Manulife US REIT secures new loan; distributions to increase

SINGAPORE (July 15): Manulife US REIT has secured mortgage loan facilities from Wells Fargo Bank and National Association Royal Bank of Canada for US$296 million (RM1.17 billion), as well as an additional facility for the REIT’s budgeted capital expenditures and leasing costs of nearly US$31.8 million.

The new mortgage facilities are expected to be used to fully repay the REIT’s current bridge loan facilities from John Hancock Life Insurance Co (USA) of US$296 million, and for partially financing the acquisition of the IPO Portfolio.

The new loan agreements lowered the REIT’s weighted average interest rate from 2.8% per annum to 2.46% per annum. The REIT’s debt maturity will also be staggered and extended to a weighted average maturity of four years, with no refinancing required until 2019.

The additional facility from the lenders increases the funds available for budgeted capital and leasing costs from US$10 million to US$31.8 million, at the prevailing market interest rates.

Furthermore, the REIT has entered into a three-year US$10 million revolving credit facility with DBS Bank for working capital purposes.

The REIT manager says that the lower interest rates achieved from the refinancing of its loans would reduce the REIT’s financing cost and increase its distributable income to unitholders. The fixed interest rate over the four-year period would also shield the REIT from interest rate volatility, it adds.

Manulife US REIT’s distribution policy is to distribute 100% of its annual distributable income.

Units for Manulife US REIT were trading 0.6% lower at 85 Singaporean cents. — theedgemarkets.com

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