Manulife US REIT - Annual Report 2020

Tenant Retention and Rental Reversion Notwithstanding a very challenging year due to the COVID-19 induced U.S. recession and WFH dynamic, MUST was able to successfully retain 56.6% of its tenants in 2020 with a rental reversion of +0.1% (the rental reversion is +4.7% for 2020 excluding one mark-to-market renewal). There is no income support arrangement within the portfolio. Passing Rent and Portfolio Rental Escalations by GRI The portfolio’s average passing rent as at 31 December 2020 and average rent set to expire over 2021-2022 are US$40.88 psf and US$40.97 respectively. The rents of the leases due to expire in 2021 and 2022 are on average 0.3% below the market rent. This should provide MUST some buffer when renewing the 2020 and 2021 upcoming expiries. Figueroa, Los Angeles In 2020, MUST’s existing legal tenant at Figueroa, Allen Matkins, agreed to an early renewal on its existing space and also expanded into new space for a 10-year period. The tenant now occupies a total of ~65,000 sq ft and accounts for 10.6% and 9.1% of the property’s GRI and NLA, respectively. The preliminary renewal and space expansion extended the property’s WALE profile from 3.4 to 3.7 years. This lease exhibits the strength of the property’s location and competitive position in the market and emphasises the success of Figueroa’s asset enhancement initiatives which were completed in 1Q2020. Property Passing Rent 2021- 2022 Expiring Rents Average Market Rent 1 2021- 2022 Expiries 2 Above/ (Below) Market Rent Figueroa $42.67 $40.14 $42.86 6.3% (6.3%) Michelson $48.13 $40.72 $35.99 2.2% 13.1% Peachtree $35.86 $35.97 $44.56 2.0% (19.3%) Plaza $32.95 $33.70 $37.83 1.0% (10.9%) Exchange $42.04 $41.57 $42.99 2.9% (3.3%) Penn $55.18 $50.74 $57.00 4.2% (11.0%) Phipps $38.44 $39.46 $39.04 0.5% 1.1% Centerpointe $35.16 $33.30 $32.47 1.1% 2.6% Capitol $41.45 $42.23 $39.98 3.5% 5.6% Total $40.88 $40.97 $41.11 23.7% (0.3%) 1 Source: CoStar Market Analysis & Forecast - As at 1 Jan 2021. 2 Calculated based on in-place occupancy of portfolio. Moving on to the rest of the portfolio, 96.0% of the leases by GRI has annual or periodic rental escalations, with an average step-up of 2.0% per annum. 62.1 Annual Escalations of 2.6% p.a. 4.3 No Escalations (89.0% government leases) 33.6 Mid-term/ Periodic Escalations Rental Escalations by GRI (%) Top 10 Tenants The portfolio’s top 10 tenants contributed 35.8% of the portfolio’s GRI as at 31 December 2020. The majority of these anchor tenants include headquarters, listed companies as well as government. This reflects the high quality and stability within MUST’s broader portfolio. The total number of tenants was 176 as at 31 December 2020. Top 10 Tenants by GRI (%) Tenants % of Portfolio GRI The William Carter 6.3 TCW Group 4.1 Kilpatrick Townsend 3.7 The Children’s Place 3.6 US Treasury 3.3 United Nations Foundation 3.3 Quinn Emanuel Trial Lawyers 3.1 Amazon 3.0 Hyundai Motor Finance 3.0 Quest Diagnostics 2.4 Total 35.8 25 ANNUAL REPORT 2020