ManuLife US REIT Secured its Safety (For Now)

In the latest update, Manulife REIT has announced the impending sale of its Phipps Property. Forming about 10.5% of the REIT's valuation, the sale is likely to protect the REIT from breaching the 50% regulatory limit and lower its interest expense tremendously

Approximate Leverage Ratio (Post Disposal)

With the sponsor announcing the waiver of disposal fees, it is likely most of the proceeds from the sale will be used for debt repayment. I expect ManuLife's REIT leverage to fall to 45% post sale. This prevents it from running into the danger of breaching MAS's regulatory limit.

MIRAE Severe Dilution Off the Table

With the Phipps sale, the need for equity injection by Mirae is less urgent. If Manulife is capable of taking on more of the REIT's property disposal, the need of Mirae is not there. This could spell the closure of a turbulent chapert in Manulife's history.

Dividends could be secured as well, however, I expect the payout ratio to be reduced to 90% permanently.

While Manulife continues to be my least favourite among the 3 commercial REITs, the fact that the parent is able to come in to buy disposals (albeit at a low valuation), there are signs that its net asset value can be realised at some discount. This should spell confidence to the whole sector. Hopefully, Keppel and Prime could do the same if the need arises