Debt-burdened trust aims to sell offices and reinvest in industrial, multifamily and retail sectors
Manulife US Real Estate Investment Trust is asking its investors to approve a major restructuring plan that would shift the struggling office-focused REIT into a broader real estate owner with holdings in industrial, multifamily and retail across the United States and, for the first time, Canada.
According to a recent regulatory filing, the Singapore-listed REIT is seeking approval for two major policy changes. The first is a disposition mandate allowing the sale of up to three current office properties for as much as $350 million in total. The second is an acquisition mandate that would authorize the purchase of up to $600 million in non-office assets, specifically industrial, residential and retail properties.
The REIT said the shift reflects the reality that relying solely on office sales is not enough to sustain the business as remote work and high vacancies continue to pressure the sector. Both resolutions require approval from more than 50% of voting shareholders; if either fails, lenders could demand accelerated repayment of $559 million in loans starting Jan. 1, potentially forcing the REIT to liquidate assets at steep discounts.
If approved, the restructuring would help the trust secure lender commitments to extend its minimum sale deadline from Dec. 31 to June 30, 2026, while temporarily easing financial covenant requirements. Manulife US REIT currently owns seven office buildings totaling 3.5 million square feet across Arizona, California, Georgia, New Jersey, Virginia and Washington, D.C.
This plan marks the REIT’s effort to break free from the slide in office valuations and occupancy levels that has weighed it down since 2023, when it breached its requirement to keep debt below 50% of total assets. Shareholders are scheduled to vote on Dec. 16.
Three Office Sales Completed
Over the past 14 months, Manulife US REIT has generated nearly $273.1 million through office property sales, reaching 83% of its $328.7 million disposition target under its restructuring agreement. The sales included:
- 400 Capitol Mall, Sacramento, California
- 500 Plaza Drive, Secaucus, New Jersey
- 1100 Peachtree St. NE, Atlanta
The REIT still needs about $55.6 million in additional sales to meet its commitment. Proceeds have allowed the trust to pay down most of its 2026 debt, leaving just $35.6 million outstanding.
“We’ve been steadily advancing our stabilization and growth plan,” said John Casasante, CEO and chief investment officer. “We need unitholders to support this next step so we can recycle office assets into higher-yield, lower-capital-intensity properties and build long-term, sustainable growth.”
To execute that strategy, Manulife US REIT is seeking approval to expand its investment scope beyond U.S. office buildings. Its acquisition mandate targets:
- Industrial properties, including data centers and cold-storage facilities
- Residential assets, such as multifamily and student housing
- Grocery-anchored retail centers
- Properties located in both the U.S. and Canada
Casasante said different property types perform differently across economic cycles, and a diversified portfolio could deliver more stable returns. Canada, he added, aligns closely with U.S. real estate fundamentals and is also home to the REIT’s sponsor, Manulife Financial, based in Toronto.
Under the proposal, new acquisitions would be limited to 40% debt financing, with the remaining 60% funded through asset sale proceeds, rental revenue and potential equity issuance.
Source: Original reporting by Mark Heschmeyer, CoStar News.
