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Manulife US REIT’s Latest Earnings in 3 Charts

Manulife US Real Estate Investment Trust (SGX: BTOU) is the first pure-play U.S. commercial real estate investment trust (REIT) listed in Asia. It went public in May 2016 at a price of US$0.83. The REIT’s sponsor is Manulife, which is part of a leading Canada-based financial services group.

Today, Manulife US REIT announced its financial results for the first quarter ended 31 March 2019. Let’s look at three important charts from the REIT’s earnings presentation that investors should be aware of.

1. Financial summary

The following chart summarises Manulife US REIT’s latest earnings:Source: Manulife US REIT Q1 2019 earnings presentation

Manulife US REIT’s gross revenue for the reporting quarter improved by 28.5% year-on-year to US$40.0 million mainly due to revenue contribution from Penn and Phipps properties, which were acquired in June 2018. With property operating expenses increasing 29.9% due to the two newly-purchased properties, net property income jumped 27.7% to US$25.1 million.

Distributable income grew 23.7% to US$19.3 million while distribution per unit (DPU) climbed 22.8% to 1.51 US cents, up from 1.23 US cents a year back.

2. Balance sheet strength

Manulife US REIT’s balance sheet strength is shown in the slide below: Source: Manulife US REIT Q1 2019 earnings presentation

As of 31 March 2019, the REIT had a gearing ratio of 37.6% with a weighted average interest rate of 3.3%. Manulife US REIT’s net asset value (NAV) per unit stood at US$0.81 at the end of the quarter. A year ago, the gearing ratio and NAV per unit stood at 34.1% and US$0.81, respectively.

3. Portfolio lease expiry profile and occupancy

The following chart shows Manulife US REIT’s lease expiry profile and occupancy rate:Source: Manulife US REIT Q1 2019 earnings presentation

The majority of leases expire in 2024 and beyond, with the weighted average lease expiry (by net lettable area, NLA) at six years. The overall portfolio occupancy was 97.4%, an improvement from the figure of 95.8% at the end of March 2018 and 96.7% at the end of December 2018.

Jill Smith, chief executive of Manulife US REIT’s manager, said in the earnings report:

“We are delighted to start 2019 on a positive note. MUST enjoyed strong leasing momentum of close to 230,000 sq ft [square feet] by NLA and increasing the portfolio’s occupancy to 97.4% as at 31 March 2019. This increase was mainly attributed to Peachtree in Atlanta, off the back of the thriving environment and high employment growth. The strong leasing demand resulted in positive rental reversions and drove Peachtree’s occupancy from 93.7% to 99.4% QoQ [quarter-on-quarter]. With the easing of interest rates, we should benefit when we refinance Figueroa’s loan due in July 2019. We remain confident in the world’s largest real estate market and will seek accretive acquisitions of Trophy/Class A buildings in desirable markets.”

At Manulife US REIT’s current unit price of US$0.87, it has a price-to-book ratio of 1.07 and a trailing distribution yield of 6.7%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended shares of Manulife US REIT. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.