Investment Strategy

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Manulife US REIT is a Singapore REIT established with the investment strategy principally to invest, directly or indirectly, in a portfolio of income-producing office real estate in key markets in the United States, as well as real estate-related assets.

In accordance with the requirements of the Listing Manual, the Manager’s investment strategy for Manulife US REIT will be adhered to for at least three years following the Listing Date. The Manager’s investment strategy for Manulife US REIT may only be changed within three years from the Listing Date if an Extraordinary Resolution is passed at a meeting of Unitholders duly convened and held in accordance with the provisions of the Trust Deed.

REIT Structure

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Manulife US REIT will be investing in the Properties in the United States through special purpose vehicles (“SPVs”) that are wholly-owned subsidiaries of the Parent U.S. REIT and organised so as to qualify as U.S. REITs.

U.S. REITs are generally permitted to deduct dividends paid to their shareholders from their U.S. federal (and in most instances, state) taxable income. It is intended that each Property will be acquired and held in a separate U.S. REIT. This structure may facilitate financing on more attractive terms than might be available if the Properties were held by a single U.S. REIT.

Additionally, if Manulife US REIT desires to dispose of any one of the Properties, the exit can be structured as a sale of the shares of the U.S. REIT which owns the Property rather than a sale of the underlying real property, with the goal of simplifying legal transfer and eliminating any otherwise applicable U.S. branch profits tax on the transaction.

In addition, the Property-holding U.S. REITs may form one or more TRSs. TRSs are subsidiaries of U.S. REITs that are generally permitted to undertake activities that the U.S. REIT rules might prohibit a U.S. REIT from performing directly. Such TRSs will enable the Property-holding U.S. REITs to provide non-customary services to their tenants without jeopardising their U.S. REIT statuses.

The following diagram illustrates the relationship, among others, between Manulife US REIT, the Manager, the Trustee, the U.S. Asset Manager and the Unitholders as at the Listing Date:

Growth Strategies

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Key Objectives

The Manager's key objectives are to provide Unitholders with regular and stable distributions and to achieve long-term growth in DPU and NAV per Unit, while maintaining an appropriate capital structure.

Key Strategies

The Manager will seek to achieve Manulife US REIT's key objectives through the following strategies:

  • Proactive asset management and asset enhancement strategy – The Manager will actively manage Manulife US REIT's property portfolio with the objective of achieving growth in Gross Revenue and Net Property Income and maintaining optimal occupancy levels. The Manager will also look to drive organic growth, encourage strong relationships with the tenants of the Properties and facilitate property enhancement opportunities.
  • Investments and acquisition growth strategy – The Manager will seek to achieve portfolio growth through the acquisition of quality income-producing properties used mainly for office purposes that fit within Manulife US REIT's investment strategy to enhance the returns to Unitholders and to pursue opportunities for future income and capital growth.
  • Capital management strategy – The Manager will endeavour to employ an appropriate mix of debt and equity in financing acquisitions and adopt financing policies to optimise risk-adjusted returns to Unitholders.

The Sponsor

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The Sponsor, The Manufacturers Life Insurance Company, was established in 1887 and is part of a leading Canada-based financial services group with principal operations in Canada, the United States and Asia.

Manulife Financial Corporation is listed on the Toronto Stock Exchange, the New York Stock Exchange, the Hong Kong Stock Exchange and the Philippine Stock Exchange.

The Sponsor’s Financial Strength credit ratings are AA- (Standard & Poor’s Ratings Group), A1 (Moody’s Investors Service, Inc.) and AA- (Fitch Ratings Inc.).

Global Presence

At its founding in 1887, the Sponsor’s first president was also Canada’s first Prime Minister, Sir John A. Macdonald. Today, the Sponsor and its subsidiaries provide a wide range of financial protection and wealth management products, such as life and health insurance, group retirement products, mutual funds and banking products across Canada, the U.S. and Asia. It is also experienced, through its regulated advisory subsidiaries, in providing asset management services to institutional customers worldwide.

