ANNUAL REPORT 2024 NAVIGATING TOWARDS SUCCESS
Manulife US Real Estate Investment Trust (MUST or the REIT) is a Singapore real estate investment trust (REIT) listed on the Singapore Exchange Securities Trading Limited (SGX-ST) since 20 May 2016. Its investment strategy is principally to invest, directly or indirectly, in a portfolio of income-producing office real estate in key markets in the United States (U.S.), as well as real estate-related assets. As at 31 December 2024, MUST’s portfolio comprised nine freehold office properties in Arizona, California, Georgia, New Jersey, Virginia and the Washington, D.C. metropolitan statistical area, and had assets under management of US$1.1 billion. The REIT is managed by Manulife US Real Estate Management Pte. Ltd. (the Manager) which is wholly-owned by the Sponsor, The Manufacturers Life Insurance Company (Manulife), part of the Manulife Group. The Sponsor’s parent company, Manulife Financial Corporation (MFC), is a leading international financial services provider that helps people make their decisions easier and lives better. It operates as John Hancock in the U.S., and Manulife elsewhere, providing financial advice, insurance and wealth and asset management solutions for individuals, groups and institutions. ABOUT MUST 22 Financial Review 25 Operational Review 28 Portfolio Overview 39 Independent Market Report 55 Investor and Media Relations 59 Enterprise Risk Management 65 Sustainability Report 112 Corporate Governance 137 Financial Statements 192 Interested Person Transactions 193 Statistics of Unitholdings 8 FY2024 Financial & Portfolio Highlights 10 Chairman's Message 11 In Conversation with Management 14 Key Events 16 Board of Directors 19 Organisation Chart/Trust and Tax Structure 20 Management Team CONTENTS
VISION To create long-term value for stakeholders by building a resilient and diversified U.S. real estate portfolio MISSION To provide Unitholders with sustainable distributions and riskadjusted total returns ANNUAL REPORT 2024 | 01
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STABILISATION IN PROGRESS Completed two asset divestments for net consideration of US$150 million and made early repayment of 2025 debts; continuing to adopt strategic leasing strategy with prudent use of capital ANNUAL REPORT 2024 | 03
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NEXT STEPS TO RECOVERY Execute asset divestments and repay 2026 debts by June 2025; improve financial metrics and liquidity ANNUAL REPORT 2024 | 05
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STRATEGY FOR GROWTH Diversify and reposition the portfolio through accretive acquisitions, leveraging Sponsor's global real estate platform to seize value opportunities in the U.S. real estate market ANNUAL REPORT 2024 | 07
FY2024 FINANCIAL & PORTFOLIO HIGHLIGHTS Note: More details are disclosed in the Financial Review on pages 22 to 24 and Operational Review on pages 25 to 27 of this Annual Report. 1 US$3.8 million was retained for general corporate and working capital purposes in 2H2022 and the distribution amount to Unitholders for FY2022 was approximately US$84.1 million. 2 Pursuant to the recapitalisation plan set out in the circular to Unitholders dated 29 November 2023 (the Recapitalisation Plan) and the entry into the master restructuring agreement (the Master Restructuring Agreement), Manulife US REIT halted distributions to Unitholders till 31 December 2025, unless the early reinstatement conditions (the Early Reinstatement Conditions) as set out in the circular to Unitholders dated 29 November 2023 are achieved earlier. 3 Excluding the Sponsor-Lender loan exit premium. Including the Sponsor-Lender loan exit premium, the weighted average cost of debt would be 5.03% for FY2024 (FY2023: 4.55%). Key Financial Indicators FY2024 FY2023 FY2022 FY2021 FY2020 Gross borrowings (US$ million) 745.0 925.7 1,032.7 975.0 856.5 Aggregate leverage (%) 60.8 58.3 48.8 42.8 41.0 Weighted average cost of debt (%) 4.533 4.153 3.74 2.82 3.18 Weighted average debt maturity (years) 2.9 3.3 2.8 2.4 2.3 Interest coverage ratio (times) 1.7 2.4 3.1 3.4 3.5 Market capitalisation (US$ billion) 0.2 0.1 0.5 1.2 1.2 Portfolio FY2024 FY2023 FY2022 FY2021 FY2020 Assets under Management (AUM) (US$ billion) 1.1 1.4 1.9 2.2 2.0 Occupancy rate (%) 73.6 84.4 88.0 92.3 93.4 FY2024 DISTRIBUTIONS Manulife US REIT’s distribution policy is to distribute at least 90.0% of its annual distributable income on a semi-annual basis. Pursuant to the Recapitalisation Plan and the Master Restructuring Agreement,Manulife US REIT has halted distributions to Unitholders till 31 December 2025,unless the Early Reinstatement Conditions are achieved earlier. NET PROPERTY INCOME (NPI) (US$ million) AGGREGATE LEVERAGE (%) INCOME AVAILABLE FOR DISTRIBUTION (US$ million) DISTRIBUTION PER UNIT (DPU) (US cents) OCCUPANCY RATE (%) WEIGHTED AVERAGE LEASE EXPIRY (WALE) BY NLA (years) 79.9 60.8 38.3 – 73.6 5.0 60.8 38.3 73.6 - 5.0 FY23 FY23 FY23 FY23 FY23 FY232 114.6 58.3 74.3 84.4 - 5.0 FY22 FY22 FY22 FY22 FY22 FY22 113.2 48.8 87.91 88.0 4.75 4.7 FY21 FY21 FY21 FY21 FY21 FY21 109.5 42.8 85.6 92.3 5.33 5.1 FY20 FY20 FY20 FY20 FY20 FY20 115.8 41.0 89.0 93.4 5.64 5.3 FY24 FY24 FY24 FY24 FY24 FY242 79.9 08 | MANULIFE US REIT
Total Trading Volume in FY2024 1,535.1 m units Number of Units in Issue as at 31 December 2024 1,776.6 m units Market Capitalisation as at 31 December 2024 US$158.1 m Open (2 January 2024) US$0.080 Close (31 December 2024) US$0.089 Average Daily Trading Volume in FY2024 6.1 m units Low (5 March 2024) US$0.054 High (19 September 2024) US$0.128 UNIT PRICE PERFORMANCE Jan Mar May Jul Feb Apr Jun Aug Sep Oct Nov Dec 60.0% 40.0% 20.0% 0.0% -20.0% -40.0% 300 250 200 150 100 50 0 0.14 0.12 0.10 0.08 0.06 0.04 0.02 0 FTSE ST REIT Index MUST Straits Times Index MONTHLY TRADING PERFORMANCE IN 2024 Jan Mar May Jul Feb Apr Jun Aug Sep Oct Nov Dec Unit price (US$) Total trading volume (million units) 216.4 113.5 0.077 87.6 0.072 55.0 0.068 37.4 0.064 93.0 0.055 Total Trading Volume Unit Price at the end of each month 170.5 262.2 124.8 100.5 78.8 195.4 0.081 0.060 0.099 0.124 0.112 0.103 0.089 +11.3% MUST -11.8% FTSE ST REIT Index +16.9% Straits Times Index RELATIVE PRICE PERFORMANCE IN 2024 (%) ANNUAL REPORT 2024 | 09
