Office REIT Eyes Pivot To Other Sectors To Avoid Bankruptcy
A struggling Singapore-based office REIT wants to pivot to the industrial, multifamily, retail and data center sectors in the U.S. and Canada to stabilize its portfolio and avoid a forced liquidation at distressed prices.
Manulife US REIT is seeking shareholder approval for two significant structural changes as officials believe office property sales won’t keep the company afloat, CoStar reported.
The first change would be a disposition mandate to sell up to three of the REIT’s office properties to raise as much as $350M. Manulife is also seeking an acquisition mandate to allow it to purchase up to $600M of nonoffice assets in the U.S. and Canada.
Both changes have to be approved by more than 50% of shareholder votes cast or neither will go into effect. If the changes aren’t approved and lenders call in payment on $559M in loans at the start of 2026, Manulife could be forced into liquidation.
"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 CEO and Chief Investment Officer John Casasante said in a statement.
Shareholders are expected to vote on the restructuring during an extraordinary general meeting on Dec. 16.
The REIT owns 3.5M SF of net rentable area across seven office properties in Arizona, California, Georgia, New Jersey, Virginia and Washington, D.C.
Manulife has been operating under a master restructuring agreement since headwinds in the U.S. office sector led it to breach financial covenants in late 2023 that required it not exceed a 50% debt-to-asset ratio.
If the plan is approved by shareholders, the REIT will seek to extend its minimum sale target deadline six months to June 30.
Manulife raised more than $273M from three office sales over the past 14 months, reaching 83% of its $328.7M minimum sale target. Among those was the 28-story 1100 Peachtree office tower in Atlanta that sold for $133.8M to Spear Street Capital in the spring, 20% less than Manulife's 2016 purchase price.
The REIT needs another $55.6M to meet its target. It repaid much of its 2026 debt ahead of schedule and carries just $35.6M in loans set to mature next year.
If Manulife gets approval to broaden its investments beyond U.S. office properties, it would be the company’s first time acquiring assets in Canada. Manulife Financial, the REIT's sponsor, is based in Toronto.
Under the restructuring proposal, Manulife would cap acquisitions at 40% debt financing, with the rest to come from asset sale proceeds, rental income and potential share issuances.
The acquisition program seeks to add data centers and cold storage facilities, multifamily and student housing properties, and grocery-anchored retail centers to the company’s portfolio.
"Different asset types respond differently to economic cycles," Casasante said. "A more diversified portfolio can help provide stable returns for unitholders."
