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Manulife's (MFC) Unit Inks Partnership With StepStone & Scannell

Manulife Financial Corporation’s MFC Manulife Investment Management, a leading global wealth and asset management brand, recently entered into a $1.2 billion partnership with Scannell Properties and StepStone Real Estate. Scannell’s expertise in developing industrial properties and StepStone’s contribution bode well for Manulife’s investment arm. Manulife will recapitalize 35 freshly constructed Class A industrial portfolios in 17 markets in the United States, spanning 10.4 million square feet.

The recapitalization of the Manulife Investment Management portfolio should aid the company in adjusting to the on-the-ground realities of the real estate market. It aims to leverage the rising and robust demand for logistics on a long-term basis. It believes that it can capitalize on this opportunity as industrial sector fundamentals remain strong.

The company expects to work with its partners to complete the construction, lease up the remaining vacancies and implement strategies of finance and disposition after stabilization. StepStone and Scannell are expected to aid Manulife in achieving its investment objectives, thereby benefiting the results of MFC’s global wealth and asset management arm in the future.

Manulife’s real estate portfolio contributed two-thirds of the total underperformance of returns in the past five quarters. This partnership is expected to improve its investment returns in the future. Rising interest rates contributed majorly to lower current returns, but the company is confident of achieving higher returns going forward, due to higher cap rates.

Manulife is consistently expanding its Wealth and Asset Management business around the world, which has been driving its core earnings growth. The company expects the core EBITDA margin to be near 30% for this segment. Positive flows and consistent net income should drive its margins in the future. Manulife Investment Management continues to differentiate its services from its peers by finding solutions and creating value for clients in challenging surroundings.

Zacks Rank & Price Performance

Manulife currently carries a Zacks Rank #3 (Hold). Shares of the company have gained 7% in the past three months, outperforming the industry’s growth of 6.3%.

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Key Picks

Some better-ranked stocks from the broader Finance space are Primerica, Inc. PRI, Reinsurance Group of America, Incorporated RGA and Aflac Incorporated AFL. Each stock presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The consensus mark for Primerica’s current-year earnings indicates a 39.9% year-over-year increase. Furthermore, the consensus estimate for PRI’s revenues in 2023 suggests 3.2% year-over-year growth.

The Zacks Consensus Estimate for Reinsurance Group of America’s current-year earnings has improved 3.4% in the past 30 days. The consensus mark for RGA’s current-year earnings and revenues indicates 36% and 10.1% year-over-year growth, respectively.

The consensus mark for Aflac’s current-year earnings indicates an 18.2% year-over-year increase. The Zacks Consensus Estimate for AFL’s current-year earnings has improved 1.1% in the past 30 days.

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