Dear Unitholders, 2024 has been a pivotal year for MUST as we kickstarted the Recapitalisation Plan to stabilise the REIT and positioned ourselves for recovery and growth. As we observe gradual signs of recovery in the U.S. office sector, we are also proud to share the significant progress we have made with our disposition plan to repay debt and improve the REIT’s stability. FROM STABILISATION TO RECOVERY From the onset, the Sponsor has been firmly behind the REIT in its Recapitalisation Plan, being directly involved in negotiations with lenders and putting together a Sponsor’s package, including the purchase of Park Place for US$98.7 million and a six-year US$137.0 million loan extended to the REIT. The Board swiftly appointed a new management team with the departure of the previous management. John, our CEO and CIO, has more than 25 years of in-depth and hands-on experience managing U.S. real estate portfolios. In his last role at DWS, he was responsible for a portfolio with a net asset value of US$15 billion across industrial and office. Mushtaque, our CFO, was appointed through an internal transfer from Manulife Investment Management, and has extensive financial management and accounting experience in investment management of real estate and other private assets. Together, they have helped MUST to strengthen relationships with stakeholders, enhance commercial, operational and financial efficiencies, and swiftly execute the REIT’s disposition plan. In October 2024, we divested Capitol in Sacramento, California for a net consideration of approximately US$110 million. The proceeds, along with existing cash from our balance sheet, were used to pay off 2025 debts. In February 2025, we completed the sale of Plaza in Secaucus, New Jersey for a net consideration of approximately US$40 million, with proceeds used to pay down 20% of 2026 debts. RETURNING TO GROWTH The Sponsor will continue to support MUST’s growth ambitions through its global real estate platform which has in-house capabilities such as on-the-ground transaction and capital markets expertise, market research and strategy, and asset managers. These investment capabilities can empower the Manager to navigate the market and negotiate leases effectively, while tapping on value opportunities in the dislocated U.S. real estate market. While our focus remains on optimising leasing and business operations to enhance cash flows, balance sheet liquidity and returns, we are also looking to return to a growth trajectory. We plan to diversify into other real estate sectors and alternative investments that offer attractive and accretive cash yields and are less capital intensive. Together, we will explore creative deal structuring to acquire higher-yielding assets that we also expect to be long-term accretive to the balance sheet. By maintaining a disciplined and forward-looking approach, we are confident of adapting and thriving amidst a gradual recovery in U.S. office market conditions. Our goal is to resume distributions and bring the REIT back to a growth path, distinguished by resilience, strategic vision and sustainable growth. Looking forward, although macro headwinds persist in the U.S. office sector, we are optimistic that tailwinds such as the U.S. President's return-to-office mandate will help to bolster recovery for the sector. APPRECIATION I would like to extend my heartfelt gratitude to our Unitholders for their patience and unwavering support as we navigate this journey together. Thank you to our Board of directors, management team and dedicated employees for their steadfast commitment and tireless efforts to push the Recapitalisation Plan forward. My appreciation also extends to our lenders for their close partnership in working with us to achieve our recapitalisation goals. Last but not least, I would like to thank our Sponsor for the strong support they have shown for MUST. With the REIT's stabilisation phase in progress, we are looking forward to advancing towards recovery and growth by leveraging on the Sponsor’s resources to capitalise on investment opportunities in the U.S. We hope to resume our distributions and create long-term value for our Unitholders. Sincerely, Marc Feliciano Chairman Marc Feliciano Chairman CHAIRMAN’S MESSAGE 10 | MANULIFE US REIT
IN CONVERSATION WITH MANAGEMENT Q1 AJohn: We are happy to report good progress with positive results to our Unitholders who have entrusted us with the execution of the Recapitalisation Plan. However, it has not been without challenges given the uneven recovery in the U.S. office sector. I hit the ground running, getting to know our assets and stakeholders, including the asset and property managers and local brokers. I have also assessed the portfolio to analyse which assets have liquidity. Property transactions tend to be more dynamic during these periods of uncertainty, which is why the execution is critical to ensure that we are maximising Unitholder value. So far, we have completed the divestment of Capitol for a net consideration of approximately US$110 million, using net proceeds plus US$21 million of cash from our balance sheet to pay off our 2025 debts. We have also completed the sale of Plaza and used the net consideration of approximately US$40 million to pay down 20% of 2026 debts. While these divestments will impact NPI, we are repositioning for the future as we plan to pivot towards diversified assets that offer higher yields with less capital expenditure. We are implementing strategies to improve cash flows by strategically optimising leasing and enhancing business operations. These include executing leases with creative structuring to preserve and manage capital which will enable us to create liquidity and value at the asset level. AMushtaque: Since we came onboard, we have prioritised financial stability and risk management through deleveraging our balance sheet and prudent use of our capital expenditure budget. In 2024, we repaid a total of US$180.7 million of debt, including US$50.0 million in March 2024, followed by another US$130.7 million in November 2024. The latter amount was made possible largely from the net proceeds realised from the sale of Capitol. To be able to make an early repayment of all of our outstanding loans maturing in 2025 was a significant achievement. The sale of Plaza in February 2025 has further enabled us to pay off US$40.0 million of debt towards the US$203.9 million coming due in 2026. We intend to make an early repayment of our remaining 2026 debts totalling US$163.9 million by 30 June 2025. As the new management, having joined in mid-2024, you have had to drive MUST’s Recapitalisation Plan. Can you share the progress so far? Q2 AJohn: As at 31 December 2024, MUST's same-store occupancy fell to 73.6% from 84.2% the year before, due to significant vacates and downsizes such as TCW Group's non-renewal in Figueroa, a financial tenant’s vacate in Exchange, and The Children's Place downsize in Plaza. The current market conditions favour tenants, so a lot of the recent lease comparables tend to be non-accretive. Therefore, we take a more strategic approach in optimising our capital. We proactively pursue every lease deal in the market that makes sense. With our market knowledge, we are able to determine during the negotiation process, if our building has a competitive Why have MUST's occupancy and valuations declined? RIGHT John Casasante Chief Executive Officer and Chief Investment Officer LEFT Mushtaque Ali Chief Financial Officer ANNUAL REPORT 2024 | 11
