Manulife US REIT NPI rose 27.7% to $34.19m in Q1

Revenue contribution from Penn and Phipps buys boosted earnings.

Manulife US Real Estate Investment Trust’s (Manulife US REIT) net property income (NPI) for Q1 2019 surged 27.7% YoY to $34.19m (US$25.08m) from $26.76m (US$19.65m) in 2018, an announcement revealed. Revenue also jumped 28.5% YoY from $42.43m (US$31.15m) to $54.51m (US$40.03m).

The strong performance was primarily due to revenue contribution from Penn and Phipps properties acquired in June 2018. This also translated to a 23.7% YoY increase of distributable income to $26.35m (US$19.34m) from $21.29m (US$15.63m) in 2018, according to its financial statement.

Distribution per unit (DPU) also edged up 22.8% YoY from $0.017 (US$0.0123) to $0.021 (US$0.0151).

Also read: Manulife US REIT's NPI surged 55.4% to $122.97m in 2018

In Q1 2019, Manulife US REIT enjoyed strong leasing momentum of close to 230,000 sqft by net lettable area (NLA), which increased the portfolio’s occupancy to 97.4% as at 31 March 2019. The increase was mainly attributed to Peachtree in Atlanta, off the back of the thriving environment and high employment growth. The strong leasing demand resulted in positive rental reversions and drove Peachtree’s occupancy from 93.7% to 99.4% QoQ.

Meanwhile in January, Hyundai reportedly renewed its lease of approximately 97,000 sqft by NLA at Michelson. Including this lease, a total of seven leases amounting to 6.1% of the portfolio were signed in Q1 2019. As a result, 56% of the portfolio’s leases by NLA will expire in 2024 and beyond.

According to the firm, its tenant base continues to be well-diversified across multiple trade sectors, with no single tenant contributing more than 7.3% of gross rental income as at 31 March 2019. Approximately 94% of the portfolio’s leases by gross rental income have built-in rental escalations. More than half or 55% are also said to have annual rental escalations averaging about 2.5% per annum, whilst the remaining 39% have midterm or periodic rental increases.

In an effort to ensure the sustainability of the REIT's properties, Manulife US Real Estate Management is undertaking asset enhancement initiatives (AEI) to rejuvenate Figueroa and Exchange at a cost of $10.9m (US$8m) and $16.34m (US$12m), respectively. The AEI works are expected to be completed by Q1 2020.

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