Manulife US REIT plans next asset sale for 2027 debt
The Singapore-listed trust aims to divest another property within eight months to address US$133.4 million in maturing obligations, as US office demand slowly improves.
Debt Management and Divestment Timeline
Manulife US REIT (MUST), a trust listed on the Singapore Exchange, intends to sell another asset within the next six to eight months. This divestment forms part of its strategy to manage approximately US$133.4 million in debt scheduled to mature in 2027.
John Casasante, the REIT manager's CEO and Chief Investment Officer, confirmed this at MUST's third-quarter 2026 financial results briefing on 4 November. Other options under consideration include refinancing, raising equity, or extending debt maturities.
US Office Market Dynamics
The US office property market remains in a recovery phase, according to Mr Casasante. He noted that the current pool of buyers for office assets primarily consists of family offices, private investors, and owner-occupiers.
Institutional investors have largely stayed away, and most recent acquisitions around MUST's portfolio have been all-cash transactions, indicating a reluctance to take on new debt. This challenging environment influences the REIT's divestment approach.
Restructuring Agreement Exit
Earlier this year, MUST successfully divested Figueroa, a 35-storey Grade-A office tower in downtown Los Angeles. This sale generated net proceeds of US$82.4 million, allowing the REIT to surpass a US$328.7 million minimum sale target mandated by its Master Restructuring Agreement (MRA) before the 30 June 2026 deadline.
The trust is now working towards exiting the MRA by the end of 2026. This requires achieving a consolidated total liabilities-to-deposited properties ratio of no more than 45%, or between 45% and 50% with an interest coverage ratio (ICR) exceeding 2.5 times for at least one financial quarter, without any ongoing default events.
For Singapore-based investors in MUST, the planned divestment and MRA exit are critical steps towards financial stability. The REIT has reduced its portfolio from 12 to six properties and halted distributions since the first half of 2023.
Successfully managing the 2027 debt and exiting the MRA by year-end could pave the way for a clearer outlook on future unitholder distributions. The ongoing challenge of attracting institutional buyers to the US office market suggests that asset sales may continue to be a primary method for debt reduction in the near term.
This article is journalism, not investment advice; consult a licensed professional before making financial decisions. Market data is indicative, may be delayed, and should be verified with your broker or exchange before use.
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