Q3 AMushtaque: As a result of the decline in portfolio valuation, MUST's aggregate leverage increased to 60.8% as at 31 December 2024. Our trailing 12-month ICR declined to 1.7x, partially due to the one-off US$2.3 million fee paid to lenders, and does not reflect the full-year impact of the US$50.0 million and US$130.7 million debt repayment in March and November 2024, respectively. We are actively pursuing the disposition of certain Tranche 1 and 2 assets to enable MUST to discharge the remaining US$163.9 million of debt well in advance of its maturity in 2026. The planned debt repayment, together with the potential recovery in MUST's portfolio valuation, will eventually help improve the aggregate leverage ratio. Following the completion of our Recapitalisation Plan, we also intend to grow the REIT through a portfolio repositioning by re-deploying existing capital and What is MUST's plan to improve its aggregate leverage and interest coverage ratio (ICR)? How are you managing 'higher-for-longer' interest rates? advantage, allowing us to negotiate an accretive deal which we would consider a strategic transaction. We chose not to consummate 'commodity' leases, which are essentially a race to the bottom because these tenants are looking for a lease with the lowest rental and highest tenant improvement allowance, with no specific preference amongst competitive buildings. Since our current priority is debt repayment, we want to focus on pursuing strategic deals that are accretive, create liquidity, and improve our valuations. This will help us move into the recovery and growth phases more quickly. In 2024, the decline in MUST’s portfolio value narrowed from more than 20% YoY in 2023 to 9.3% IN CONVERSATION WITH MANAGEMENT Going forward, we will continue to optimise and enhance the portfolio performance to support sustainable cash flows, returns and distributions. We will also be undertaking necessary steps to broaden our strategy to include other real estate sectors and permissible alternative real estate investments that offer attractive and accretive cash yields and are less capital intensive. in 2024. The valuation decline was due to higher discount rates and terminal capitalisation rates applied by valuers for certain properties, reflecting weak leasing demand due to tenant downsizing, along with idiosyncratic property-level risks such as higher vacancy or weak submarket fundamentals. By tranches, MUST’s Tranche 1 properties declined by 15.3%, while Tranche 2 and 3 properties recorded smaller declines of 7.1% and 3.9%, respectively. That said, the latest valuations reflect signs of stabilisation in select submarkets. Although properties in softer submarkets such as Washington, D.C. and Los Angeles CBD saw larger declines in values, two properties, Centerpointe (+0.1%) and Phipps (+2.4%), recorded flat to higher valuations as a result of stable discount and terminal capitalisation rates and better market leasing assumptions applied by the valuers. Going forward in 2025, gradual improvements in return-to-office rates and leasing demand are expected to contribute towards stabilisation and improved office values. 12 | MANULIFE US REIT
Q4 AJohn: Sustainability remains a key consideration in everything that we do. I am proud of the progress we have made in 2024. We also earned a 5 Star rating in the GRESB Real Estate Assessment for the seventh consecutive year and an ‘A’ grade in public disclosure, ranking second among 10 U.S. office peers. In addition, we have also met all our social and governance targets. MUST climbed to the 11th spot among 43 REITs and business trusts in the Singapore Governance and Transparency Index 2024, up from 16th place in 2023, reflecting our commitment to delivering long-term value to our stakeholders. Testament to our commitment to continuous improvement, we completed our first internal audit review on our sustainability reporting process which gave us confidence that our key controls and processes are in place. We have also identified some areas where we can continue to improve as we progress in our sustainability journey. Looking ahead, we will be preparing for the extensive reporting adjustments needed to implement the International Sustainability Standards Board (ISSB) requirements. What sustainability milestones has MUST achieved in FY2024? What are your plans for the year ahead? AMushtaque: Our priority is to achieve financial stability and my job is to ensure that MUST achieves an optimal capital structure through the successful completion of the Recapitalisation Plan while managing capital prudently amidst a challenging leasing environment. We have made significant progress in 2024, with all our loan repayments for 2025 completed ahead of schedule. We intend to continue this momentum and make a full repayment of our 2026 debts by 30 June 2025. A reduction in aggregate leverage and strengthening of our balance sheet will enable us to resume distributions and raise equity capital to diversify and grow MUST's portfolio. Q5 A What are your plans to grow MUST under your leadership? John: My immediate priority is to lead MUST through the Recapitalisation Plan. I am fully committed to seeing the REIT through, so that we can resume distributions to Unitholders as well as execute the growth plans that we have. I am excited and confident that we can continue the momentum that we have gathered so far to navigate towards growth for the REIT. Going forward, we will continue to optimise and enhance the portfolio performance to support sustainable cash flows, returns and distributions. We will also be undertaking necessary steps to broaden our strategy to include other real estate sectors and permissible alternative real estate investments that offer attractive and accretive cash yields and are less capital intensive. At the same time, we will remain firmly rooted in the U.S., which is a market where we have deep expertise. Whether it is new asset types or alternative real estate investments, we will keep leveraging our Sponsor’s global real estate platform and in-house capabilities to capitalise on value opportunities in the dislocated U.S. real estate market for the benefit of Unitholders. raising additional capital to invest in accretive investment opportunities. This will enhance the value of our portfolio, which will not only reduce MUST's aggregate leverage, but also improve its capacity to service debt on a sustainable basis. In 2024, the U.S. Federal Reserve made three interest rate cuts, bringing the federal funds rate from 5.25%-5.50% to 4.25%-4.50%. However, a more hawkish Fed guidance caused market volatility in the fourth quarter that saw the benchmark FTSE ST REIT Index decline 10% in the last three months of the year. As part of our risk management strategy, we continue to monitor interest rate movements and target to maintain an optimal hedge ratio of 50-80%, in tandem with planned debt repayments. ANNUAL REPORT 2024 | 13
