Manulife Us Reit · SGX:BTOU
Manulife Us Reit — FY2024 Earnings Presentation
37 slides from Manulife Us Reit's earnings presentation, Feb 20, 2025
Slide 1: FY 2024 Financial Results
FY 2024 Financial Results 20 February 2025
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 20 February 2025 published on SGXNet. This presentation is for information purposes only and does not constitute or fo
Slide 3: Content
Content 01 Highlights 02 Financial Performance 03 Portfolio Performance 04 Market Overview 05 Strategy & Outlook 06 Appendix 3 FY 2024 Financial Results
Slide 4: Highlights
01 Highlights Exchange, Jersey City
Slide 5: Key milestones achieved
Key milestones achieved Leadership team took the helm since 30 Jun 2024 focusing on stabilisation and recovery of MUST Divestment of 400 Capitol completed; proceeds plus ~US$21m cash from balance sheet used to pay off 2025 debts Divestment of Plaza announced on 20 Feb 2025; net consideration of ~US$
Slide 6: FY 2024 Highlights
FY 2024 Highlights 73.6% ~611k sq ft Occupancy Leases Executed 3Q 2024: 75.4% (on same-store basis) 13.4% of portfolio NLA (excludes Capitol) 5.0 years US$1,137.2m Portfolio Portfolio WALE Portfolio Valuation 3Q 2024: 5.1 years -9.3% from 31 Dec 2023 US$71.4m US$38.3m Same-store Net Property Income
Slide 7: Financial Performance
Financial 02 Performance Peachtree, Atlanta
Slide 8: FY 2024 financial snapshot
FY 2024 financial snapshot FY 2024 FY 2023 Change Change FY YoY change in Adjusted DI mainly due to: (US$’000) (US$’000) (US$’000) (%) (US$26.8m) decrease in gross revenue for same- Gross Revenue 167,582 208,025 (40,443) (19.4) store properties, mainly due to lower rental and recoveries income fro
Slide 9: Same-store portfolio NPI performance
Same-store portfolio NPI performance NPI (US$ m) Variance Variance Property NPI decline largely driven by: FY 2024 FY 2023 (US$ m) (%) • TCW’s non-renewal in Figueroa (-189k sq ft) Tranche 1 23.0 31.1 (8.1) (26) • Financial tenant’s vacate in Exchange (-73k Centerpointe 5.6 8.5 (2.9) (34) sq ft) and
Slide 10: Financial position
Financial position • Utilised cash balance and net proceeds from Capitol divestment to pay down US$130.7m of loans in Nov 2024, with no remaining debt due in 2025 • Exercised prudence in capital spending and maintained strong liquidity position in a highly constrained environment As at As at 31 Dec
Slide 11: Key financial indicators
Key financial indicators • No further debt due in 2025 with the debt repayment in Nov 2024 As at Pro forma Financial Debt profile(1) as at 31 Dec 2024 (US$ m) Key financial indicators 31 Dec 2024 31 Dec 2024(2) covenants(1) Trust-level term loan Unencumbered gearing ratio(3) 64.2% 63.2% 80.0% Sponso
Slide 12: Interest rate management
Interest rate management • 69.4% of loans remain hedged/fixed as at 31 Dec 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 annual Proportion
Slide 13: Portfolio Performance
Portfolio 03 Performance Michelson, Irvine
Slide 14: Leasing performance
Leasing performance • Signed 611k sq ft of leases in FY 2024 (13.4% of NLA), of Executed leases across diverse industries which 82.5% were renewals • In 4Q, notable leases include: 4Q 2024 o New leases by finance and insurance firms at Phipps and Finance and Insurance (41%) New, 44.3% Figueroa (11k
Slide 15: Strategic leasing to optimise capital
Strategic leasing to optimise capital Leverage our Pursue accretive Proactive marketing Respond to all new competitive advantage, leases with low TIs, continues to renewal and avoid commodity and those that generate >1m sq ft expansion leasing, structure leases generate higher of leasing pipeline op
Slide 16: Lease expiry profile
Lease expiry profile • 16.6% of leases expiring in 2025 (based on NLA), of which 7.1% are 31 Dec 2024 expiries (majority are in Tranche 1 asset Diablo where the tenants have vacated on 1 Jan 2025) • Remaining expiries are concentrated in the second half of 2025 Expiry by NLA Tranche(1) Property Leas
Slide 17: Diversified tenant base; top 10 tenants with 5.4 years WALE
Diversified tenant base; top 10 tenants with 5.4 years WALE 129 tenants diversified across >20 trade sectors; no tenant Top 10 tenants Sector Property Lease expiry NLA % of (sq ft) GRI contributing more than 6.0% of GRI The William Carter 1 Retail Trade Phipps Jul 2035 209,040 6.0 Co. Trade sector b
Slide 18: Valuations reflect green shoots in some of MUST’s submarkets
Valuations reflect green shoots in some of MUST’s submarkets • Higher average discount (+46 bps) and terminal capitalisation rates (+27 bps) vs. Dec 2023 reflecting market (low office utilisation, soft leasing demand) and property level risks (lower renewal rate, higher leasing costs) in certain sub
Slide 19: Market Overview
Market 04 Overview Centerpointe, Virginia
Slide 20: U.S. economic indicators
