $8.4B+ TOTAL:
Slide 14: Window for private capital is closing for top quality product
Window for private capital is closing for top quality product – institutional investor momentum is building, for the “right” product Investment Sales Activity by Primary Buyer Type Select Top Office Buyers 2023-2024 80% Investor Volume Investor Type 3Edgewood $2.2B Private / HNW 70% Norges $2.0B Cro
Slide 15: Office bid activity gains momentum in 2024
Office bid activity gains momentum in 2024 – institutional investors have become larger portion of bidder pool Bid Count Breakdown Bid Count Breakdown by Strategy: 2023 by Strategy: 2024 Overall 2024 Bid Volume Up 72% YoY vs. 2023 $100M+ bid activity up 20% $18 180% YoY (‘24 vs. ’23) 27% $16.9 33% B
Slide 16: How investors are underwriting office buildings
How investors are underwriting office buildings CORE / TROPHY / STABILIZED NON-CORE / SUB-STABILIZED » GOING-IN YIELD: going-in yield higher than borrowing cost » BASIS: entering & exiting substantially below replacement cost » GOING-IN CAP RATE (75% + OCCUPIED) - ACCRETIVE FINANCING: (i.e., “positi
Slide 17: Current national office transaction environment for top quality product
Current national office transaction environment for top quality product Recent Pricing Indicators Recent Pricing Indicators Orange County, CA – Value Add – $37M – Dallas, TX– Core – $121M – Closed 3Q24 Closed 4Q24 • 388k SF 2000 vintage asset w/ 11 years of WALT / 94% occ. • 231k SF 1985 vintage ass
Slide 18: Upcoming loan maturities will catalyze transactions activity
Upcoming loan maturities will catalyze transactions activity; originations remain muted Office Loan maturities ($ billions) Office Loan Originations* ($ billions) $250 $140 Office sector represents 22%of total CRE loan maturities $120 $120 $200 $206 $100 $500B+ in $91 $93 $150 maturities through $80
Slide 19: Thank you
Thank you @)JLL CAPITAL MARKETS
Manulife US REIT — Investor Presentation (January 2025) on 6ix