For Manulife US REIT, 2024 has been defined by an unwavering focus on the ‘stabilisation’ phase of its three-pronged strategic roadmap, leading to recovery and growth. Under a new management team, the Manager prioritised asset dispositions and sought to maximise sales proceeds for its debt repayment plan. This was despite persistent challenges such as a lack of liquidity and tight lending conditions in the U.S. office market. The Manager has made significant progress on the disposition front. In 4Q2024, it completed the divestment of Capitol in Sacramento, California, followed swiftly by the sale of Plaza in Secaucus, New Jersey in 1Q2025. The two properties were sold for a net consideration of approximately US$110 million and US$40 million, respectively. With the proceeds from Capitol, topped up with cash from its balance sheet, the Manager has repaid all US$130.7 million of its loans due in 2025. In March 2025, it also repaid US$40.0 million of its 2026 debts using proceeds from Plaza, and plans to further pay down the remaining US$163.9 million of 2026 debts by June 2025. The Manager is also actively engaged in discussions with other potential buyers, both on- and off-market, for targeted assets, and is evaluating alternative transaction structures to expedite deal closing and maximise value for Unitholders. Looking forward, the REIT's recovery will be driven by further asset dispositions as well as the Manager’s efforts to improve cash flows and returns through optimising its portfolio leasing and business operations. The Manager aims to advance to the recovery stage and resume distributions to Unitholders. Thereafter, growth could come from portfolio repositioning via diversification into other real estate sectors and permissible alternative real estate investments that offer attractive, accretive cash yields and are less capital intensive. While these phases require time and patience to roll out, they will position the REIT on the right path to return to a growth trajectory. Capitol KEY EVENTS GROWTH RECOVERY STABILISATION Plaza 14 | MANULIFE US REIT
JANUARY 2025 • Announced portfolio valuation decline of 9.3% in FY2024 with signs of stabilisation in some submarkets, while other submarkets continued to face leasing challenges FEBRUARY 2025 • Income available for distribution of US$38.3 million for FY2024 mainly due to lower rental and recoveries income from higher vacancies, lower lease termination income, and divestments of Tanasbourne, Park Place and Capitol • Sold Plaza for net consideration of ~US$40 million MARCH 2025 • Paid down US$40.0 million (~20%) of MUST's 2026 debts NOVEMBER 2024 • Fully repaid US$130.7 million outstanding debts due in 2025; announced target to repay 2026 debts of US$203.9 million by June 2025 JANUARY 2024 • Announced portfolio valuation decline of 8.0% (vs 30 June 2023) largely due to higher discount and terminal capitalisation rates and weak leasing activity across MUST's submarkets MARCH 2024 • Paid down US$50.0 million in debt FEBRUARY 2024 • Distributable income of US$74.3 million for FY2023 due to lower rental and recoveries income, higher finance costs, and divestments of Tanasbourne and Park Place APRIL 2024 • Held in-person Annual General Meeting (AGM) on 18 April 2024 OCTOBER 2024 • Sold Capitol for net consideration of ~US$110 million • Retained highest rating and recognition in GRESB1: � Real Estate Assessment: 5 Star for the seventh year � Public Disclosure: ‘A’ grade, 2nd out of 10 U.S. office peers JUNE 2024 • Appointments of Mr John Casasante as Chief Executive Officer and Chief Investment Officer and Mr Mushtaque Ali as Chief Financial Officer effective from 30 June 2024 AUGUST 2024 • 1H2024 income available for distribution of US$22.9 million; selected assets marketed for sale amid ongoing discussions with off-market buyers • Ranked 11th among 43 REITs and Business Trusts in the Singapore Governance and Transparency Index (SGTI) 2024, up from 16th place in 2023 1 The GRESB Real Estate Assessment is a global standard for ESG benchmarking based on sustainability performance and best practices, while the Public Disclosure focuses on the transparency of listed real estate companies and REITs regarding their ESG commitments. ANNUAL REPORT 2024 | 15
BOARD OF DIRECTORS 01 03 02 05 MARC LAWRENCE FELICIANO, 54 Chairman Non-Executive Director Academic and Professional Qualifications • Bachelor in Business Administration (with concentration in Taxation and Finance) and Master in Professional Accounting, University of Texas at Austin, U.S.A. Date of First Appointment as a Director • 18 September 2023 Length of Service as a Director (as at 31 December 2024) • 1 year 3 months Board Committee Served on • Nominating and Remuneration Committee (Member) Present Directorships in other Listed Companies NIL Present other Principal Commitments Global Head of Real Estate, Private Markets, Manulife Investment Management Past Directorships or Principal Commitments held over the Preceding Three Years NIL Experience • Over 30 years in public and private real estate investment management in the U.S.A., which includes significant workout experience 04 01 16 | MANULIFE US REIT
