The group adds that it seeks to reinstate its initial loan facility agreements by December 2026, again, subject to negotiations with the lender, and amend its bank interest coverage ratio (ICR) in the initial loan facility agreements to align with the Monetary Authority of Singapore’s (MAS) threshold of 1.5 times.
When asked, CFO Mushtaque Ali explained that the REIT’s previous payouts were “close to almost every single dollar” made on the distributable income, or at least 90% of it. “That level of distributions will not remain sustainable given where we are in the cycle of our leasing and where our assets are,” he says.
“At this point, we still have predominantly office assets, which require a lot of capex (capital expenditure) to release and sustain [their] current occupancy levels,” he adds.
Given this, the distributions will resume “from the low end” and gradually progress as the REIT improves its leasing and cash flows.
See also: MPACT results briefing reveals continued challenges in North Asia
“The strategy will benefit as we dispose of assets and replace [them] with other asset classes that require less capex,” he continues.
MUST first announced that it was pausing its distributions for the 1HFY2023 in August 2023 after it breached its financial covenants. The REIT then announced, in February 2024, at its FY2023 results, that it will be halting distributions till Dec 31, 2025 unless it achieves its early reinstatement conditions earlier. These conditions refer to MUST having consolidated total liabilities to consolidated deposited properties of no more than 45% or having a ratio of between 45% to 50% but with an ICR of over 2.5 times with no potential events of default continuing for at least one financial quarter.
The latest update comes after MUST met its divestment targets under the MRA. On March 30, MUST announced that it will be divesting Figueroa to the City of Los Angeles’ Department of Water and Power for US$92.5 million ($119.2 million), which more than covers its divestment target of US$55.6 million.
See also: UI Boustead REIT launches maiden investment in UIB Konan Phase 3 development project
On May 6, MUST said the buyer obtained the “necessary approvals” and signed the purchase and sale agreement in relation to the sale of the building. The REIT added that the divestment is expected to be completed by 2Q2026.
Before the announcement, CEO and CIO John Casasante told the media and analysts that the divestment is “on track” and “moving along” according to the REIT’s expectations. While he cautioned that “anything can happen until a deal’s closed” in the US, the REIT had a “high level of confidence” with how the transaction was progressing. It was also “on track” for a June close.
On the US market, Casasante said the sector was a “mixed bag” but was “promising” on the whole.
He added that properties that have triple net leases — where the tenant pays for all expenses — are currently the “most attractive” and can be found in industrial, retail, multi-family or living sectors, properties that are of interest to the REIT currently.
Yet, when it comes to deals, he was careful to note that the REIT is not making deals that “don’t make sense” although it will chase every deal that comes. “You don’t know the form of the deals they’re going to take if you don’t chase it.”
As at March 31, MUST has US$35.6 million loans remaining in 2026, which are expected to be fully repaid with divestment proceeds. The REIT also aims to repay US$37 million of its debt maturing in 2027 from the proceeds from the sale of Figueroa. The remaining 2027 debt will be managed through divestments, refinancing, equity raising and, or an extension of its debt maturity.
Other plans include acquiring up to US$600 million worth of properties funded by divestments, equity and, or debt. At its extraordinary general meeting (AGM) in December 2025, MUST received unitholders’ approval to expand its acquisition mandate to include properties in the industrial and living sector, as well as retail assets in the US and Canada. The acquisitions will not exceed US$600 million.
Upon the completion of the Figueroa divestment, the REIT will own six properties in the US – namely Michelson in Irvine, California; Exchange in Jersey City, New Jersey; Penn in Washington D.C.; Phipps in Atlanta, Georgia; Centerpointe in Fairfax, Virginia; and Diablo at Tempe, Arizona – with a total net lettable area (NLA) of around 2.8 million sq ft.
Units in MUST closed 0.1 US cents higher or 1.79% up at 5.7 US cents on May 6.
