The SGX-listed Manulife US REIT (SG:BTOU) today announced the start of its restructuring process as part of its recapitalization plan approved last week. The company has received the necessary approvals from all 12 lenders for its plan to raise funds through a combination of asset dispositions and a sponsor-lender loan.
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Despite the restructuring plans, the Manulife share price traded down by 3.6% today. Lately, the stock has been volatile due to the various developments related to its recapitalization plan. Over the past month, shares have experienced an 18% loss in value during trading.
Manulife US REIT is a real estate investment trust engaged in direct or indirect investments in income-generating office real estate in the U.S.
Manulife’s Master Restructuring Plan
The restructuring agreement states that an event of default will occur if the manager is no longer wholly owned by the sponsor or any successor through a merger with a corporation owned by Manulife Financial Corporation, which is the current ultimate holding company of the sponsor.
In the company’s EGM (extraordinary general meeting) held last week, the board passed three resolutions as part of the capitalization plan.
The first resolution approved was the divestment of Park Place to its sponsor for $98.7 million. Another resolution passed was the approval of a $137 million sponsor loan at an interest rate of 7.25% annually. Lastly, the board approved the divestment of “non-core” properties by the manager and lenders at a minimum price of $328.7 million.
Manulife has faced multiple challenges in recent years, as the COVID-19 pandemic and increasing interest rates impacted the landscape of the U.S. office market. However, with its recapitalization plan, the company is optimistic about its recovery. It also emphasized the potential advantages for the U.S. office property market in the next two to three years, citing the stabilization of interest rates and the normalization of work practices.
Manulife US REIT Price Target
On TipRanks, BTOU stock has been rated as a Moderate Buy, backed by two Buys and one Hold recommendation. The share price target is $0.16, which implies a huge upside of 92.7% from the current trading levels.
