THE largest tenant in 1100 Peachtree in mid-town Atlanta, a property under Manulife US Real Estate Investment Trust (Reit), has taken out a 65-month lease renewal.

Kilpatrick Townsend, a law firm headquartered in the city, has been a major tenant in the property since 1992. It is also Manulife US Reit’s fourth-largest tenant across the Reit’s portfolio, accounting for about a third of 1100 Peachtree’s net lettable area.

With the renewal, Kilpatrick Townsend’s lease will now expire on Dec 31, 2030, instead of on Jul 31, 2025.

“Kilpatrick Townsend’s lease renewal meets our expectations for the market, and justifies our investment into the modernisation of the property,” said Tripp Gantt, chief executive of the manager.

The property is undergoing a US$18 million asset-enhancement works that are expected to be completed in 2025, with the ground floor and common spaces being renovated.

Gantt, referring to the Reit’s recent breach of its banks’ unencumbered gearing ratio, which led to all its loans being reclassified as current liabilities, said: “In our efforts to address the financial covenant breach in our loan agreements and assemble a sponsor package that ensures the Reit’s viability through the coming years, we continue to have discussions with the lenders alongside our sponsor.

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“As the negotiations continue, we seek unit holders’ understanding and patience while we finalise a solution to set Manulife US Reit on a path forward.”

Under the financial covenant in its loan agreements with the banks, the Reit’s ratio of consolidated total unencumbered debt to consolidated total unencumbered assets should not have exceeded 60 per cent.

The Reit reported a ratio of 60.2 per cent on Jul 18. This ratio later came down to 59.7 per cent, following a good-faith payment in August. However, to rectify the breach, Manulife US Reit will still need to obtain an expressed waiver from the lender banks. 

As a result of the breach, the Reit did not declare a distribution for its first half ended Jun 30.

Its manager said the resumption of distribution payments in the second half hinges on the outcome of discussions with its lenders.  

Units of Manulife US Reit : BTOU 0% ended Thursday US$0.001 or 2 per cent lower at US$0.049.