As at Dec 31, 2022, MUST's net asset value was US$1.02 billion. As such, the divestment requires unitholders' approval.
Phipps was valued at US$210 million as at Dec 31, 2022, at a capitalisation rate of 5.25%. In 2018, MUST acquired Phipps from its sponsor for US$205 million. Its net property income (NPI) in FY2022 was US$12.2 million, up from US$11.9 million in FY2021, and contributed 10.8% to MUST's total NPI in FY2022.
If MUST manages to divest Phipps for around US$190 million to US$200 million, it would take the REIT's aggregate leverage down to a more manageable 43% or thereabouts.
The manager also announced that the exclusivity period with Mirae Asset Global Investments has lapsed.
See also: Potential rescue by acquirer Mirae could dilute Manulife US REIT's DPU; DBS halves TP to 24 US cents
In November 2022, MUST's manager announced a strategic review by Citigroup. On Dec 30, 2022, MUST's manager announced that its portfolio valuation had declined by 10%, taking its aggregate leverage to around 49%. Its options to "cure" this included equity fund raising, divestments, and a new partnership.
Most market watchers believed that divestments were the best way to realise value, followed by a rights issue, where all unitholders would have equal rights.
As at 9.34am, units in Manulife US REIT are trading 0.3 US cents lower, or 1.71% down, at 17.2 US cents. Its units reached an all-time low of 13.3 US cents on May 16.
