Manulife US REIT - Sustainability Report 2017

GRESB Score Target • Used as a reflection of ESG integration in the investment management processes. A score o f 76 was received. • Improve GRESB scores compared to prior year Investment Management Investment decisions are important as they impact the distributions to our Unitholders. The Chief Investment Officer (CIO) works with the management team to execute the investment programme of the Manager. The CIO, together with the U.S. acquisition teams, are responsible for identifying and evaluating potential investments with the view of enhancing the REIT’s portfolio. When evaluating a potential investment, the team is guided by an internal investment checklist and policies to determine its impact on the overall portfolio. All acquisitions have to be vetted by the management team and ultimately approved by the Board of Directors. ESG aspects in acquisitions are addressed through the following: (1) Sustainability in Investment and Due Diligence Checklist which covers: • Environmental risks and building efficiency (2) The Asset Management Sustainability Checklist considers sustainability performance and programmes including: • Green building certification • Performance versus targets and / or benchmarks • Sustainability awards and recognition • Overview of proposed sustainability programmes or initiatives • Summary of any green lease clauses or agreements with tenants regarding sustainability collaboration • Details of any energy, water or waste audits or energy recommissioning studies Although properties are not exclusively selected for their environmental and social attributes, the Manager recognises that a sustainable portfolio can have a positive impact on the REIT’s financial performance. The latest study conducted in the North America and published in the Journal of Portfolio Management showed that LEED™ and ENERGY STAR certified buildings in the U.S. achieved on average higher net rents, higher tenant satisfaction, lower energy consumption, lower rent concessions, lower vacancy and higher renewal rates. Through a vertically integrated platform, the CIO works with the Property Manager to continuously review and recommend ongoing capital and operational improvement plans through Asset Enhancement Initiatives (AEI). These plans relate to operational efficiency of the building while maintaining the quality of maintenance and services. AEIs also help to maintain high tenant retention and occupancy levels which in turn deliver higher rental income. The Property Manager also initiates creative enhancements in its properties to cater to different users’ needs. For example, Light Emitting Diode (LED) lights were installed in Michelson’s common areas to improve the lighting conditions and reduce electricity costs. During the year, Peachtree and Figueroa completed its multi-year lift lobby and restroom refurbishment programme. In Peachtree, a conference centre was also upgraded. Other initiatives included restroom enhancements for greater accessibility, nursing rooms to support working mothers, and converting a car park space into a gym to promote an active and healthy lifestyle. The improvements in lift lobbies and corridors also created a pleasant and welcoming environment for tenants. GRESB GRESB is an investor-led initiative that assesses the ESG performance of real estate companies and funds. In 2017, The REIT took part in the GRESB Benchmark assessment and received a “Green Star” ranking with a score of 76, higher than the global average of 63. This performance was driven by better scores in the following categories: Policy and Disclosure, Monitoring and Environmental Management Systems (EMS), and Performance Indicators . FY2017 Performance and Target SustainAbility Report 56 Manulife US REIT