Manulife US REIT (MUST) reported 1Q21 business update. Portfolio occupancy remained healthy at 92.0% which was above the US Class A average of 82%. Management saw some improvement in leasing momentum with 5.8% of leases by NLA or 270,000 sq ft at +2.1% rental reversion executed in 1Q21.

MUST will continue to look for opportunities to enhance portfolio by acquiring at least 20% of high growth tenants (currently at 10%) e.g. business parks, tech and healthcare tenants via joint ventures and acquisitions in magnet cities with robust population growth and low cost of living. We see MUST as a beneficiary of recovery of US economy with its fast rollout of vaccines.

We continue to like MUST’s resilient portfolio, quality tenants, stable income streams from built-in escalations and minimal lease expiry profile (4.4% of leases by GRI) in FY21 which could limit downside risk and help MUST ride over the market turmoil.

We maintain our fair value estimate of USD0.82. BUY.

Source: OCBC Research - 14 May 2021