Manulife US REIT (MUST) has secured approval from lenders to extend the deadline for the disposal of assets by six months to Dec 31, 2025, and the use of US$25 million ($32.17 million) to partially pay down debts due in the next three years.
The US$25 million of cash is in addition to proceeds from the latest sale of Peachtree in Atlanta. The REIT sold Peachtree in Atlanta Georgia, a Class A office building, to an unrelated third party on May 11 for US$133.8 million.
This extension of the deadline gives MUST the ability to dispose of up to four Tranche 1 and/or Tranche 2 assets to third-party buyers to raise minimum net sale proceeds of US$328.7 million by June 30, 2025.
The REIT’s master restructuring agreement (MRA) was first introduced ahead of an EGM in December 2023, where MUST divided its assets into three tranches — Tranche 1, 2 and 3.
Tranche 1 assets are prioritised for divestment. These are Centerpointe, Diablo, Figueroa and Penn. Half of MUST’s Tranche 2 assets — Capitol, Exchange, Peachtree and Plaza — have already been sold. Under the terms of its MRA, “not more than two” assets from Tranche 2 may be sold to satisfy the cumulative net sale proceeds. This means MUST is likely to focus on shedding its Tranche 1 assets next.
The deadline extension allows for continued engagement with stakeholders and potential buyers in current market conditions, which MUST says have recently been challenging, and this extension is conditional on the completion of the sale of Peachtree.
Based on the cumulative proceeds from the sales of Capitol, Plaza and Peachtree, MUST will
have achieved about 82% of the net proceeds target, or US$60 million short of the net proceeds target.
MUST’s sponsor, Manulife, says that it will not receive any repayment at this stage in a show of support towards the REITs restructuring.
1QFY2025 business updates
MUST reported a portfolio occupancy of 69.9% for the 1QFY2025 ended March 31, 2025. Its weighted average lease expiry stood at 4.8 years, and rent reversion stood at 8.9%.
See also: Mapletree Industrial Trust sells three properties to Brookfield for $535.3 mil
The REIT’s occupancy level of about 70% is largely due to lease expiries at Diablo, offset by new leases signed at Phipps and Certerpointe.
As at end March, MUST’s bank interest coverage ratio is 2.0 times.
Units in Manulife US REIT closed 0.1 US cents higher or 1.639% higher at 6.2 US cents on May 23.
