Manulife US REIT, suffering from the drop in value of its portfolio, is seeing its aggregate leverage inching closer to the regulatory limit of 50%. The trust, which is now doing a strategic review, is publishing an update on the issue:
Manulife US REIT’s expected aggregate leverage will be approximately 49% (taking into account additional borrowings, fair value changes in investment properties and certain projections in the value of other total assets from 30 June 2022 to 31 December 2022), while its projected interest coverage ratio as at 31 December 2022 will be approximately 3.1 times. Accordingly, the aggregate leverage of Manulife US REIT is within the regulatory 50% limit under Appendix 6 to the Code on Collective Investment Schemes
For the avoidance of doubt, the financial covenants in respect of the existing loans of Manulife US REIT are not expected to be breached despite the decline in valuation.
The blog Investment Moats has published an in depth discussion on the issue as well.