Brokers' take

Manulife US Reit > Buy (maintained) RHB Research, Sept 20 Sept 20 close: US$0.91 Target price: US$1.00

MANULIFE US Reit's (MUST) yield-accretive acquisition of 400 Capitol is an overall positive, and further diversifies its portfolio tenant mix and market exposure. Valuations are still attractive - the stock is trading at 1.1 times price/book value and offers a 7 per cent FY20F dividend yield.

MUST announced the acquisition of 400 Capitol in Sacramento, California at US$198.8 million, with an implied cap rate of 7.2 per cent. Addressing our concerns on WeWork being the second largest tenant of the property, management noted that WeWork is on a long-term lease and does not have much presence in the sub-market. The acquisition is expected to be completed by Q4 2019.