Summarise

[SINGAPORE] Manulife US Reit (MUST) is proposing the sale of its Figueroa office property in Los Angeles to trim its debt.

It plans to sell the 35-storey building to the City of Los Angeles &ndash a municipal corporation &ndash for US$92.5 million, with net proceeds of US$82.4 million, its manager said in a statement on Monday (Mar 30).

The sale is priced at the book value of US$92.5 million, and will see a net loss of about US$10.1 million after expenses.

MUST&rsquo s manager said the proceeds will go to the early repayment of a loan due in 2026 and partial repayment of loans due in 2027. It will also improve the financial ratios of the real estate investment trust (Reit) and &ldquo pave the way for portfolio diversification and growth&rdquo , it added.

Long-suffering unitholders of MUST in December grilled its manager on its recovery plan, including the interest the sponsor is charging the Reit and why its asset pivot does not include markets beyond the US.

Some unitholders also aired a proposed asset sale and delisting of the Reit, saying that it was not achieving the deliverables of a Reit.

The proposed divestment of Figueroa will fulfil the terms of the disposition mandate obtained by MUST&rsquo s manager last year, as detailed in a circular, it said.

With the sale of Figueroa, the distribution per unit (DPU) of MUST would have dropped 2.1 per cent to US$0.0141 if the transaction had been completed at the start of 2025. DPU would have fallen 7.8 per cent to US$0.0133 including the debt repayments.

Distributions to unitholders have been suspended since 2023 as part of recapitalisation plans and the signing of a master restructuring agreement.

While the sale is set to be fully completed in the second quarter of 2026, MUST reminded investors that the purchase and sale agreement has not been signed by the buyer and there is no assurance that it will be executed.

The property, with a 45.6 per cent occupancy and a weighted average lease expiry of 4.9 years by net lettable area, is set to be bought by the Los Angeles Department of Water and Power, added MUST.

Units of MUST : BTOU -1.75% closed flat at US$0.057 on Friday.

 

Over-geared because of a series of untimely acquisitions, Manulife US REIT (MUST), the first US office REIT to be listed in Asia, has been struggling to get back on its feet. Since its IPO at 83 US cents, the REIT is a shadow of its former self at just 6 US cents at its last close on March 19.

 

From 2017 to 2019, dizzy on flat-bottomed interest rates, MUST expanded from three assets at IPO to 12 by end-2021. The strain became evident when rates surged, and the US office market slumped, forcing the REIT to suspend distributions since its 1HFY2023 after breaching financial covenants. The REIT had no choice but to lighten up by selling its properties to meet conditions imposed by its lenders. Unfortunately, it is being forced to do so as a distress seller.

 

In contrast, another Singapore-listed US office REIT, Prime US REIT, which reduced distributions to just 10% in 2HFY2023, has, since 2HFY2025, raised the distributable income payout ratio to 50%, and subsequently to 65%.

 

Keppel Pacific Oak US REIT (KORE), which also suspended distributions in 2HFY2023, announced an early resumption of distributions. MUST remains the only one of the three still withholding distributions entirely.

 

The REIT&rsquo s valuations are not helping either. As of December 2025, portfolio valuations fell by 1.6% y-o-y to US$913.8 million ($1.1 billion), although four out of seven assets saw rebounds. MUST&rsquo s portfolio weighted-average discount rates fell by 12 basis points (bps) and weighted terminal capitalisation rates rose by 4 bps, which reflects &ldquo signs of stabilisation&rdquo , says MUST&rsquo s CEO and CIO John Casasante. But signs are not distributions.

 

As of Dec 1, 2025, MUST remained US$55.6 million short of its end-2025 divestment target despite divesting Capitol, Plaza and Peachtree in 2024 and 2025.

 

At the FY2025 results briefing on March 19, Casasante declined to comment on the potential disposal of Figueroa, citing an ongoing transaction. Figueroa, which was valued at US$98.1 million as of December 2025, will more than cover MUST&rsquo s divestment target.

 

Notably, MUST had originally been scheduled to announce its results on the morning of Feb 26, but delayed the announcement till March 18, citing &ldquo negotiations on the sale of an asset&rdquo . Under the disposition mandate, the sale of an asset requires a valuation no earlier than two months before the entry into the purchase and sale agreement. Should the disposition take place, the REIT will require a new valuation for the asset.

 

That said, investors will be wary of what that valuation will look like. As one investor noted during the briefing, MUST&rsquo s assets have consistently been revalued downwards to the point where its new transacted price always falls within 10%.

 

Casasante acknowledged as much, saying the REIT was viewed as &ldquo somewhat of a stressed seller&rdquo . As such, the spread between valuation and spot may be greater. However, with fundamentals improving, the spread should narrow.

