SINGAPORE - Unit holders of Manulife US Real Estate Investment Trust on Dec 14 voted overwhelmingly in favour of the recapitalisation plan proposed by its manager.
More than 97 per cent of the votes present at an extraordinary general meeting (EGM) were in favour of each of the three inter-conditional resolutions.
The first resolution – to approve the divestment of the Reit’s Park Place property to the sponsor for US$98.7 million (S$131.2 million) – saw 97.7 per cent or 545.6 million votes in favour.
Meanwhile, 97.6 per cent or 543.9 million votes were for the second resolution, which involved obtaining a six-year unsecured sponsor-lender loan of US$137 million at an effective interest rate of 10 per cent per annum.
Unit holders also approved the third resolution to adopt a disposition mandate, which authorises the disposal of any one or more of the existing properties. Some 98.1 per cent or 701.3 million votes were for this resolution.
Manulife US Reit had almost 1.8 billion issued and paid-up units as at June 30, 2023.
In November, the manager of Manulife US Reit unveiled the recapitalisation plan involving asset sales and taking a sponsor loan to remedy its financial covenant breach.
Manulife US Reit breached existing financial covenants in July after portfolio valuations fell 14.6 per cent, affecting its ability to pay out distributions.
The Reit’s proportion of unencumbered debt to unencumbered assets exceeded the 60 per cent threshold, while its aggregate leverage also crossed the 50 per cent regulatory gearing limit.
The recapitalisation plan sought to “revitalise” the Reit and provide more time for the manager to sell assets and realise value.
As part of the plan, the lenders have agreed to waive past and existing breaches, and have provided a temporary relaxation of financial covenants until December 2025.
Distributions, however, would continue to be halted until December 2025. These could resume if the Reit meets “early reinstatement conditions” that are similar to the regulatory leverage limits in Singapore.
Units of Manulife US Reit closed up 0.5 US cent, or 6.4 per cent, at 8.3 US cents on Dec 15.
