FY2016 Financial Results (20 May 2016 to 31 Dec 2016) 13 February 2017
Important Notice This presentation shall be read in conjunction with Manulife US REIT’s financial results announcement dated 13 February 2017 published on SGX Net. This presentation is for information purposes only and does not constitute or form part of an offer, invitation or solicitation of any offer to purchase or subscribe for any securities of Manulife US REIT in Singapore or any other jurisdiction nor should it or any part of it form the basis of, or be relied upon in connection with, any contract or commitment whatsoever. The value of units in Manulife US REIT (“ Units ”) and the income derived from them may fall as well as rise. The Units are not obligations of, deposits in, or guaranteed by the Manager, DBS Trustee Limited (as trustee of Manulife US REIT) or any of their respective affiliates. The past performance of Manulife US REIT is not necessarily indicative of the future performance of Manulife US REIT. This presentation may contain forward-looking statements that involve risks and uncertainties. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements as a result of a number of risks, uncertainties and assumptions. These forward-looking statements speak only as at the date of this presentation. No assurance can be given that future events will occur, that projections will be achieved, or that assumptions are correct. Representative examples of these factors include (without limitation) general industry and economic conditions, interest rate trends, cost of capital and capital availability, competition from similar developments, shifts in expected levels of office rental revenue, changes in operating expenses, property expenses, governmental and public policy changes and the continued availability of financing in the amounts and the terms necessary to support future business. Investors are cautioned not to place undue reliance on these forward-looking statements, which are based on current view of management on future events. Holders of Units (“ Unitholders ”) have no right to request that the Manager redeem or purchase their Units while the Units are listed. It is intended that Unitholders may only deal in their Units through trading on Singapore Exchange Securities Trading Limited (the “ SGX-ST ”) . Listing of the Units on the SGX-ST does not guarantee a liquid market for the Units. DBS Bank Ltd. was the Sole Financial Adviser and Issue Manager for the initial public offering of Manulife US Real Estate Investment Trust ( “Offering” ). DBS Bank Ltd., China International Capital Corporation (Singapore) Pte. Limited, Credit Suisse (Singapore) Limited and Deutsche Bank AG, Singapore Branch were the Joint Bookrunners and Underwriters for the Offering. 2
Contents 1 Key Highlights 2 Financial Highlights 3 Portfolio Performance 4 Moving Forward 5 Appendix 3
Peachtree, Atlanta, Georgia Key Highlights
Impressive FY2016 Results Key Financial Highlights for FY2016 4Q2016 1 FY2016 2 US$12.4 m US$30.0m Net Property Income 1.0% above forecast 3 0.2% above forecast 3 US$9.7m US$22.3m Distributable Income 3.6% above forecast 3 4.8% above forecast 3 1.54 US cents 3.55 US cents Distribution per Unit 3.6% above forecast 3 4.8% above forecast 3 (1) 4Q2016 is defined as the period from 1 Oct 2016 to 31 Dec 2016 (2) FY2016 is defined as the period from 20 May 2016 to 31 Dec 2016 (3) The Prospectus disclosed an 8-month profit forecast for the period from 1 May 2016 to 31 Dec 2016. Forecast results for the financial period from 1 October 2016 to 31 Dec 2016 (4Q2016) and from 20 May 2016 (Listing Date) to 31 Dec 2016 (FY2016) were derived by pro-rating the forecast figures for the period from 1 May 2016 to 31 Dec 2016 as disclosed in the Prospectus 5
Portfolio Highlights for FY2016 Portfolio Performance Portfolio Valuation Occupancy Rate US$833.8m 97.0% 7.2% from Listing Date 1 Gearing WALE 33.8% 5.8 years from 36.8% on Listing Date 1 Rental Reversions Net Asset Value +10.5% US$0.87 per Unit from 1 Jan 2016 to 31 Dec 2016 11.5% from Listing Date 1 (1) 20 May 2016 6
Figueroa, Los Angeles, California Financial Highlights
