Manulife US REIT - Annual Report 2021

MANULIFE US REIT 28 Operational Review Manulife US REIT’s portfolio encompasses 12 high-quality office buildings located in key U.S. markets with an NLA of 5.4 million sq ft, long WALE of 5.1 years and a high occupancy rate of 92.3% as at 31 December 2021. Increasing Exposure to High-growth Markets through Acquisitions Having built a high-quality portfolio of nine Trophy/Class A properties since its IPO, the next phase of growth for MUST is the entry into high-growth sunbelt and magnet cities. With this defensive and resilient portfolio in place, the Manager actively seeks to increase exposure to cities that would benefit from secular trends spurred by the COVID-19 pandemic. These include: • Population shifting from coastal markets to the sunbelt due to lower costs of living • Large clusters of tech companies forming in non-coastal magnet cities due to lower rents and lower tax burdens • U.S. growth markets recording 62.9% 1 higher leasing volume than the broader U.S. market as a result 1 JLL US Market Office Overview 4Q2021. Growth markets include: Austin, Charlotte, Denver, Nashville, Phoenix, Raleigh, San Diego, and Seattle. Exposure to High-growth Sectors by GRI AUM in Growth Markets 9.7% 21.0% 29.0% 12.8% 2020 2020 (Atlanta) 2021 (Atlanta, Phoenix, Portland) 2021 +32.0% +38.1% With these catalysts in mind, and after reviewing close to 50 acquisition opportunities, MUST successfully acquired a portfolio of three assets fromdifferent third-party vendors for US$201.6 million in December 2021. These properties capture exposure to the REIT’s desired growth trends and markets. Two properties are located in the Phoenix submarkets of Tempe and Chandler in Arizona. The third is located in Hillsboro, a submarket of Portland, in Oregon. These assets gaveMUST an entry into high-growthmagnet cities. They also propelledMUST’s exposure to high-growth tenants in the technology and healthcare sectors by 32.0% to 12.8% of GRI, and AUM in growth markets by 38.1% to 29.0%. Nearly half of the acquisition portfolio’s GRI comes from tenants in these sectors. The acquired portfolio comes with an occupancy rate of 93.4% and a WALE of 5.9 years, which enhances the overall occupancy and WALE of MUST’s portfolio. Based on the upsized private placement of US$100.0 million, the accretion to FY2020 DPU and 1H2021 DPU was +1.8% and +2.8%, respectively.