Manulife US REIT - Annual Report 2020

Key Financial Indicators FY2020 FY2019 Gross borrowings (US$ million) 856.5 816.9 Gearing ratio 1 (%) 41.0 37.7 Weighted average cost of debt (%) 3.18 3.37 Weighted average debt maturity (years) 2.3 2.8 Interest coverage ratio 2 (times) 3.5 3.8 Unencumbered properties as % of total portfolio 3 (%) 42.0 31.6 1 Based on gross borrowings as percentage of total assets. 2 Based on net income before finance expenses, taxes and net fair value change in investment properties and derivatives, over finance expenses. 3 Based on appraised values as at 31 December 2020. Management Fees MUST’s base fee and performance fee are based on its distributable income and DPU growth respectively, so as to better align the interests of the Manager and Unitholders. Under the Trust Deed, the Manager is entitled to receive a base fee of 10.0% per annum of the distributable income, as well as a performance fee of 25.0% of the difference in DPU in a financial year compared with the preceding financial year, multiplied by the weighted average number of issued Units. The base fee for FY2020 was 6.8% higher than FY2019 due to higher distributable income. The Manager has elected to receive the base fee in Units. No performance fee was recorded for FY2020. Finance Expenses and Other Trust Expenses Finance expenses of US$29.7 million were 13.6% higher than FY2019 mainly due to interest incurred on additional borrowings taken to partially finance acquisitions, and to fund capital expenditures and leasing costs. These were partially offset by lower interest cost from Peachtree mortgage refinanced at a lower interest rate in July 2020. Other trust expenses of US$2.6 million were 7.6% higher than FY2019 largely due to additional administrative and professional fees arising from the properties acquired in 2019, as well as tax compliance expenses and restructuring fees incurred in relation to the restructuring pursuant to the U.S. tax regulations. Please refer to the announcement made on 24 April 2020 on the completion of restructuring. Tax Tax income for FY2020 of US$22.7 million was mainly due to deferred tax income arising fromnet fair value loss in investment properties, partially offset by deferred tax expense from tax depreciation. Deferred tax has no impact on the distributable income to the Unitholders. Distributable Income and DPU Distributable income of US$89.0 million was 6.8% higher than FY2019 largely due to contributions from Centerpointe and Capitol acquired in 2019, partially offset by higher finance expenses. However, DPU was lower by 5.4% mainly due to lower rental income from certain properties, lower portfolio carpark income and provision for expected credit losses, after factoring in the enlarged unit base from equity fund raisings in 2019. MUST continues to pay out 100.0% of the distributable income to the Unitholders. Portfolio and Net Asset Value (NAV) The total assets of MUST have decreased by 3.6% or US$78.4 million to US$2,088.1 million as at 31 December 2020. The decrease in total assets was mainly due to net fair value loss on investment properties during the year. The net fair value loss was largely due to appraiser factoring in lower rental growth, higher vacancies and higher leasing costs assumptions as a result of the COVID-19 pandemic. Net assets attributable to Unitholders decreased by 8.0% to US$1,157.9 million, which translated to NAV per Unit of US$0.73 as at 31 December 2020. The adjusted NAV per Unit (excluding distributable income) was US$0.70. 21 ANNUAL REPORT 2020