1 Date of Appointment on 17 June 2024. 02 03 KOH CHER CHIEW FRANCIS, 73 Independent Non-Executive Director Lead Independent Director Academic and Professional Qualifications • Doctor of Philosophy, University of New South Wales, Australia • Master of Business Administration, University of British Columbia, Canada • Bachelor of Business Administration with Honours (Second Class Honours Upper Division), University of Singapore • CGMA, Chartered Global Management Accountant (U.K., U.S.A.) • FCMA, Chartered Institute of Management Accountants (U.K.) • CA, Institute of Singapore Chartered Accountants Date of First Appointment as a Director • 21 October 2019 Date of Last Reappointment as a Director • 25 June 2024 Length of Service as a Director (as at 31 December 2024) • 5 years and 2 months Board Committee Served on • Audit and Risk Committee (Chairman)1 • Nominating and Remuneration Committee (Member) Present Directorships in other Listed Companies NIL Present other Principal Commitments • Singapore Management University (SMU) (Emeritus Professor of Finance) • China Taiping Insurance (Singapore) Pte. Ltd. (Director) • Drs Koh & Partners Pte. Ltd. (Secretary, Director) • The Singapore Chinese Girls’ School (Director) Past Directorships or Principal Commitments held over the Preceding Three Years NIL Experience • Over 40 years of experience in investment, consulting, executive development and public service • Previously Deputy Director of Government of Singapore Investment Corporation, involved in direct investments in various countries in Asia VERONICA JULIA MCCANN, 64 Non-Independent Non-Executive Director Academic and Professional Qualifications • CIMA, University of Central London • Chartered Institute of Management Accountants, Fellow Member • Chartered Global Management Accountants, Member Date of First Appointment as a Director • 17 June 2015 Date of Last Reappointment as a Director • 25 June 2024 Length of Service as a Director (as at 31 December 2024) • 9 years and 6 months Board Committee Served on • Audit and Risk Committee (Member) Present Directorships in other Listed Companies NIL Present other Principal Commitments • Advanced MedTech Holdings Pte. Ltd. (Director) Past Directorships or Principal Commitments held over the Preceding Three Years NIL Experience • Over 30 years of experience in banking and finance • Previously Chief Financial Officer Asia and Deputy Chief Executive, Singapore at Commerzbank AG ANNUAL REPORT 2024 | 17
2 Date of Appointment on 1 May 2024. 04 05 CHOO KIAN KOON, 73 Independent Non-Executive Director Academic and Professional Qualifications • Bachelor of Science in Estate Management, University of Singapore • Master of Philosophy in Environmental Planning, University of Nottingham • Doctor of Philosophy (Urban Planning) with Certificate of Achievement in Urban Design, University of Washington, U.S. • Singapore Institute of Planners, Affiliate Member • Singapore Institute of Surveyors and Valuers, Fellow Date of First Appointment as a Director • 9 June 2017 Date of Last Reappointment as a Director • 15 June 2023 Length of Service as a Director (as at 31 December 2024) • 7 years and 6 months Board Committee Served on • Nominating and Remuneration Committee (Member) Present Directorships in other Listed Companies NIL Present other Principal Commitments • VestAsia Group Pte. Ltd. (Chairman and Director) • Department of Real Estate, National University of Singapore (Adjunct Associate Professor) Past Directorships or Principal Commitments held over the Preceding Three Years • Pan Hong Holdings Group Ltd. (Director) Experience • Over 40 years of experience in property industry • Previously Senior Vice President at CapitaLand and supervised the establishment of CapitaLand Mall Trust and CapitaLand Commercial Trust KAREN TAY KOH, 64 Independent Non-Executive Director Academic and Professional Qualifications • Bachelor of Arts, Economics, University of Cambridge, U.K. • Master of Arts, University of Cambridge, U.K. • Masters in Public Administration and International Tax Program (Certificate) Harvard University, U.S.A. Kennedy School & Law School Date of First Appointment as a Director • 10 November 2020 Date of Last Reappointment as a Director • 15 June 2023 Length of Service as a Director (as at 31 December 2024) • 4 years and 1 month Board Committee Served on • Nominating and Remuneration Committee (Chairman)2 • Audit and Risk Committee (Member) Present Directorships in other Listed Companies • Banyan Tree Holdings Limited (Director) Present other Principal Commitments • LaSalle College of the Arts (Director) • Lernen Midco 2 Limited (Director) • K3 Venture Partners Pte. Ltd. (Director) • HSBC Bank (Singapore) Limited (Director) • BC Platforms AG (Director, Senior Advisor and Chair of Asia Advisory Board) • D’Amore Mckim College of Business, Northeastern University (Member of Advisor Board, Centre for Emerging Markets) • HealthCura Pte. Ltd. (Executive Director) • Nutmeg Management Pte. Ltd. (Executive Director) Past Directorships or Principal Commitments held over the Preceding Three Years • TVM Capital Healthcare Partners Pte. Ltd. (Director) • The Red Pencil Singapore (Director and Deputy Chairman) Experience • Over 30 years of experience in public and private sector organisations, particularly in finance, healthcare, education and private equity • 19 years at the Singapore Ministry of Finance, including postings at the Inland Revenue and Monetary Authority of Singapore • Previously Deputy CEO SingHealth and Deputy CEO Singapore General Hospital BOARD OF DIRECTORS 18 | MANULIFE US REIT
ORGANISATION CHART/ TRUST AND TAX STRUCTURE 1 No single investor to hold more than 9.8% (including the Sponsor) - ‘Widely Held’ (No more than 50% of shares can be owned by five or fewer individuals) rule for REITs in U.S. 2 Each shareholder loan SPV has extended an intercompany loan to the Parent U.S. REIT. 3 Subject to 30% withholding tax. 4 Principal repayments are not subject to U.S. withholding taxes. Interest payments that are finally distributed to Unitholders are not subject to U.S. withholding taxes, assuming Unitholders qualify for portfolio interest exemption and provide appropriate tax certifications, including an appropriate IRS Form W-8. 5 The U.S. Asset Manager is a subsidiary of the Sponsor. 6 Each Sub-U.S. REIT holds an individual property. 7 The Property Manager has entered into a master property management agreement with the Parent U.S. REIT and a property management agreement with each Sub-U.S. REIT. 8 As at 31 December 2024. 9 The divestment of the property was completed on 25 February 2025 (U.S. time). ORGANISATION CHART TRUST AND TAX STRUCTURE Dividends3 Intercompany loans Principal and interest payments4 Property management services Property management fees Ownership of Units Trustee fees Act on behalf of Unitholders Management fees Management services Distributions • Set strategic vision and formulate investment strategy • Manage MUST’s assets and liabilities • Provide recommendations to Trustee on acquisitions and divestments in accordance with investment strategy • Execute MUST’s investment and asset management strategy in accordance with strategy and guidelines issued by the Manager • Provide accounting and administrative support 100% wholly-owned 100% wholly-owned 100% wholly-owned BOARD OF DIRECTORS MANAGER UNITHOLDERS1 SHAREHOLDER LOAN SPVS2 EQUITY SPV SINGAPORE UNITED STATES TRUSTEE CHIEF EXECUTIVE OFFICER AND CHIEF INVESTMENT OFFICER AUDIT AND RISK COMMITTEE NOMINATING AND REMUNERATION COMMITTEE CHIEF FINANCIAL OFFICER CHIEF CORPORATE OFFICER HEAD OF INVESTOR RELATIONS U.S. ASSET MANAGER5 PROPERTY MANAGER7 PARENT U.S. REIT SUB-U.S. REITS6 Centerpointe Diablo Exchange Figueroa Michelson Peachtree Penn Phipps Plaza9 PROPERTIES8 ANNUAL REPORT 2024 | 19
