Manulife REIT sells Los Angeles office building for 120 million to repay debt | Lianhe Zaobao

Manulife US REIT is selling an office building asset located in Los Angeles, with the proceeds used to reduce trust debt. The trust's management announced on Monday (March 30) before the market opened that it plans to sell the 35-story building named Figueroa for USD 92.5 million (approximately SGD 119.28 million) to the local municipal government's water and electricity department, with proceeds amounting to USD 82.4 million. As of the end of last year, its occupancy rate was 45.6%, and the weighted average lease term was 4.9 years. The sale price is nearly in line with the book value of the property, but will result in a net loss of USD 10.1 million after deducting related expenses. The trust stated that the proceeds from this transaction will be used to repay a loan maturing in 2026 and partially repay a loan maturing in 2027. Management stated that the sale could improve the financial ratios of this real estate investment trust and pave the way for diversification and growth of the portfolio. Further Reading Manulife US REIT's distributable income declines by 31% in the second half of the year, leverage still above regulatory requirements Manulife US REIT's net loss narrows, distributable income per unit is 0.6 cents Management also mentioned that this proposed divestment fulfills the divestment authorization terms obtained by the trust last year. Assuming the transaction is completed in early 2025, the trust's distribution per unit (DPU) will decrease by 2.1% to USD 0.0141. When accounting for debt repayment, the DPU will decrease by 7.8% to USD 0.0133. After the announcement, the trust opened at USD 0.056 on Monday, down 1.75%. Manulife US REIT has long been suffering losses. The trust's holders had inquired with management last December regarding the trust's recovery plan, including the interest charged by the sponsor to the trust and why its asset transformation does not include markets outside the United States Some holders have also suggested that the trust should sell its assets and delist, pointing out that the trust has failed to achieve the performance expected of a real estate investment trust. As part of the capital restructuring plan and the signing of the overall restructuring agreement, the trust has suspended dividend payments to unit holders since 2023