Manulife Us Reit · SGX:BTOU
Manulife Us Reit — Manulife US Real Estate Investment Trust — H1 2024 Earnings Presentation
32 slides from Manulife Us Reit's earnings presentation, Aug 5, 2024
Slide 1: 1H 2024 Financial Results
1H 2024 Financial Results 5 August 2024
Slide 2: Important Notice
Important Notice This presentation shall be read in conjunction with the Manulife US Real Estate Investment Trust (“Manulife US REIT” or “MUST”) financial results announcement dated 5 August 2024 published on SGXNet. This presentation is for information purposes only and does not constitute or form
Slide 3: Content
Content 01 1H 2024 Key Highlights 02 Financial Performance 03 Portfolio Performance 04 Market Overview and Management Strategy 05 Appendix 3 1H 2024 Financial Results
Slide 4: 1H 2024 Key Highlights
1H 2024 01 Key Highlights Exchange, Jersey City
Slide 5: 1H 2024 key highlights
1H 2024 key highlights Key highlights Portfolio Financial • Disposition plan on track with Committed 78.4% Net Property US$42.8 m 3 assets on the market Occupancy 1Q 2024: 78.7% Income -16.7% YoY • Occupancy rate stable QoQ; same-store basis positive leasing momentum Leases ~428k sq ft MAS 56.3% • P
Slide 6: Financial Performance
Financial 02 Performance Peachtree, Atlanta
Slide 7: 1H 2024 financial snapshot
1H 2024 financial snapshot 1H 2024 1H 2023 Change Change 1H YoY change in Adjusted DI mainly due to: (US$’000) (US$’000) (US$’000) (%) (US$7.7m) decrease in gross revenue for same-store properties, mainly due to lower Gross Revenue 86,740 99,568 (12,828) (12.9) rental and recoveries income from hi
Slide 8: Portfolio NPI performance
Portfolio NPI performance 1H 2024 1H 2023 Variance Variance NPI by Tranches NPI by property (US$ m) (US$ m) (US$ m) (%) Centerpointe 2.9 4.8 (1.9) (40) 33% 14% 1% Diablo 3.3 2.9 0.4 14 22.8 Figueroa 0.7 4.5 (3.8) (85) 19.5 Penn 4.3 4.4 (0.1) (3) 16.7 Tranche 1 (Subtotal) 11.2 16.7 (5.5) (33) Capitol
Slide 9: Financial position
Financial position • Utilised cash balance to pay down an additional US$50.0m of debt in Mar 2024 • Exercised prudence in capital spending and maintained strong liquidity position in a highly constrained environment As at As at 30 Jun 2024 31 Dec 2023 Investment Properties (US$’000) 1,426,995 1,411,
Slide 10: Key financial indicators
Key financial indicators • Continued focus on the execution of the Recapitalisation Plan to address upcoming loan maturities As at As at Financial Debt profile(1) as at 30 Jun 2024 (US$ m) Key financial indicators 30 Jun 2024 31 Mar 2024 covenants(1) Trust-level term loan and revolving credit facili
Slide 11: Interest rate management
Interest rate management • 80.2% of loans remain hedged/fixed as at 30 Jun 2024 • MUST targets to maintain optimal hedge ratio of 50 – 80% as it repays debt from proceeds from expected sale of assets in line with the Recapitalisation Plan Every 50 bps increase in SOFR would reduce Proportion of hedg
Slide 12: Portfolio Performance
Portfolio 03 Performance Michelson, Irvine
Slide 13: Positive leasing momentum
Positive leasing momentum • Executed 428k sq ft of leases in 1H (8.5% of NLA) Executed leases across diverse industries; 76% renewals despite challenging conditions New, Information Technology (31%) 13.8% o Long WALE of 7.3 years for leases in 1H contributes to Retail Trade (28%) income stability Ex
Slide 14: Leasing cycle activity
Leasing cycle activity • Maintained ~1.4m sq ft of leasing pipeline o Strategically pursuing leases that create liquidity through accretive structuring o Monitoring occupancy and cashflow of each property and weighing costs and benefits of every lease transaction o Evaluating each lease relative to
Slide 15: Maintains well-staggered expiry profile
Maintains well-staggered expiry profile • Tranche 1 assets(1) account for ~66% of expiries in remainder of 2024 and in 2025 • Lease at Phipps is expected to be renewed (2.2%); expiry at Michelson will be partially backfilled by Hyundai’s expansion (0.8%) • Actively in discussions to further decrease
Slide 16: Diversified tenant base; top 10 tenants with 6.8 years WALE
Diversified tenant base; top 10 tenants with 6.8 years WALE NLA % of • 171 tenants diversified across more than 20 trade Top 10 tenants Sector Property Lease expiry (sq ft) GRI sectors with no tenant contributing more than 1 The William Carter Retail Trade Phipps Jul 2035 209,040 5.1 Co. 5.1% of GRI
Slide 17: Market Overview and Management Strategy
Market Overview and 04 Management Strategy Capitol, Sacramento
Slide 18: MUST's submarkets continue to stabilise