MANAGEMENT TEAM JOHN CASASANTE Chief Executive Officer and Chief Investment Officer In his dual role as CEO and CIO, Mr John Casasante works with the Board to determine the strategy for MUST as well as with other members of the management team to execute MUST’s strategy, oversee the day-to-day management and operations of MUST, and work with the Manager’s financial, legal and compliance personnel in meeting the strategic, investment and operational objectives. He is also responsible for the design and execution of the portfolio investment strategy, as well as overseeing the U.S. asset and property management functions. Mr Casasante has over 25 years of commercial real estate experience. Before joining Manulife, he worked at DWS as the Regional Director, Real Estate Asset Management Alternatives and Real Estate Assets, and was responsible for the Western U.S. real estate portfolio with a NAV of US$15 billion across industrial and office. He has also held senior roles at Cushman & Wakefield and Lincoln Property Company. Mr Casasante holds a Bachelor of Science degree in Business Administration, Entrepreneur Emphasis, from the University of Southern California in Los Angeles, California. MUSHTAQUE ALI Chief Financial Officer Mr Mushtaque Ali is the Chief Financial Officer (CFO). He is responsible for the formulation and execution of MUST’s financial strategies, capital and funding management, financial risk management, as well as the treasury, tax and finance operations of MUST. Mr Ali has over 25 years of experience in the finance and accounting professions, mainly in the investment management industry with a focus on private assets and real estate investment management. Previously, he was Head of Finance, Singapore and Southeast Asia, at Manulife Investment Management. Before relocating to Singapore from Canada, Mr Ali served in global leadership roles within Manulife Investment Management’s Private Markets business, including as the Head of Fund & Asset Management Finance and as Head of Private Assets Financial Reporting & Advisory, focusing on real estate, infrastructure, and other private asset classes. Mr Ali holds a Master of Finance from the University of Toronto. He is a Certified Public Accountant from Ontario, Canada, as well as a fellow member of the Institute of Chartered Accountants of England & Wales. DAPHNE CHUA Chief Corporate Officer Ms Daphne Chua is the Chief Corporate Officer and Company Secretary of the Manager. She oversees compliance, corporate secretarial and business administration matters. As the key liaison with the regulators, she is responsible for overseeing and managing regulatory filings on behalf of MUST and assisting MUST in complying with the applicable provisions of the Securities and Futures Act (SFA) and all other relevant legislations. Ms Chua has over 20 years of experience in the field of compliance working for a variety of global financial institutions with operations in Singapore. She has worked closely with various boards of directors and senior management, both in Singapore and internationally, in ensuring compliance with relevant laws and regulations, internal policies and procedures. Prior to joining the Manager in July 2015, Ms Chua held a number of compliance positions including those for J.P. Morgan Asset Management, Manulife Investment Management, Credit Suisse Private Banking and Morgan Stanley. Ms Chua holds a Bachelor of Accountancy (with a Minor in Banking & Finance) (Honours) from Nanyang Technology University, Singapore. 20 | MANULIFE US REIT
CHOONG CHIA YEE Head of Finance Mr Choong Chia Yee is the Head of Finance. He is responsible for financial and management reporting, enterprise risk management, as well as the day-today running of finance operations. Mr Choong has over 25 years of experience in accounting, finance, strategic planning, budgeting, tax, initial public offering, audit, regulatory reporting and compliance. Prior to joining the Manager in November 2016, Mr Choong was Vice President, Finance at Mapletree Logistics Trust and he held several senior managerial positions in CapitaLand Mall Asia. He has extensive experience with corporate entities that have widespread international operations. Mr Choong holds a professional qualification from the Chartered Institute of Management Accountants, U.K., where he is also a fellow member. He also holds the designations of Chartered Global Management Accountant, Fellow Chartered Accountant of Singapore and Chartered Accountant of Malaysia. WYLYN LIU Head of Investor Relations Ms Wylyn Liu leads the investor relations (IR) and corporate communications strategy for MUST, ensuring transparent and effective dialogue between management and the investment community. She is responsible for managing relationships and fostering meaningful engagement with analysts, institutional and retail investors and the media, and also oversees the sustainability strategy for MUST. Ms Liu has more than 15 years of IR experience in both large and small-cap companies across diverse industries. Prior to joining the Manager in 2022, Ms Liu was Assistant Vice President at the Manager of CapitaLand Ascendas REIT where she helped to develop and implement the REIT’s IR programme. She also previously held IR roles at other SGX-listed companies in the shipping and media industries. Ms Liu holds a Bachelor of Business Administration (Honours) degree from the National University of Singapore. ANNUAL REPORT 2024 | 21
FINANCIAL REVIEW FY2024 (US$’000) FY2023 (US$’000) Change (%) Gross revenue 167,582 208,025 (19.4) Property operating expenses (87,708) (93,419) (6.1) Net property income 79,874 114,606 (30.3) Interest income 3,277 617 >100 Manager’s base fee (4,251) (7,833) (45.7) Trustee’s fee (226) (267) (15.4) Other trust expenses (2,546) (2,970) (14.3) Finance expenses (48,099) (46,020) 4.5 Net income before tax and fair value changes 28,029 58,133 (51.8) Net fair value change in derivatives (16,577) (15,653) 5.9 Net fair value change in investment properties (187,936) (438,561) (57.1) Loss on disposal of investment properties (1,618) (908) 78.2 Net loss before tax (178,102) (396,989) (55.1) Tax income 99 17,026 (99.4) Net loss (178,003) (379,963) (53.2) Income available for distribution to Unitholders 38,260 74,292 (48.5) Adjusted income available for distribution to Unitholders¹ 38,260 67,991 (43.7) Adjusted income available for distribution to Unitholders per Unit² (US cents) 2.15 3.83 (43.9) FY2024 FY2023 Total operating expenses3 (US$’000) 94,660 104,502 Net assets4 (US$’000) 430,632 608,635 