FY2016 DPU Exceeded Forecast 1 by 4.8% For period 4Q2016 4Q2016 4Q2016 FY2016 FY2016 FY2016 Forecast 1 Forecast 1 20 May 2016 to Actual Change Actual Change (US$’000) (US$’000) (US$’000) (US$’000) 31 Dec 2016 (%) (%) Gross Revenue 2 19,314 19,726 (2.1) 47,510 48,234 (1.5) • 14,503 14,259 1.7 35,291 34,879 1.2 Rental and Other Income • Recovery Revenue 4,811 5,467 (12.0) 12,219 13,355 (8.5) Net Property 12,369 12,348 0.2 29,972 29,687 1.0 Income Net Income 3 17,954 6,814 >100 51,674 16,282 >100 Distributable 9,712 9,376 3.6 22,306 21,285 4.8 Income Distribution per 1.54 1.49 3.6 3.55 3.39 4.8 Unit (cents) (1) The Prospectus disclosed an 8-month profit forecast for the period from 1 May 2016 to 31 Dec 2016. Forecast results for the financial period from 1 October 2016 to 31 Dec 2016 (4Q 2016) and from 20 May 2016 (Listing Date) to 31 Dec 2016 (FY 2016) were derived by pro-rating the forecast figures for the period from 1 May 2016 to 31 Dec 2016 as disclosed in the Prospectus (2) The gross revenue was below forecast due to lower recovery revenues. Recovery revenues from tenants are recognised when applicable recoverable property operating expenses are incurred. Since the recoverable property operating expenses were lower than forecast, the recovery revenues were also lower (3) Net Income is higher than forecast largely due to fair value gains of $52.3 million recognised in income 8 8
Distribution Schedule First Distribution of 3.55 US cents per Unit to be Paid on 30 March 2017 3.55 US cents Distribution per Unit For period 20 May 2016 to 31 December 2016 Annualised Distribution per Unit 5.75 US cents 17 February 2017 Ex-Distribution Date Books Closure Date 21 February 2017 Distribution Payment Date 30 March 2017 9 9
Portfolio Valuation Increased by 7.2% since Acquisition Valuation Increases Underpinned by Positive Fundamentals in US Office Market Change in Portfolio Value as at 31 Dec 2016 Acquisition Valuation Valuation Price Change since Change since Current as at as at Cap Rate 1 Property as at 30 Sep 2016 20 May 2016 30 Sep 2016 31 Dec 2016 20 May 2016 (%) (%) (%) (US$ million) (US$ million) (US$ million) Figueroa 284.7 302.5 3.3 4.5 312.5 9.8 Michelson 317.8 328.6 334.6 1.8 5.3 5.3 Peachtree 175.0 182.1 186.7 2.5 6.7 5.8 Total/ Weighted 777.5 813.2 833.8 2.5 7.2 5.1 Average (1) As at 31 Dec 2016 by CBRE 10 10
Robust Balance Sheet As at 30 Sep 2016 As at 31 Dec 2016 (US$’000) (US$’000) Investment Properties 813,200 833,800 Total Assets 852,485 875,223 294,102 1 294,186 2 Borrowings Total Liabilities 326,801 328,218 Net Asset Attributable to 525,684 547,005 Unitholders NAV per Unit (US$ per unit) 0.84 0.87 (1) Net of upfront debt related unamortised transaction costs of US$1.9 million (2) Net of upfront debt related unamortised transaction costs of US$1.8 million 11
Proactive Capital Management 100% Fixed Rate Loans with No Near-term Refinancing Gearing Ratio Reduced Increasing Debt Head Room As at 3Q2016 As at 4Q2016 Gross Borrowings US$296.0 million US$296.0 million Gearing Ratio 34.7% 1 33.8% 1 Weighted Average Interest 2.46% p.a. 2.46% p.a. Rate Debt Maturity 4 years 3.6 years (weighted average) 5.2 times 2 5.3 times 2 Interest Coverage (1) Based on gross borrowings as percentage of total assets (2) Based on net income before finance expenses, taxes, fair value gain on properties and amortisation, over finance expenses. Including fair value gain on investment properties, the interest coverage would be 15.5 times during the 20 May 2016 to 31 Dec 2016 reporting period 12
Resilient Portfolio with Visible Growth 99.2% 2 of Leases have Rental Escalations Debt Maturity Profile 1 0.8% US$ m 13.2% 150 121.0 Michelson 108.0 Figueroa 100 67.0 Peachtree 50 86.0% Annual rental escalations which average around 3% 0 Mid-term or periodic rental increases Jul 2019 Jul 2020 Jul 2021 Without rental increases (1) No refinancing required until 2019. Excludes Good News Facility of US$31.8 million and US$10.0 million Revolving Credit Facility, both of which have not been drawn down (2) As at 31 Dec 2016 13
Michelson, Irvine, California Portfolio Performance
Diversified Portfolio Portfolio Summary as at 31 Dec 2016 1,783,079 sq ft Total NLA WALE by (NLA) 5.8 years Occupancy 97.0 % Land Tenure 100% freehold No. of Tenants 71 Peachtree Peachtree 24.4% 22.4% Figueroa Figueroa 33.0% 37.5% US$833.8m US$48.6m Portfolio PY2017 NPI Valuation Michelson Michelson 42.6% 40.1% 15
Strategically Located in Key U.S. Cities Portfolio Markets Progressing Steadily Rental Cycle, CBD U.S. Markets 1 Rental Cycle, Suburban U.S. Markets 1 (1) Source: JLL as at 4Q2016. Retrieved from http://www.us.jll.com/united-states/en-us/research/7982/us-office-outlook-q4-2016-jll 16
High Occupancy and Tenant Retention Rate High Occupancy of 97.0% 1 Exceeds New Tenants/Renewals U.S. Market Average of 87.6% 2 Portfolio 97.0% Occupancy Rate Tenant 70.5% 3 Retention Rate (1) As at 31 Dec 2016 (2) Source: Colliers International, United States Research Report, Office Market Outlook (Q32016) (3) For FY2016 17
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