Manulife US REIT - Annual Report 2021

MANULIFE US REIT 180 For the year ended 31 December 2021 Notes to the Financial Statements 20 EARNINGS PER UNIT Basic earnings per Unit is based on: Group 2021 2020 US$’000 US$’000 Net income/(loss) for the year 39,413 (43,284) 2021 2020 No. of Units No. of Units ’000 ’000 Weighted average number of Units 1,603,032 1,575,689 Basic EPU is calculated based on the weighted number of Units for the year. This is comprised of: (i) the weighted average number of Units in issue for the year; and (ii) the estimated weighted average number of Units issuable as payment of the Manager’s fees and Property Manager’s management fees for the year. Diluted EPU is the same as the basic EPU as there are no dilutive instruments in issue during the year. 21 FINANCIAL RISK MANAGEMENT Capital management The Manager’s objective when managing capital is to optimise the Group’s capital structure within the borrowing limits set out in the CIS Code by the MAS to fund future acquisitions and asset enhancement projects at the Trust’s properties. To maintain or achieve an optimal capital structure, the Manager may issue new Units or source additional borrowings from both financial institutions and capital markets. The Group has a policy to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Manager monitors the yield, which is defined as net property income from the property divided by the latest valuation for the property. The Manager also monitors the level of distributions made to Unitholders. The Group seeks to maintain a balance between the higher returns that might be possible with higher level of borrowings and the advantages and security afforded by a sound capital position. The Group is subject to the aggregate leverage limit as defined in the Property Funds Appendix of the CIS Code. The aggregate leverage ratio is calculated as total borrowings and deferred payments (collectively, the “Aggregate Leverage”) divided by total assets. On 16 April 2020, the MAS announced that the Aggregate Leverage limit for Singapore REITs (“S-REITs”) will be raised from 45.0% to 50.0% with immediate effect and deferred the implementation of a new minimum interest coverage ratio (“ICR”) requirement to 1 January 2022 in light of the current COVID-19 pandemic situation. With a new minimum ICR of 2.5 times, S-REITs are allowed to increase their leverage to beyond the prevailing 45.0% limit (up to 50.0%). The Group has complied with the Aggregate Leverage limit of 50.0% during the financial year, with an Aggregate Leverage of 42.8% (2020: 41.0%) and ICR of 3.4 times (2020: 3.5 times) as at 31 December 2021.