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Anonymous

09 Sep 2020

SeedlyAMA

What contributes to REIT earnings? And how might COVID-19 affect this REITs in this volatile market?

AMA Manulife US REIT

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Carol Fong

09 Sep 2020

Head of Investor Relations at Manulife US REIT

The earnings of REITs are derived from the rental income from the assets. It’s like a landlord collecting rents from many tenants.

We have built a top-quality defensive portfolio which reflects our strong belief that Trophy/Class A assets provide strong income in upcycles and remain resilient during market turmoil. We also fortified MUST’s portfolio by choosing locations with growth potential and are well sought after by tenants for their live, work, play appeal.

Our freehold portfolio has built-in rental escalations of approximately 2% per annum with no break clause in the leases. Most of our properties are competitively positioned, at 5% to 10% below market rents, which will provide a buffer during this downturn.

We deliberately sought creditable tenants from a wide range of sectors to diversify our net property income, and we are fortunate that few of our tenants are from sectors that were badly affected by the shutdown.

Undoubtedly, this has been a tumultuous period for the U.S. with a number of headwinds in addition to the COVID-19 pandemic. We believe that MUST’s portfolio has proved to be resilient through such difficult times, and that it can emerge stronger on to a renewed growth path.

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