NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2025 1 GENERAL (CONT’D) (c) Fees under the property management agreements (cont’d) Construction supervision fee (cont’d) In addition, the Property Manager shall receive any construction, supervision or management fees that may be charged pursuant to a lease or otherwise relating to any alterations performed to any premises under a lease provided that the Construction Supervision Fee shall not be duplicative of any such fee. 2 BASIS OF PREPARATION 2.1 Statement of compliance The financial statements have been prepared in accordance with the IFRS Accounting Standards issued by the International Accounting Standards Board (“IASB”), the applicable requirements of the Code on Collective Investment Schemes (the “CIS Code”) issued by the Monetary Authority of Singapore (“MAS”) and the provisions of the Trust Deed. 2.2 Basis of measurement The financial statements have been prepared on the historical cost basis except as otherwise disclosed in the accounting policies below. 2.3 Use of going concern assumption The Group reported a net loss of US$87.7 million for the year ended 31 December 2025 (2024: US$178.0 million), which is largely attributable to the net fair value decrease in the Group’s investment properties amounting to US$83.5 million (2024: US$187.9 million). As disclosed in Note 9, in the financial year ended 31 December 2023, the decrease in the fair value of the investment properties (Note 6) contributed to the Group’s breach of a financial covenant imposed by the Group’s lenders and limited the Group’s ability to raise further debt funding. In response to this, the Group has undertaken a restructuring of existing credit facilities through the Recapitalisation Plan. Under the terms and conditions of the Recapitalisation Plan and the Master Restructuring Agreement, the Group is required to procure the sale of certain of the Group’s properties and to achieve minimum cumulative net sale proceeds targets (each a “Minimum Sale Target”) by certain dates as follows: (i) on a best endeavours basis by 31 December 2024: Minimum cumulative net sale proceeds of US$230.0 million (the “2024 Net Proceeds Target”) (ii) by 30 June 2025 (the “Disposal Deadline”): Minimum cumulative net sale proceeds of US$328.7 million (“Net Proceeds Target”) (inclusive of the above 2024 Net Proceeds Target) Pursuant to the disposition mandate approved by the Unitholders as part of the Recapitalisation Plan (the “Previous Disposition Mandate”), the Manager has been authorised to dispose of the Group’s existing investment properties until it achieves net sale proceeds exceeding US$328.7 million, 31 December 2025 or if the early reinstatement conditions are achieved, whichever is earliest. The reinstatement conditions which are currently applicable to Manulife US REIT (the “Reinstatement Conditions”) are as follows: (i) consolidated total liabilities to consolidated deposited properties (as defined in the MRA) being no more than 50%; (ii) minimum interest coverage ratio of 1.5 times; and (iii) there being no default continuing for at least one full financial quarter after Manulife US REIT delivers its financial statement evidencing compliance with (i) and (ii). / 109 / MANULIFE US REIT
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