Manulife US Real Estate Investment Trust is asking shareholders to approve a restructuring plan that would transform the struggling office real estate investment trust into a diversified owner of industrial, multifamily and retail properties in the United States and, for the first time, Canada.
The Singapore-listed REIT seeks approval for two major structural changes, according to a regulatory filing. The first is a disposition mandate that would authorize the sale of up to three existing office properties for a maximum combined price of $350 million. The second is an acquisition mandate that would permit the purchase of industrial, multifamily and retail assets totaling up to $600 million.
The restructuring acknowledges that office property sales alone cannot sustain the business in an era of remote work and elevated vacancies, according to the REIT. Both resolutions must pass with more than 50% of the shareholder votes cast or neither takes effect, the filing with the Singapore Stock Exchange said. If either is rejected, lenders could accelerate payment on $559 million in loans come Jan. 1 and the REIT could face forced liquidation at distressed prices.
Approval of the plan would help the REIT secure lender support to extend its minimum sale target deadline from Dec. 31 to June 30, 2026, and temporarily relax key financial covenants. The REIT's current portfolio comprises seven office properties spanning Arizona, California, Georgia, New Jersey, Virginia and Washington, D.C., totaling 3.5 million square feet of net rentable area.
The plan represents Manulife US REIT's attempt to escape a downward spiral in office occupancy and property values that has hit Asia's first pure-play U.S. office REIT since late 2023, when it first breached financial covenants requiring that it not exceed a 50% debt-to-asset ratio.
Shareholders are expected to vote Dec. 16.
Three office sales so far
Manulife US REIT has raised nearly $273.1 million from dispositions over the past 14 months, achieving 83% of its $328.7 million minimum sale target under the master restructuring agreement. Three office sales delivered those proceeds: 400 Capitol Mall in Sacramento, California; 500 Plaza Drive in Secaucus, New Jersey; and 1100 Peachtree St. NE in Atlanta.
The REIT needs about $55.6 million more to meet its target. Manulife US REIT has repaid most of its 2026 debt ahead of schedule through asset sale proceeds and balance sheet cash. The REIT now carries $35.6 million in loans maturing in 2026.
"We have been steadily executing our stabilization, recovery, and growth roadmap," John Casasante, CEO and chief investment officer of the REIT, said in a statement. "We need unitholders to give us their support for the plan so that we can unlock new growth opportunities through recycling office assets to acquire higher-yielding, less capital-intensive assets, and grow the business in a sustained manner."
Manulife US REIT is seeking approval to broaden its investments beyond U.S. office properties. The acquisition program will target industrial assets including data centers and cold storage facilities, residential properties such as multifamily and student housing, and grocery-anchored retail centers in the U.S. and Canada.
"Different asset types respond differently to economic cycles," Casasante said. "A more diversified portfolio can help provide stable returns for unitholders."
Canada would be a new market for the REIT. Manulife noted that the country aligns closely with U.S. real estate fundamentals. In addition, the REIT's sponsor, Manulife Financial, is based in Toronto.
Under its proposal, Manulife US REIT would cap acquisitions at 40% debt financing. The remaining 60% would come from asset sale proceeds, rental income and potential share issuances.