U.S. economic indicators MUST continues to monitor policies from the new administration and their potential impacts: return-to-office mandate, tariffs, immigration policies, tax policies etc. GDP growth (%)(1) Unemployment Rate (%)(2) Consumer Price Index (%)(3) Fed Funds Rate(%)(5) 6.1 3.5 3.4 5.50
Slide 21: U.S. office: leasing activity picks up on average
U.S. office: leasing activity picks up on average 4Q 2024 U.S. office market statistics Gross leasing activity 80 57.1 million sq ft +5.0% QoQ Quarterly leasing activity (million sq ft.) 70 (Pre-pandemic average excl. coworking) 52.9m sq ft +0.3m sq ft 60 +14.1% YoY Leasing volume Net absorption 50
Slide 22: MUST’s submarkets: leasing indicators stabilising
MUST’s submarkets: leasing indicators stabilising Leasing volume picked up Rents improved 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 2024 Leasing Volume
Slide 23: Uneven recovery across MUST’s submarkets
Uneven recovery across MUST’s submarkets Atlanta (Buckhead & Midtown): Orange County (Irvine): Expect strong office demand and Irvine saw a pickup in leasing activity uptick in large transactions (average in 2024. Leases were dominated by Miami deal size is up 9.8% QoQ) to continue renewals and corr
Slide 24: Strategy & Outlook
Strategy 05 & Outlook Michelson, Irvine
Slide 25: Strategic roadmap
Strategic roadmap Stabilisation Recovery Growth Prioritise Recapitalisation Plan Portfolio Optimisation Portfolio Repositioning and Growth • Focus on asset dispositions • Implement strategies to while maximising sale improve cash flows and returns • Diversify into other asset types proceeds to prior
Slide 26: Stabilisation in progress
Stabilisation in progress ✓ Achieved 2 asset sales ✓ Fully repaid 2025 debts ✓ Paying down 2026 debts using Plaza’s net proceeds in 1Q 2025 ✓ Prudent capital expenditure and strategic leasing strategy results in cash balance of US$65 million ✓ In divestment discussions on additional properties 400 C
Slide 27: Next steps to Recovery
Next steps to Recovery Asset Pay down ~US$204m loans Improve financial metrics disposals due in 2026 and liquidity What would help drive a faster recovery? • Acceleration of the broader recovery in U.S. office sector • Return of institutional investors to U.S. office sector • Increased availability
Slide 28: Strategy for Growth
Strategy for Growth Diversify and reshape portfolio • Pursue other real estate sectors, alternative real estate investments and creative deal structures to maximise value • Diversify income and generate sustainable cashflows Diversify and reshape Low capital Focus on low capital deals, attractive ri
Slide 29: Thank You
Subscribe for Thank A qr code on a white background Description automatically generated Our Sustainability Pillars You Building Resilience Reducing environmental impact of our properties and supporting the transition to a net zero economy Follow us on People First Prioritising the health and well-be
Slide 30: Appendix
06 Appendix Phipps, Atlanta
Slide 31: 2H 2024 financial snapshot
2H 2024 financial snapshot 2H 2024 2H 2023 Change Change 2H YoY change in DI mainly due to: (US$’000) (US$’000) (US$’000) (%) (US$20.1m) decrease in gross revenue for same- store properties, mainly due to lower rental and Gross Revenue 80,842 108,457 (27,615) (25.5) recoveries income from higher v
Slide 32: 2024 ESG highlights
2024 ESG highlights Building Resilience People First Driving Sustainable Growth GRESB real estate Nurturing our talent Green financing assessment 44 hours per employee US$550.8m green/sustainability-linked 5 Star, score of 90 (Target: 30 hours per employee) loans (73.9% of total borrowings) 8th out
Slide 33: U.S. office real estate activities
U.S. office real estate activities • Tenants still cutting footprint by ~8%; ~60% of large tenants (>25k sq ft) chose to expand or 19.6%(1) maintain same footprint1 4Q 2024 vacancy • Sublease additions continue to fall (tenants > 20k sq ft), down ~25% year over year1 U.S. office employment YoY (%)(2
Slide 34: Limited supply in MUST’s markets
Limited supply in MUST’s markets Gross Last 12 New Net RBA Asking Net Months Projected 12 Properties Vacancy Delivery Delivery Markets (m sq Rent Per Absorption Rent Months Rent Under (%) (‘000 sq Year ft) Sq Ft (‘000 sq ft) Growth(1) Growth(1) (%) Construction ft) (US$) (%) (‘000 sq ft)(2) Downtown
Slide 35: Portfolio overview
Portfolio overview Valuation: US$1.1b NLA: 4.6m sq ft Occupancy: 73.6% WALE: 5.0 years No. of tenants: 129 Figueroa Michelson Peachtree Plaza(2) Exchange Penn Phipps Centerpointe Diablo Washington, Location Los Angeles Irvine Atlanta Secaucus Jersey City Atlanta Virginia Tempe D.C. Property Type Cla
Slide 36: Strong and committed Sponsor
Strong and committed Sponsor Global Real Estate AUM of US$18.9b(1) Other Assets, 3% Office, 47% • Part of a leading Canada-based financial services group Ground rent, 2% with principal operations in Asia, Canada and the U.S. Land/Development, 2% Market Retail, 4% Value • Operates as John Hancock in
Slide 37: 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