MUST’s submarkets continue to stabilise Leasing volume improved; lease terms stable Net effective rents steady 6.0 75.0 $35 Leasing volume (million sq ft) Lease term (months) 5.0 70.0 65.0 $30 4.0 60.0 3.0 55.0 2.0 $25 50.0 1.0 45.0 0.0 40.0 $20 2019 2020 2021 2022 2023 2024 2019 2020 2021 2022 2023
Slide 19: U.S. economic update
U.S. economic update GDP growth Consumer Price Unemployment Federal funds Index (CPI) rate rate 2.8%(1) 3.0%(2) 4.1%(4) 5.25 – 5.50%(5) U.S. real GDP Inflation moderating; Unemployment rate Policy rate maintained as continued to trend Personal Consumption ticked up; highest since Fed continues to mo
Slide 20: U.S. office: leasing volume picks up in 2Q
U.S. office: leasing volume picks up in 2Q 2Q 2024 U.S. office market statistics Gross leasing activity 80 57.1 million sq ft +14.7% QoQ Quarterly leasing activity (million sq ft.) 70 (Pre-pandemic average excl. coworking) 50.2m sq ft -8.9m sq ft 60 +18.2% YoY Leasing volume Net absorption 50 (+14.7
Slide 21: Strategic roadmap
Strategic roadmap Stabilisation Recovery Growth Prioritise Recapitalisation Plan Portfolio Optimisation Portfolio Repositioning and • Focus on asset dispositions • Implement strategies to Growth while maximising sale improve cash flows and returns • Diversify and expand into proceeds to meet milesto
Slide 22: Stabilisation: In-progress
Stabilisation: In-progress • Dispositions based on submarket liquidity and near-term drag on portfolio • 3 properties on the market for sale • Discussions with off-market buyers on targeted assets Dispositions • Evaluating alternative transaction structures • Executing leases with creative structuri
Slide 23: Thank You
Subscribe for Thank Our Sustainability Pillars Building Resilience You Reducing environmental impact of our properties and supporting the transition to a net zero economy Follow us on People First Prioritising the health and well-being of our employees, tenants and the local community Driving Sustai
Slide 24: Appendix
05 Appendix Plaza, New Jersey
Slide 25: Top questions from investors
Top questions from investors 1. Are there any challenges/obstacles hindering the disposition process? Are you confident of meeting the milestones of the Recapitalisation Plan? The environment for selling office properties in the U.S. remains challenging, with limited debt availability and a reductio
Slide 26: Top questions from investors
Top questions from investors 3. Rent reversion was negative over 1H 2024. What is the outlook for the rest of the year? Rent reversions can vary significantly depending on leases that are signed during the period. Each lease is unique and negotiated taking into consideration market rents, tenant imp
Slide 27: U.S. economy grew 2.8% in 2Q 2024
U.S. economy grew 2.8% in 2Q 2024 • GDP rose at annual rate of 2.8% in 2Q 2024, rebounding from 1.4% growth in 1Q 2024 2.8%(1) • Unemployment rate rose to 4.1% in Jun 2024; healthy job gains of 206k 2Q 2024 GDP growth U.S. GDP growth (%)(1) 4.1%(2) 2.7 1.5 2.3 1.8 2.3 2.7 1.7 2.2 2.9 2.3 5.8 2.5 2.8
Slide 28: U.S. office real estate activities
U.S. office real estate activities • Upon expiration, tenants still cutting footprint by ~10%, but, in 2Q, ~60% of deals completed by 22.1%(1) large tenants (>25k sq ft) chose to expand or maintain same footprint 2Q 2024 vacancy • Sublease vacancy rates continue to fall, down ~32%(1) compared to 1H
Slide 29: Limited supply in MUST's markets
Limited supply in MUST’s markets Gross Last 12 New Net RBA Asking Net Months Projected 12 Properties Vacancy Delivery Delivery Markets (m sq Rent Per Absorption Rent Months Rent Under (%) (‘000 sq Year ft) Sq Ft (‘000 sq ft) Growth(1) Growth(1) (%) Construction ft) (US$) (%) (‘000 sq ft) Downtown Lo
Slide 30: Portfolio overview
Portfolio overview Valuation: US$1.4b(1) NLA: 5.1m sq ft Occupancy: 78.4% WALE: 4.7 years No. of tenants: 171 Figueroa Michelson Peachtree Plaza Exchange Penn Phipps Centerpointe Capitol Diablo Washington, Location Los Angeles Irvine Atlanta Secaucus Jersey City Atlanta Virginia Sacramento Tempe D.C
Slide 31: Strong and committed Sponsor
Strong and committed Sponsor Global Real Estate AUM of US$18.3b Ground rent, 2% Land/Development, 6% • Part of a leading Canada-based financial services group Office, 49% with principal operations in Asia, Canada and the U.S. Retail, 5% Market Value • Operates as John Hancock in the U.S. and as Manu
Slide 32: 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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