Manulife US Reit secures lease renewal with anchor tenant; talks with lenders ongoing
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An artist's impression of 1100 Peachtree's plaza following its ground-floor renovation. Its anchor tenant Kilpatrick Townsend is Manulife US Reit's fourth-largest tenant across the Reit portfolio.
PHOTO: MANULIFE US REIT
Michelle Zhu
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SINGAPORE - Manulife US Real Estate Investment Trust’s (Reit) largest tenant at 1100 Peachtree in Midtown Atlanta, Georgia, has inked a 65-month lease renewal with the Reit.
Atlanta-headquartered Kilpatrick Townsend has been a major tenant at the property since 1992.
The law firm is also Manulife US Reit’s fourth-largest tenant across the Reit portfolio, making up about a third of 1100 Peachtree’s net lettable area.
With the renewal, Kilpatrick Townsend’s lease will now expire on Dec 31, 2030, as opposed to the previous lease term due to expire on July 31, 2025.
“Kilpatrick Townsend’s lease renewal meets our expectations for the market and justifies our investment into the modernisation of the property,” said Mr Tripp Gantt, chief executive officer of the Reit manager.
The building at 1100 Peachtree is undergoing a US$18 million (S$24.7 million) asset enhancement initiative that is expected to be completed in 2025.
It comprises renovation of the ground floor and common spaces of the building.
Mr Gantt also addressed the Reit’s recent breach of its banks’ unencumbered gearing ratio, which has caused all its loans to be reclassified as current liabilities.
“In our efforts to address the financial covenant breach in our loan agreements and assemble a sponsor package that ensures the Reit’s viability through the coming years, we continue to have discussions with the lenders alongside our sponsor,” he said.
“As the negotiations continue, we seek unit holders’ understanding and patience while we finalise a solution to set Manulife US Reit on a path forward.”
Under the financial covenant in its loan agreements with the banks, the Reit’s ratio of consolidated total unencumbered debt to consolidated total unencumbered assets should not be more than 60 per cent.
The Reit reported a higher ratio of 60.2 per cent on July 18. This ratio was later lowered to 59.7 per cent following a good-faith payment in August.
But to rectify the breach, Manulife US Reit will still need to obtain an expressed waiver from the lender banks.
As a result of the breach, the Reit did not declare a distribution for its first half ended June 30.
Its manager said the resumption of distribution payments in the second half hinges on the outcome of discussions with its lenders.
Units of Manulife US Reit ended Friday 0.1 US cent, or 2 per cent, higher at five US cents. THE BUSINESS TIMES
