Manulife US REIT mulls halting half-yearly distribution until 2025 under recapitalisation plan

The plan aims to address its breach of financial covenants.

SGX-listed Manulife US REIT (MUST) has unveiled its recapitalisation plan, which includes halting half-yearly distribution until 2025, to address its breach of financial covenants.

In a bourse filing, the REIT said the plan will also provide “immediate liquidity and more time for MUST to strengthen its portfolio.”

In 1H23, MUST’s portfolio valuations declined by 14.6% to US$1.6b, resulting in the REIT breaching a financial covenant in its existing loan facilities requiring the percentage of its consolidated total unencumbered debt to consolidated total unencumbered assets to be not more than 60%.

Apart from the halting of half-yearly distribution until 2025, MUST also plans to divest Park Place for US98.7m to Manufacturers Life Insurance Company, the REIT’s sponsor.

In addition, the sponsor or an affiliate (sponsor-lender) will grant a six-year unsecured loan of US$137m to the REIT

“The sponsor-lender loan will carry an interest rate of 7.25%, paid quarterly, with an exit premium of 21.16% upon maturity,” the REIT said.

The REIT also plans to raise aggregate net sale proceeds of at least US$328.7m through asset disposition.

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