The Sponsor also has a demonstrated business expertise in Asia dating back more than 100 years since 1897 and has the longest history of continuous operation in Asia of any international insurer. Currently Manulife Asia operates in 11 countries/territories (China, Hong Kong, Taiwan, Japan, Thailand, Cambodia, Malaysia, Vietnam, Singapore, the Philippines and Indonesia). Its distribution network comprises more than 60,000 professional agents, 100 bank partnerships and 500 dealers, independent agents and broker signed major distribution deals. The Sponsor sells both protection and wealth management products in Asia. Protection products include life insurance, group life and health, and hospital coverage. Wealth management products include mutual funds, pensions and investment-linked products.

In Canada, the Sponsor’s Canadian Division has grown into a team of 9,100 employees, serving one in every five Canadians. Globally, the Sponsor and its subsidiaries have an international network of more than 86,000 employees and agents in more than 20 countries and territories.

In the U.S., the Sponsor operates as John Hancock, which celebrated its 150th anniversary in 2012. With roughly 5,100 employees, John Hancock’s core retail products in the U.S. focus on providing financial solutions such as 401(k) retirement plans, mutual funds, college savings plans, life insurance and long term care.

Asset Management Capabilities

Manulife Financial Corporation has US$676 billion in assets under management and administration as at 31 December 2015 of which over 60% is managed for third parties and the remainder are Manulife’s own assets invested on behalf of its General Account.

Manulife Asset Management is the global asset management arm of the Sponsor providing comprehensive asset management solutions for institutional investors and investment funds in key markets around the world. This investment expertise extends across a broad range of public and private asset classes, as well as asset allocation solutions. As at 31 December 2015, AUM for Manulife Asset Management’s public markets were approximately US$301 billion.

Manulife Asset Management Private Markets brings together many of the Sponsor’s private securities investment management capabilities that were initially developed to manage its General Account assets. Manulife Asset Management Private Markets’ investment expertise spans across several private asset classes, including commercial real estate, timberland and farmland, biomass renewable energy, oil and gas, private equity and mezzanine debt. Manulife Asset Management Private Markets also partners with Manulife’s specialised private fixed income investment teams to invest in private placement debt and commercial mortgages. Hancock Natural Resources Group, Manulife Real Estate, John Hancock Real Estate, NAL Resources, Regional Power, Manulife Capital, and Hancock Capital Management are units of Manulife Asset Management Private Markets. As at 31 December 2015, Manulife Asset Management Private Markets’ AUM were US$77.6 billion, representing private assets managed by and for Manulife’s general fund and external clients.

The private market investments of the Sponsor and its subsidiaries include, as at 31 December 2015, approximately: (i) US$21.1 billion of private placement debt, (ii) US$19.8 billion of commercial mortgages, (iii) US$11.2 billion of timberland, (iv) US$15.0 billion of real estate, (v) US$6.4 billion of private equity and mezzanine debt, (vi) US$2.6 billion of farmland, (vii) US$1.2 billion of oil and gas producing assets and investments, and (viii) US$0.4 billion of renewable energy assets.

Manulife Real Estate, the real estate investment and management arm of the Sponsor, has over 70 years of experience through the acquisition, development, ownership, and asset and property management of its multi-billion dollar global real estate portfolio. As at 31 December 2015, the Manulife Real Estate portfolio totalled nearly 64.0 million sq ft across North America and Asia. Manulife Real Estate has a strong acquisition capability with over US$6.2 billion of acquisitions since 2010. Currently, approximately 82% of real estate AUM is managed for the General Account and the Sponsor is looking to expand third party real estate offerings across multiple geographies.

In Canada, Manulife Real Estate has an established real estate investment management business which invests in Canadian real estate properties on behalf of institutional investors. Manulife Canadian Property Portfolio (“MCPP”), launched in 2011, is a core open-end income producing real estate investment fund designed for institutional investors to deliver a steady flow of income and long-term capital growth through direct investment in and active management of real estate located across Canada. MCPP currently holds 51 quality income producing office, industrial and retail properties with a net asset value of US$500.5 million as at 31 December 2015. The portfolio totals nearly 6.3 million sq ft and is diversified by geography, tenant base and asset class. On 30 January 2015, Manulife closed the acquisition of Standard Life plc’s Canadian operations, including its Canadian asset management business, Standard Life Investments Inc. As part of the acquisition, Manulife now manages the Manulife Pooled Real Estate Fund, formerly known as the Standard Life Real Estate Fund with a net asset value of US$1,262.6 million with 117 properties held in the portfolio as at 31 December 2015.

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