OUE Commercial REIT - Annual Report 2021

The Manager utilised the net divestment proceeds from OUE Bayfront’s partial divestment on 31 March 2021 to reduce the amount of outstanding convertible perpetual preferred units and pare down borrowings. As a result, the aggregate leverage as at 31 December 2021 stood at 38.7%, down from 41.2% a year ago. In June 2021, the Manager announced the issuance of S$150 million five-year 3.95% fixed rate notes. Further, in October 2021 we took an important first step towards sustainable financing with OUE C-REIT’s maiden S$540 million sustainability-linked loan. The proceeds from both the notes and loan facilities were used to refinance existing borrowings, which lengthened the weighted average term of debt to 3.0 years, leaving only S$171 million or 7.6% of total debt due for refinancing in December 2022. These forward- looking activities have reduced OUE C-REIT’s near-term refinancing risk while maintaining a stable weighted average cost of debt at 3.2% per annum as at 31 December 2021. The resultant well-spread out debt maturity, with no more than 24% of debt due in any year, further mitigates the concentration of refinancing risk. The Manager in 2021 has elected to receive 50% of its management fees in cash with the balance in Units. PROGRESSING OUR SUSTAINABILITY COMMITMENT The Manager aspires to higher standards of sustainability and governance for OUE C-REIT. Thus, we have made further improvements in the past year to strengthen the management approach, refine our data collection system and align disclosures with relevant international reporting frameworks to enhance transparency around our sustainability efforts and meet the various information needs of our stakeholders. We are pleased to share that we have started to adopt the recommendations by the Task Force on Climate-related Financial Disclosures (“TCFD”) in our latest sustainability report. TCFD is a well- regarded international sustainability framework which is also aligned with the requirements of the Guidelines on Environmental Risk Management for Asset Managers set out by the Monetary Authority of Singapore (“MAS”). We have conducted a comprehensive assessment of climate-related risks and opportunities, including the transition and physical risks using scenario analysis, and this is further elaborated in the sustainability report on page 78. In 2022, OUE C-REIT will be participating in the Global Real Estate Sustainability Benchmark (“GRESB”) Real Estate Assessment. With the increased focus on environmental, social and governance (“ESG”) performance and disclosure, OUE C-REIT’s participation in the leading global benchmark for the real estate sector will improve the ease of assessment by institutional investors and enhance our profile amongst industry peers. With the results of our assessment, we will also be able to identify future areas of improvement in our portfolio. LOOKING AHEAD The Ministry of Trade and Industry in Singapore has projected GDP growth of 3.0% to 5.0% in 2022, moderating from the 7.6% expansion in 2021. While significant uncertainties remain, the general business outlook remains cautiously optimistic. Singapore’s economic expansion is likely to remain uneven, driven by outward-oriented sectors while activity in the aviation, tourism and consumer-facing sectors would likely remain below pre-COVID levels. While OUE C-REIT’s Singapore office properties have consistently enjoyed positive rental reversions which have resulted in high average passing rents, reversions going forward may be constrained due to higher-than-market expiring rents in 2022. Nevertheless, we are optimistic that the ongoing recovery in the office market will progressively narrow the gap between expiring rents and market rents. With the progressive easing of border restrictions amidst high vaccination rates in Singapore, the retail sector is expected to benefit from improvements in consumer sentiment and economic activity. However, the Manager expects tenants to remain cautious in their lease negotiations at least in the near term, in view of the uneven pace of recovery among the different retail trade sectors. At Mandarin Gallery, the Manager will continue to implement flexible leasing strategies to boost occupancy, while working with tenants and other partners to offer new interactive experiences to support the industry’s shift towards omni-channel retail, which will help drive footfall and sales. In view of persistent market uncertainty, proactive asset management to retain and attract new tenants to sustain occupancy remains an ongoing focus. 19 A N N U A L R E P O R T 2 0 2 1