Centerpointe I & II (Photo: Manulife US REIT)Manulife US REIT's Centerpointe I & II (Photo: Manulife US REIT)

Manulife US REIT is acquiring a Grade A office building in Washington DC, and will raise at least USD94 million in a private placement exercise to fund the purchase.

The property to be acquired is the two-tower Metro Area landmark known as Centerpointe I & II, and it will be purchased for USD122 million, just below its valuation of USD122.1 million.

This implies a cap rate of approximately 7.55%.

The property features 420,000 square feet of net lettable area, and features an occupancy rate of 98.7%.

It is currently occupied by 21 tenants, and has a weighted average lease expiry (WALE) of 6.9 years by net lettable area.

The estimated total cost of the acquisition is approximately USD127.0 million, including transaction fees and expenses of approximately USD3.8 million.

The acquisition is 3.3% accretive based on FY 2018 pro forma distribution per unit (DPU), said Jill Smith, CEO of the REIT’s manager.

The acquisition will be financed via a combination of loans, and issuance of new units in Manulife US REIT via private placement exercise.

This placement will raise gross proceeds of no less than USD94.0 million, said the REIT.

Upon completion of the acquisition, which is expected to be on 10 May 2019, the aggregate gearing ratio of Manulife US REIT will improve from 37.6% to 36.8%.

Manulife US REIT finished the trading day about 1.1% higher from its previous close on the Singapore Exchange to end at USD0.88.

Related: Manulife US REIT expects strong 2019 on favourable macroeconomics

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.