SGX-listed Manulife US REIT Names Marc Feliciano Chairman

Manulife US REIT (MUST) welcomed new leadership on Thursday appointing Marc Feliciano as non-executive chairman as the Singapore-listed REIT struggles through an 81 percent slide in its equity price this year.

Feliciano, who took over as global head of real estate at the REIT’s sponsor Manulife Investment Management in February 2022, will assume the chairman role from Stephen Blewitt who held the position on an interim basis since September 2022. Blewitt stepped down from the trust’s board as of Thursday after having retired as global head of private markets with Manulife Investment Management in June.

“Marc is a highly experienced real estate investment professional who has spent nearly three decades in public and private real estate investment management in the US,”  Blewitt said. “With his leadership on the board, I am confident that Manulife US REIT is well positioned to prevail over the market challenges, and to uncover relevant investment opportunities as markets stabilise.”

Backed by the asset management division of Canadian insurance giant Manulife, MUST’s unit price rose 1.96 percent on the Singapore exchange today following the leadership announcement.

Manulife Boss Takes Over

The change in management coincides with a challenging period for MUST, which has seen its equity price slide 94.9 percent since the dawn of the pandemic, with its portfolio 85.1 percent occupied as of 30 June. Last week the trust announced that it had renewed a lease for its fourth-largest tenant, inking law firm Kilpatrick Townsend to a 65-month deal for space in its 1100 Peachtree property in Atlanta, Georgia.

Before taking the helm at Manulife Investment Management’s real estate division last year, Feliciano spent almost 30 years at RREEF Real Estate in the US and its successor DWS, rising to become chief investment officer for the Americas with the investment management division of Deutsche Bank, according to his LinkedIn profile.

In his role at Manulife Investment Management, Feliciano continues to be based in Chicago while overseeing the company’s global real estate business including portfolio management, investments, asset management, and sustainability integration.

Feliciano serves as the first permanent replacement for Hsieh Tsun-Yan, a 30-year McKinsey veteran who stepped down as non-executive chairman of MUST in September 2022.

The new chairman attributes the REIT’s underwhelming performance to a US office slump that started in early 2022. The trust’s 11 properties in the US are part of a market where tenants handed back to landlords 1.6 million square metres (18.3 million square feet) of office space from July to September, according to JLL. Average vacancy for grade A offices across the US was 21 percent in September was 21 percent, up 1.4 percentage points from June the property consultancy said.

In a meeting with investors and analysts earlier this month, Feliciano predicted that a turnaround for the trust will be linked to an overall office market recovery in around two years time, an idea seconded by Tripp Gantt, chief executive officer of Manulife Investment Manager.

“Stay alive till 25”, Gantt told attendees at the meeting in Singapore.

MUST’s aggregate leverage, a ratio to calculate the percentage of debt compared to its total assets, was at 56.7 percent on 30 June, exceeding the Singapore’s central bank debt level limit of 50 percent. No regulatory action was taken since the breach occurred due to a decrease in portfolio valuation. The REIT made no distributions for the first half of 2023 as it struggled to rectify its finances.

Distributions Halted

The trust’s net property income contracted to $55.4 million in the first six months of this year, falling 3.9 percent from the same period in 2022. This contributed to a 17.4 percent drop in distributable income to $37.9 million.

The REIT’s manager attributed the loss of net revenue to falling rents as its new leases were signed at rates averaging 2.5 percent below earlier prices.

In April MUST sold off an office complex near Portland, Oregon for $33.5 million at a net loss of $400,000.