 

MUST&rsquo s Growth and Value Plan, approved by unitholders in December 2025, broadens its investment mandate to industrial, living and retail assets in the US and Canada from Jan 1. On paper, it is the REIT&rsquo s most substantive strategic shift in practice, executing it requires completing further asset sales, recycling the proceeds into acquisitions, and doing so while managing a leverage ratio that still sits at 58%, well above the Monetary Authority of Singapore&rsquo s 50% guideline.

 

The path back to distributions is clear in theory: sell assets, repay debt, bring leverage to below 50%, and hold the ICR at 1.5 times for one quarter. But for unitholders who bought in at 83 US cents and are now sitting on 6 US cents, the distance between the two has never felt more significant.

No distribution has been declared, in line with its recapitalisation plans and master restructuring agreement

 

[SINGAPORE] Manulife US Real Estate Investment Trust (Reit), or   MUST   : BTOU -1.64%, on Wednesday (Mar 18) posted a distributable income of US$10.6 million for the second half ended Dec 31, 2025, down 31.1 per cent year on year. 

 

This translates to a distributable income per unit (DIPU) of US$0.006, from US$0.0087 a year earlier.

 

No distribution was declared for H2 FY2025. 

 

Distributions to unitholders of MUST have been suspended since 2023 as part of recapitalisation plans and the signing of a master restructuring agreement (MRA). 

 

Following concessions granted under the agreement, lenders have required the trust to keep half-yearly payouts on hold until it meets reinstatement conditions and until relief measures tied to its interest coverage ratio lapse. 

 

Revenue for H2 FY2025 fell 33.8 per cent year on year to US$53.5 million.

 

The Reit manager attributed the drop in distributable income to lower net property income (NPI) and lower interest income, although these were &ldquo partially offset&rdquo by lower finance expenses and lower base fees.

 

NPI slipped to US$23 million, down 37.9 per cent from US$37.1 million in H2 FY2024.

 

The manager also cited asset divestments between October 2024 and May 2025, as well as weaker occupancy and lower income across several properties, as factors behind the latest half-year&rsquo s lower revenue. 

 

Manulife US Reit proposes strategic pivot to retail, living, industrial sectors

 

On a same-store basis, excluding the asset divestments, revenue would have fallen 9.6 per cent and NPI by 15.6 per cent. 

 

Full-year performance

For the full year, MUST&rsquo s revenue fell 32 per cent to US$113.9 million, from US$167.6 million in FY2024. NPI decreased 33.4 per cent to US$53.2 million from US$79.9 million. 

 

This brought FY2025 distributable income to US$25.5 million, down 33.2 per cent from US$38.3 million a year earlier. DIPU came in at US$0.0144, down from FY2024&rsquo s US$0.0215. 

 

As at Dec 31, 2025, MUST&rsquo s aggregate leverage stood at 58 per cent, up from 56.2 per cent in the third quarter. 

 

While this is above the 50 per cent regulatory limit set by the Monetary Authority of Singapore, the manager said there has been &ldquo no breach&rdquo of the threshold, as the increase was due to factors beyond its control, such as asset value declines. 

 

The manager added that lenders have extended covenant relief, including a higher gearing cap of 80 per cent until Jun 30, 2026, and a lower interest coverage ratio of 1.5 times till the end of the year. 

 

The Reit&rsquo s weighted average debt maturity stood at 2.3 years as at Dec 31, 2025, with an unencumbered gearing ratio of 60.8 per cent and an interest coverage ratio of 1.7 times. 

 

Its weighted average interest rate was 4.6 per cent. Including the sponsor-lender loan exit premium, the figure would have been 5.3 per cent. 

 

Portfolio occupancy stood at 67.7 per cent, down from 68.2 per cent three months earlier. Portfolio value dipped 1.6 per cent to US$913.8 million, though the manager said four of seven assets recorded valuation improvements. 

 

John Casasante, chief executive and chief investment officer of the manager, said the Reit&rsquo s priorities following unitholders&rsquo approval of its growth and value-up plan are to meet its minimum asset sale target by June, cut leverage, and strengthen cash flow and its credit profile by diversifying into industrial, living and retail assets. 

 

This will position MUST for &ldquo sustainable long-term growth&rdquo , he added. 

 

Unitholders had in December 2025 approved a broadened investment mandate for the Reit, allowing it to expand beyond the office sector and outside of the US. 

 

This followed questions from unitholders on the manager&rsquo s recovery plan, including probes into the interest that the sponsor was charging and why its asset pivot did not include markets beyond the US.