Manulife US REIT - Annual Report 2021

MANULIFE US REIT 106 Economic Sustainability MUST continues to build on strong fundamentals to deliver long-term returns for our Unitholders through the sustainable allocation of capital. Our long-term economic value creation consists of four pillars: Organic Growth Sustainable distributions through proactive leasing while maintaining optimal occupancy levels Capital Management Optimise capital structure and increase financial flexibility Inorganic Growth Yield-accretive acquisition of properties in key locations with strong fundamentals Growing Responsibly Make a difference through positive and purposeful contribution Green Financing Integrating sustainability considerations into our financing mechanisms, MUST obtained its first green loan in 2020 and first sustainability-linked loan in 2021. Pegged to pre- determined ESG targets, the loan allows MUST to save on borrowing costs as it achieves targets including the efficient use of energy and water and the management of GHG emissions fromMUST’s building portfolio. As at December 2021, the cumulative green and sustainability-linked loan facilities secured by the Group is US$440.0 million. Governance Framework Good corporate governance contributes to the success of our business. To protect stakeholders’ interest and enhance long-term stakeholder value, we are committed to uphold the highest standards of corporate governance and risk management in our operations. MUST adopts a zero-tolerance policy towards fraud, corruption and unethical actions of any form. We have in place a robust corporate governance framework and apply stringent internal controls to manage our exposure to corruption risks. As a SGX-ST listed REIT, we align our business practices to relevant industry rules and regulations set out in the Code of Corporate Governance (2018) issued by the MAS. Our management of fraud risk is supported by various policies and programmes. These policies, such as the Board Diversity Policy, Investor Relations Policy, Whistle-blowing Policy and Manulife Code of Business Conduct and Ethics are available on our website. MUST’s Sponsor is a Securities and Exchange Commission (SEC) registered company and the Manager ensures that its corporate governance aligns with that of its Sponsor. To ensure that MUST and the Manager operate within each of their regulatory ambits, theManager’s compliance team works closelywith the Sponsor’s legal and compliance teams plus appointed external Singapore and U.S. legal counsels. The compliance team is consulted on all business activities as a way to mitigate and manage potential compliance risks. The compliance team is also involved in tracking the periodic submission of data to regulators and application and review of licenses. Alongside the compliance team, the internal audit team reviews processes and procedures. The Manager also follows a comprehensive enterprise risk management framework and submits reports to the Board on a regular basis. Board Effectiveness To strengthen the directors’ knowledge of the Singapore and U.S. REIT markets, MUST curated a five-part training programme for its directors in 2021. This covered topics on Singapore and U.S. real estate markets, as well as sustainability reporting standards and practices. Additionally, five professional development courses were arranged for independent directors to strengthen the understanding of their role and effectively manage critical issues around risk management, strategy formulation and key legal frameworks. Board Diversity The Board and management recognise that an effective Board where members engage and dissent constructively is fundamental to good corporate governance. An effective board of directors embraces diversity within its members and diversity with its talents. By developing a diverse talent pool with different skill sets, we believe MUST can stay ahead of the competition in our industry. At the broad level, we adopt a Board Diversity Policy, which requires the REIT to consider prospective candidates based on merit and ensure the selection is free of conscious and unconscious discrimination. Stated in the policy, the REIT is also required to appoint at least 33.0% of female directors over time and ensure 25.0% of its independent directors are female. More information on MUST’s corporate governance guidelines and practices can be found on pages 116 to 135. Driving Sustainable Growth For detailed information on MUST’s economic performance in FY2021, please refer to the FY2021 Financial and Portfolio Highlights on page 8 of the Annual Report.