Manulife US Reit H2 FY2025 distributable income down 31%

[SINGAPORE] Manulife US Real Estate Investment Trust (Reit), or MUST , on Wednesday (Mar 18) posted a distributable income of US$10.6 million for the second half ended Dec 31, 2025, down 31.1 per cent year on year.

This translates to a distributable income per unit (DIPU) of US$0.006, from US$0.0087 a year earlier.

No distribution was declared for H2 FY2025.

Distributions to unitholders of MUST have been suspended since 2023 as part of recapitalisation plans and the signing of a master restructuring agreement (MRA).

Following concessions granted under the agreement, lenders have required the trust to keep half-yearly payouts on hold until it meets reinstatement conditions and until relief measures tied to its interest coverage ratio lapse. 

Revenue for H2 FY2025 fell 33.8 per cent year on year to US$53.5 million.

The Reit manager attributed the drop in distributable income to lower net property income (NPI) and lower interest income, although these were “partially offset” by lower finance expenses and lower base fees.

NPI slipped to US$23 million, down 37.9 per cent from US$37.1 million in H2 FY2024.

The manager also cited asset divestments between October 2024 and May 2025, as well as weaker occupancy and lower income across several properties, as factors behind the latest half-year’s lower revenue.

On a same-store basis, excluding the asset divestments, revenue would have fallen 9.6 per cent and NPI by 15.6 per cent. 

Full-year performance

For the full year, MUST’s revenue fell 32 per cent to US$113.9 million, from US$167.6 million in FY2024. NPI decreased 33.4 per cent to US$53.2 million from US$79.9 million.

This brought FY2025 distributable income to US$25.5 million, down 33.2 per cent from US$38.3 million a year earlier. DIPU came in at US$0.0144, down from FY2024’s US$0.0215.

As at Dec 31, 2025, MUST’s aggregate leverage stood at 58 per cent, up from 56.2 per cent in the third quarter.

While this is above the 50 per cent regulatory limit set by the Monetary Authority of Singapore, the manager said there has been “no breach” of the threshold, as the increase was due to factors beyond its control, such as asset value declines. 

The manager added that lenders have extended covenant relief, including a higher gearing cap of 80 per cent until Jun 30, 2026, and a lower interest coverage ratio of 1.5 times till the end of the year. 

The Reit’s weighted average debt maturity stood at 2.3 years as at Dec 31, 2025, with an unencumbered gearing ratio of 60.8 per cent and an interest coverage ratio of 1.7 times. 

Its weighted average interest rate was 4.6 per cent. Including the sponsor-lender loan exit premium, the figure would have been 5.3 per cent. 

Portfolio occupancy stood at 67.7 per cent, down from 68.2 per cent three months earlier. Portfolio value dipped 1.6 per cent to US$913.8 million, though the manager said four of seven assets recorded valuation improvements. 

John Casasante, chief executive and chief investment officer of the manager, said the Reit’s priorities following unitholders’ approval of its growth and value-up plan are to meet its minimum asset sale target by June, cut leverage, and strengthen cash flow and its credit profile by diversifying into industrial, living and retail assets. 

This will position MUST for “sustainable long-term growth”, he added. 

Unitholders had in December 2025 approved a broadened investment mandate for the Reit, allowing it to expand beyond the office sector and outside of the US.

This followed questions from unitholders on the manager’s recovery plan, including probes into the interest that the sponsor was charging and why its asset pivot did not include markets beyond the US. 

Units of MUST closed 1.6 per cent or US$0.001 lower at US$0.06 on Wednesday, before the results were released.