A Singapore-listed real estate investment trust that owns 11 U.S. offices said its lenders and Canadian sponsor agreed to a financial restructuring plan that would provide $236 million in loans and proceeds from the sale of a development near Phoenix.

Manulife US REIT said that under the proposed recapitalization, its sponsor, Canadian insurance giant Manulife, will make unsecured loans totaling $137 million and spend just under $100 million to buy the REIT’s two-building Park Place in Chandler, Arizona.

The REIT would also try to sell other offices to raise at least $328.7 million to deleverage its balance sheet and fund essential operations, the company said in a statement. The trust would also contribute $50 million from its own cash holdings and halt distributions through 2025 as part of the proposed recapitalization.

The plan, which requires approval of unit holders at a general meeting scheduled for Dec. 14, asks lenders and creditors to extend its debt maturities by a year and waive the REIT's breaches of required debt-to-asset ratio under its loan financial covenants.

The Manulife trust's woes reflect the broader challenges facing many other U.S. and global office REITs, which have been hit hard by high interest rates and steep occupancy drops as hybrid working patterns have caused companies to reevaluate their office footprints.

For example, the value of the Manulife REIT’s 5.3 million-square-foot office portfolio, which includes such properties as the 20-story Phipps Tower in Atlanta, declined by 14.6% to just over $1.6 billion in the first half of this year, the company revealed in July. The REIT’s plan to sell the 506,190-square-foot tower in Atlanta’s Upper Buckhead district, also to its Manulife sponsor, stalled over the summer as the property’s valuation dropped by 15% this year.

The REIT hopes to be more successful in disposing of the two-building Park Place near Phoenix. Manulife acquired the 400,000-square-foot property at 1650 and 1700 S. Price Road from San Diego-based Douglas Allred Co. in late 2021 for $106 million.

That was a time when Manulife and other REITs were venturing beyond big cities to invest in growing regions where commuters looked to avoid crowds on mass transit and other places during the height of the pandemic.

U.S. office valuations and investment transaction volume have declined sharply this year as high interest rates cut off many buyers’ access to financing, Manulife US REIT CEO Tripp Gantt said during a briefing on Wednesday to outline the recapitalization plan.

The disruptions have complicated the trust's efforts to sell property, raise equity funds and pursue other strategic options such as mergers and taking out new loans to improve its balance sheet, Gantt added.

“We do have a number of parties who are remaining engaged with us, but they’re waiting to see the outcome of this,” Gantt said. “We feel this plan negotiated with our lenders is the best solution to both address the breach of the covenants, and give us the liquidity and the runway that we need at this point.”