Manulife US REIT - Annual Report 2021

MANULIFE US REIT 14 for U.S. office becomes clearer, we will be focused on improving the leasing outcome and rejuvenating the portfolio through recycling. In 2022, we plan to intensify our leasing drive, working with our Property Manager and leasing agents to attract new tenants and to reposition buildings. We expect to see a further flight to quality and newer, green buildings by office-using tenants. We will therefore continue to pivot to increase exposure to high-growth sunbelt and magnet cities, targeting newer buildings eligible for green credentials and increasing our tenant exposure to technology, healthcare, and new knowledge companies. Having witnessed a market surge in U.S. office leasing in the latter part of 2021, with the first positive net absorption since the onset of COVID-19 and transactional volumes up 78.0% 1 YoY, we believe that office is still relevant. Whilst companies are increasingly signalling to employees to return to the office, it is likely that hybrid working will be the preferred choice through 2022 and into the future. This does not necessarily mean that employers will reduce office space, but rather they will need to maintain or even expand as their businesses resume growth in the dynamic post-pandemic economic environment. The signing of longer U.S. office leases – averaging 7.1 years in 1Q2021 to 7.8 years in 4Q2021 2 – is further evidence of stronger corporate confidence in securing real estate space. Over 2021, we delivered on our goal to kickstart growth, increasing MUST’s AUM through our accretive acquisitions by ~10.0% YoY to around US$2.2 billion across 12 assets. With the support of our Sponsor, we will continue to expand our exposure to growth markets and high-growth tenant sectors, as well as explore JV/M&A and capital recycling. In terms of sustainability, wewill aimto improve our ratings and rankings following improved Global Real Estate Sustainability Benchmark (GRESB) and MSCI scores in 2021. We will further equip our employees and directors in ESG best practices to keep MUST at the forefront of ESG developments, and comply with SGX-ST listing rules. As climate-related disclosures become compulsory for SREITs from June 2022, we will also work on improving our disclosures to align with the Task Force on Climate-Related Financial Disclosures (TCFD) framework’s recommendations in the four key areas of governance, strategy, risk management as well as metrics and targets. For the portfolio, we are setting interim and long-term MUST-specific carbon reduction targets and taking the first step to develop a GHG reduction model. This will prevent stranded assets while keeping our buildings in compliance with U.S. regulations. More details can be found in the Sustainability Report. Q: Any final words? CEO: As we look forward beyond the pandemic to newopportunities for MUST, we pause to voice our appreciation to the Board of Directors for providing sage counsel, and to every member of the management team for its commitment to the REIT through a testing period. To our existing and many new Unitholders in Singapore and further afield, we express our thanks for your support. To our Sponsor, business partners, advisors, tenants, and wider members of the investment community, we thank you for standing alongside us through another challenging year and look forward to better times ahead for all. Amidst the everchanging conditions in today’s world caused by the pandemic, as well as economic and geopolitical concerns, we remain focused on our strategy and vision to be the most sustainable U.S. office REIT listed in Singapore. Hsieh Tsun-Yan Chairman Jill Smith Chief Executive Officer Message to Unitholders 1 CoStar Capital Markets Data for Class A office as at 3 January 2022. 2 JLL 4Q2021 U.S. Office Outlook.