Manulife US REIT (MUST) has secured approval from lenders to extend the deadline for the disposal of assets by six months to Dec 31, and the use of US$25 million ($32.17 million) to partially pay down debts due in the next three years.

The US$25 million of cash is in addition to proceeds from the latest sale of Peachtree in Atlanta. The REIT sold Peachtree in Atlanta Georgia, a Class A office building, to an unrelated third party on May 11 for US$133.8 million.

The extension of the deadline gives MUST until Dec 31 to meet the net sale proceeds target of US$328.7 million.

The REIT’s master restructuring agreement (MRA) was first introduced ahead of an EGM in December 2023, where MUST divided its assets into three tranches — Tranche 1, 2 and 3.

Tranche 1 assets are prioritised for divestment. These are Centerpointe, Diablo, Figueroa and Penn.

Under the former terms of MUST’s MRA , “not more than two” assets from Tranche 2 may be sold to satisfy the cumulative net sale proceeds. The MRA has now been amended to allow the disposal of up to three Tranche 2 assets, thus enabling lenders' approval of the sale of Peachtree.

Including Peachtree, MUST would have sold three out of four Tranche 2 assets, with the other two being Capitol and Plaza.

According to the manager, the extension allows for continued engagement with stakeholders and potential buyers in current market conditions, which have been challenging. This extension is conditional on the completion of the sale of Peachtree, the manager adds.

Based on the cumulative proceeds from the sales of Capitol, Plaza and Peachtree, MUST will have achieved about 82% of the net proceeds target, or US$60 million short of the net proceeds target.

MUST’s sponsor, Manulife, says that it will not receive any repayment at this stage in a show of support towards the REITs restructuring.

1QFY2025 business updates

MUST reported a portfolio occupancy of 69.9% for the 1QFY2025 ended March 31. Its weighted average lease expiry stood at 4.8 years, and rent reversion stood at -8.9%.

The REIT’s occupancy level of about 70% is largely due to lease expiries at Diablo, offset by new leases signed at Phipps and Certerpointe.

As at end-March, MUST’s bank interest coverage ratio is 2.0 times.

Units in Manulife US REIT closed 0.1 US cents higher or 1.639% higher at 6.2 US cents on May 23.