Total operating expenses as percentage of net asset value as at the end of the financial year (%) 22.0 17.2 NET PROPERTY INCOME Gross revenue for FY2024 decreased 19.4% from FY2023, mainly due to divestment of Tanasbourne in April 2023, Park Place in December 2023 and Capitol in October 2024, absence of the lease termination income of US$9.0 million from a tenant at Exchange, as well as lower rental and recoveries income resulting from higher portfolio vacancy rate, particularly at Figueroa, Centerpointe, Exchange and Plaza. Excluding the impact of the lease termination income at Exchange and divestments, gross revenue decreased by US$17.8 million or 10.5%. Property operating expenses for FY2024 decreased 6.1% from FY2023, mainly due to the divestment of Tanasbourne, Park Place and Capitol, in addition to lower property taxes and repair and maintenance expenses. This was partially offset by higher insurance premiums and non-cash amortisation of leasing commission. As a result, the net property income for FY2024 was US$79.9 million, a decrease of 30.3% from FY2023. 1 To provide a like-for-like comparison, income available for distribution to Unitholders for FY2023 has been adjusted to reflect 1H2023 Manager’s base fee of US$3.8 million and property management fee of US$2.5 million being payable in cash instead of Units. 2 Computed based on adjusted income available for distribution to Unitholders divided by the total number of Units in issue. 3 Refers to all operating expenses (including fees, charges and reimbursable costs paid/payable to the Manager and interested parties), excluding net foreign exchange gains or losses and finance expenses. 4 Net assets as at 31 December 2024 and 31 December 2023, respectively. 22 | MANULIFE US REIT
NET LOSS Other trust expenses for FY2024 decreased 14.3% from FY2023, mainly due to the absence of the accounting write-off of professional fees related to the multicurrency debt issuance programme recorded in FY2023. Interest income of US$3.3 million for FY2024 was US$2.7 million higher than FY2023 mainly due to short-term fixed deposits and higher interest rates earned on interest-bearing bank accounts. Finance expenses for FY2024 increased 4.5% from FY2023, mainly due to higher interest rates on borrowings and a one-off fee of US$2.3 million incurred in relation to the 2024 Net Proceeds Target under the Master Restructuring Agreement, partially offset by loan repayments in 2023 and 2024. Fair value loss on derivatives of US$16.6 million recognised in FY2024 was attributable to the fair valuation of interest rate swaps entered into to hedge against interest rate exposure. Fair value loss on investment properties for FY2024 was US$187.9 million as a result of a decline in valuations, adjusted for capital expenditure (Capex) and other costs related to the investment properties, while the loss on disposal of investment property arose from the divestment of Capitol, completed on 28 October 2024 (U.S. time) as a result of the transaction costs incurred. Tax income of US$0.1 million was due to the net impact from the recognition of deferred tax income on fair value loss of investment properties, partially offset by deferred tax expense from tax depreciation and withholding taxes in FY2024. Due to the effects of the above, MUST recorded a net loss of US$178.0 million, compared to the net loss of US$380.0 million for FY2023. INCOME AVAILABLE FOR DISTRIBUTION After adjusting for net fair value loss and other distribution adjustments, income available for distribution to Unitholders for FY2024 was US$38.3 million, 48.5% lower than FY2023. This was mainly due to lower net property income, higher finance expenses, partially offset by higher interest income. However, pursuant to the Recapitalisation Plan and the Master Restructuring Agreement, MUST has halted distributions to Unitholders till 31 December 2025, unless the Early Reinstatement Conditions are achieved earlier. PORTFOLIO AND NET ASSET VALUE (NAV) Excluding Capitol which was divested in October 2024, the portfolio value of MUST declined by 9.3% or US$116.6 million to US$1,137.2 million in FY2024. The decline in valuation was largely due to higher discount and terminal capitalisation rates, reflecting market and property-level risks. These risks include a decrease in leasing demand attributable to macroeconomic headwinds as well as downsizing on the back of lower utilisation of office space in certain submarkets, as well as higher vacancy or weak submarket fundamentals at the asset level. The decline in valuations was a key contributing factor which resulted in net assets attributable to Unitholders decreasing by 29.2% from US$608.6 million as at 1 January 2024 to US$430.6 million, which translated to an NAV per Unit of US$0.23 as at 31 December 2024. Key Financial Indicators As at 31 December 2024 As at 31 December 2023 Gross borrowings (US$ million) 745.0 925.7 Aggregate leverage1 (%) 60.8 58.3 Weighted average cost of debt² (%) 4.53 4.15 Weighted average debt maturity (years) 2.9 3.3 Interest coverage ratio3 (times) 1.7 2.4 Unencumbered properties as % of total portfolio4 (%) 100.0 100.0 CAPITAL MANAGEMENT AND RECAPITALISATION PLAN The Manager continues to maintain a proactive and prudent capital management approach, limiting Capex to essential spending while working on executing its Recapitalisation Plan. The proceeds from the divestment of Capitol, along with approximately US$21 million of cash from the balance sheet, enabled MUST to make an early repayment of the US$130.7 million of loans due in 2025 by November 2024. This repayment mitigates refinancing risk as there are currently no loans due until March 2026. The sale of Plaza in February 2025 provided further liquidity of approximately US$40 million for MUST to commence repayment of its 2026 loans totalling US$203.9 million. The REIT remains focused on fully repaying its 2026 loans by June 2025 through further asset divestments and cash. This will enable MUST to delever on a going-forward basis. 1 Based on gross borrowings as percentage of total assets. 2 Excluding the Sponsor-Lender loan exit premium. Including the Sponsor-Lender loan exit premium, the weighted average cost of debt would be 5.03% for FY2024 (FY2023: 4.55%). 3 Computed by dividing the trailing 12-month earnings before interest, tax, depreciation and amortisation (excluding effects of any fair value changes of derivatives and investment properties, and foreign exchange translation), by the trailing 12 months' interest expense, borrowing-related fees and distributions on hybrid securities as set out in the Code on Collective Investment Schemes (CIS Code) issued by MAS. 4 Based on appraised values. ANNUAL REPORT 2024 | 23
