Manulife US REIT - Annual Report 2021

ANNUAL REPORT 2021 33 Portfolio Valuation The YoY decline in valuation was due to the independent valuers factoring in higher vacancies and higher leasing cost assumptions as a result of the COVID-19 pandemic. There were a few bright spots throughout the portfolio, primarily in the Atlanta assets, Peachtree and Phipps, as the local market experienced healthy leasing demand and was one of the most liquid markets in terms of office transactions in 2021. The valuations decline in several other buildings such as Figueroa, Plaza, and Centerpointe also bottomed out during the year and experienced gains on their fair values in the second half of 2021. As a result, the portfolio valuation as at 31 December 2021 was 0.4% above that as at 30 June 2021. For all the properties, the independent valuers were appointed by the Trustee of MUST on the recommendation of the Manager. Property Valuation (US$ million) 1 YoY Change Direct Cap Rates as at 31 December 2021 2 (%) As at 31 December 2021 As at 30 June 2021 As at 31 December 2020 Figueroa 315.2 313.0 320.0 -1.5 5.50 Michelson 317.0 321.0 319.0 -0.6 5.50 Peachtree 212.9 201.1 203.1 4.8 5.75 Plaza 106.0 113.0 114.6 -7.5 7.00 Exchange 324.0 330.0 333.0 -2.7 5.75 Penn 177.3 174.6 176.5 0.5 5.50 Phipps 216.0 213.2 212.1 1.8 5.75 Centerpointe 112.7 108.7 118.5 -4.9 7.50 Capitol 197.0 196.0 196.0 0.5 7.00 Subtotal 1,978.1 1,970.6 1,992.8 -0.7 Diablo 3 65.0 - - 6.75 Park Place 3 106.9 - - 5.50 Tanasbourne 3 34.4 - - 6.50 Total 2,184.4 1,970.6 1,992.8 Going Forward Office rent growth is rebounding throughout the U.S. With each quarter in 2021, the projected 12-month rent growth continued to inch up, as evidenced by the expected rent growth of -2.5% from April 2021, -1.2% from July 2021, -0.4% from October 2021, and 2.3% growth in January 2022 4 . YoY projected 12-month rent growth is now close to pre-pandemic levels, which gives MUST optimism for its rental outlook in 2022. In 2022, the U.S. office sector will remain a core part of MUST’s portfolio. The Manager will focus on improving leasing to drive income, while future-proofing the business through portfolio rejuvenation and improvingMUST’s green credentials to capture rising demand for green office space. MUST continues to be recognised for its high ESG standards, maintaining its 5 Star in its GRESB Real Estate Assessment and a 90.0%Leadership in Energy and Environmental Design (LEED TM ), Energy Star®and/or BOMAcertifiedportfolio.With the support of its Sponsor, MUST will continue to expand its exposure to growth markets and tenants in the sunbelt andmagnet cities, explore JV/M&A and capital recycling, so as to deliver sustainable returns to Unitholders. 1 Valuations conducted by CBRE Valuation & Advisory Services (CBRE). 2 Based on overall cap rates used in direct capitalisation valuation approach. 3 Based on time specified appraisals completed by JLL during acquisition. 4 CoStar Market Analysis & Forecast Reports as at January 2022. Markets 1Q2021 2Q2021 3Q2021 4Q2021 Downtown LA (4.4) (1.5) 0.0 2.3 Irvine, Orange County (4.1) (1.4) (0.4) 2.3 Buckhead, Atlanta (1.7) (0.7) 0.0 3.4 Midtown, Atlanta (1.7) (0.7) 0.0 3.3 Meadowlands, Secaucus (5.8) (2.3) (2.1) 1.8 Hudson Waterfront, Jersey City (5.6) (2.4) (2.1) 1.8 Washington, D.C. (2.2) 0.2 0.7 0.2 Fairfax Center (2.6) 0.0 0.4 2.8 Downtown Sacramento (1.9) (0.6) 1.1 2.7 Tempe, Phoenix --- --- --- 5.7 Chandler, Phoenix --- --- --- 5.9 Hillsboro, Portland --- --- --- 3.7 Weighted Average (2.5) (1.2) (0.4) 2.3 Projected 12-month Rent Growth across MUST Markets 4 (%)