OUE Commercial REIT - Annual Report 2021

PORTFOLIO REVIEW Active Portfolio Enhancement The Manager continually evaluates opportunities to enhance the quality and marketability of OUE C-REIT’s property portfolio to ensure that assets remain relevant and competitive. We prioritised the completion of asset enhancement initiatives (“AEI”) which would enhance OUE C-REIT’s portfolio resilience as well as projects which improved operational efficiency and delivered cost savings. After extensive refurbishment, the Mandarin Orchard Singapore was relaunched as the Hilton Singapore Orchard, the flagship hotel of the Hilton brand in Singapore and its largest in Asia Pacific. In addition to modern MICE facilities and newly refurbished rooms, Hilton Singapore Orchard is home to fresh dining concepts such as Osteria Mozza. It features a reinvigorated menu of winning Italian classics from famed American chef Nancy Silverton’s original one Michelin- starred restaurant in Los Angeles. The Manager capitalised on the challenging operating environment in the Singapore hospitality sector in 2021 to undertake the re-branding works, repositioning the property to benefit from the eventual recovery in the hospitality segment. Leveraging on Hilton’s strong brand recognition as well as global sales and distribution network, the re-branding is expected to enhance the property’s competitive positioning amongst other upper upscale hotels along Orchard Road. Through the highly successful Hilton Honors guest loyalty programme with nearly 128 million members worldwide, the property is well-placed to drive more direct booking business. Further, Hilton’s established profile amongst global corporate accounts will also support a wider base of higher- yielding corporate business. Other major projects completed during the year include the upgrading of OUE Downtown Office’s lift lobbies and Lippo Plaza’s building façade. The installation of ultraviolet light germicidal systems for the air-conditioning handling units at Mandarin Gallery and OUE Downtown Office were also completed which helped to further improve the indoor air quality for the safety and comfort of shoppers and tenants. Other works in progress which commenced in 2021 include the interior renovation of Lippo Plaza’s shopping podium and modernisation of lifts at One Raffles Place Tower 1. The AEI at One Raffles Place Tower 1 will continue into 2022 with the upgrading of lift lobbies and washrooms at each office floor. Further, plans are in place to convert all lighting fixtures at OUE Downtown Office to LED lighting to bring about improved energy efficiency and potential cost savings, in line with OUE C-REIT’s sustainability commitment to energy-efficient buildings. As part of the Manager’s active portfolio management to enhance value for Unitholders, the Manager completed the Divestment of a 50% interest in OUE Bayfront, OUE Tower and OUE Link (the “OUE Bayfront property”) to a fund managed by Allianz Real Estate Asia Pacific Pte. Ltd. on 31 March 2021. The agreed value of the property of S$1,267.5 million or S$3,170 per square foot, represented a premium of 26.1% above the purchase consideration for the property at listing and 7.3% over the independent valuation of S$1,181.0 million as at 31 December 2020 which was based on the discounted cash flow, capitalisation and direct comparison methods. The Divestment has allowed OUE C-REIT to realise the value of capital appreciation of a well-managed, premium Grade A commercial asset. By retaining a 50% stake in the OUE Bayfront property, OUE C-REIT maintains significant exposure to the Singapore office market, which has demonstrated resilience amidst a challenging operating landscape. 36 O U E COMM E R C I A L R E I T