FINANCIAL REVIEW DEBT MATURITY PROFILE As at 31 December 2024, the total gross outstanding debt of MUST was US$745.0 million with an aggregate leverage of 60.8%, an increase from 58.3% as at 31 December 2023, mainly due to a decline in portfolio valuation. The Manager recognises that the higher aggregate leverage will increase the risk profile of MUST. The Property Funds Appendix states that the aggregate leverage limit is not considered to be breached if exceeding the limit is due to circumstances beyond the control of the Manager. As a decline in the valuation of investment properties has resulted in the aggregate leverage of MUST exceeding 50.0%, there is no breach of the aggregate leverage limit as defined by the Property Funds Appendix. However, the Manager will not be able to incur additional indebtedness. Accordingly, MUST would have to fund Capex, tenant improvement allowances and leasing costs with available cash, cash from operations and through proceeds from further dispositions pursuant to the Disposition Mandate. MUST’s debt maturity profile remains well-staggered with a weighted average debt maturity of approximately 2.9 years as at 31 December 2024 and there is no debt maturing in 2025. As at 31 December 2024, 69.4% of the gross borrowings have fixed rates or have been hedged with derivative financial instruments, which reduces short-term interest rate risk. MUST targets to maintain an optimal hedge ratio of 50% to 80% as it repays debt with proceeds from the expected sale of assets in line with the Recapitalisation Plan. The debt maturity profile is also well-staggered over four years with no more than 30.2% of debt maturing in any year. The fair value of the derivative assets represents 3.4% of the net assets of MUST as at 31 December 2024. DEBT MATURITY PROFILE AS AT 31 DECEMBER 2024 (US$ m) 2029 2027 2028 2026 137.0 225.3 178.8 203.9 Trust-level term loan Sponsor-lender loan % of total debt 27.4% 24.0% 30.2% 18.4% 24 | MANULIFE US REIT
OPERATIONAL REVIEW As at 31 December 2024, Manulife US REIT’s portfolio comprised nine office buildings with an NLA of 4.6 million sq ft, a long WALE of 5.0 years and an occupancy rate of 73.6%. Following the divestment of Plaza in Secaucus, New Jersey in February 2025, the portfolio consists of eight assets located in Arizona, California, Georgia, New Jersey, Virginia and Washington, D.C. spanning 4.1 million sq ft in NLA. POSITIVE SIGNS EMERGING FOR U.S. OFFICE SECTOR 2024 marked a year of stabilisation and gradual recovery in the U.S. office market. According to JLL1, U.S. office occupiers had their most active quarter in 4Q2024 since the pandemic onset, leasing 52.9 million sq ft, a post-pandemic high for the third straight quarter. This reflected a 4.9% growth QoQ and 17.6% growth YoY. The market also experienced its first quarter of positive net absorption since 4Q2021 at 276,400 sq ft in 4Q2024. In terms of supply, office groundbreakings have averaged 10% lower than the previous historical low for the past six quarters, and deliveries will begin to decline sharply after the first half of 2025. Approximately 30 million sq ft of new offices were delivered in 2024 out of a total inventory of about 4.8 billion sq ft. Out of the ~500,000 sq ft that broke ground in 4Q2024, most projects were small-scale, precommitted developments. Meanwhile, the momentum continues for return-to-office, with several major employers establishing or increasing requirements, or announcing new ways of enforcement in 4Q2024. More companies have also established fiveday attendance requirements, namely Amazon, AT&T, Washington Post, Dell Technologies and JPMorgan Chase. MUST: STABILISATION IN PROGRESS IN 2024 In line with MUST’s Recapitalisation Plan, the Manager has begun its disposition of assets, starting with Capitol in 1 JLL U.S. Office Outlook 4Q2024. 2 Based on the respective purchase and sale agreements, and subjected to closing adjustments. 3 The divestment consideration took into account the independent valuation of the property. Using the income capitalisation approach, which consists of the discounted cash flow method and direct capitalisation method, CBRE, Inc. valued the property at US$118.0 million as at 1 September 2024. 4 The divestment consideration took into account the independent valuation of the property. Using the income capitalisation approach, which consists of the discounted cash flow method, Cushman & Wakefield of New Jersey, LLC valued the property at US$43.7 million as at 31 December 2024. DIVESTMENTS Property City, State Net Consideration2 (US$ million) Valuation (US$ million) Buyer Completion Date (U.S. time) Capitol Sacramento, California 1103 118.0 400 CM OWNER, LLC 28 October 2024 Plaza Secaucus, New Jersey 404 43.7 500 Plaza Ground Lessor LLC 25 February 2025 Total 150 October 2024, followed by Plaza in February 2025. Proceeds, along with US$21 million cash from MUST’s balance sheet, have been used to pay off 2025 debts and 20% of 2026 debts. The Manager continues to focus on asset dispositions while maximising sales proceeds to prioritise debt repayment, which will bring the REIT closer to its recovery and growth phase. It also continues to engage in divestment discussions on additional properties in order to pay down the remaining 80% of loans due in 2026. As at 31 December 2024, MUST’s same-store occupancy declined YoY to 73.6%, from 84.2% as at 31 December 2023. This was a result of significant vacates and downsizes such as TCW Group's non-renewal in Figueroa, a financial tenant’s vacate in Exchange, and The Children's Place downsize in Plaza. Approximately 611,000 sq ft of leases were executed in FY2024, representing 13.4% of its portfolio NLA. Average rent reversion came in at –7.4% for leases signed for the full year. STRATEGIC ASSET MANAGEMENT TO OPTIMISE CAPITAL In 2024, the Manager continued to proactively manage the portfolio with a focus on strategic deals that maximise liquidity and optimise capital. In the current tenant's market, many leasing deals come with significant tenant concessions, resulting in long payback periods without providing any meaningful uplift to valuations. The Manager is therefore strategically prioritising leases where it has a competitive advantage. Rather than solely pursuing occupancy, it is focused on structuring leases that are accretive to MUST. Despite the challenging conditions, the Manager executed ~611,000 sq ft of leases, mainly from the Information, Retail Trade and Real Estate sectors. It also maintained a well-spread lease expiry profile. 9.5% of the leases based on NLA are expiring between 1 January 2025 and 31 December 2025. ANNUAL REPORT 2024 | 25
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