OUE Commercial REIT - Annual Report 2021

CAPITAL MANAGEMENT Notes: 16 OUE C-REIT’s interests in One Raffles Place and OUE Bayfront are held via its indirect interest in OUB Centre Limited and direct interest in BPH PropCo LLP, respectively 17 Based on SGD:CNY exchange rate of 1:4.666 and includes OUE C-REIT’s share of OUB Centre Limited’s loan and BPH PropCo LLP’s loan. OUE C-REIT’s interests in One Raffles Place and OUE Bayfront are held via its indirect interest in OUB Centre Limited and direct interest in BPH PropCo LLP, respectively 18 As prescribed under Appendix 6 of the Monetary Authority of Singapore’s Code on Collective Investment Schemes (last revised on 3 March 2022). Based on earnings before interest, tax, depreciation and amortisation (excluding effects of any fair value changes of derivatives and investment properties, and foreign exchange translation) over interest expense and borrowing-related fees, on a trailing 12-month basis 19 As above in note 18 and including distributions on hybrid securities in the denominator Capital Management Indicators As at 31 December 2021 Aggregate Leverage (%) 38.7 Total Debt 17 (S$ million) 2,256.6 Weighted Average Cost of Debt (% per annum) 3.2 Weighted Average Term of Debt (years) 3.0 Proportion of Fixed Rate Debt (%) 72.4 Weighted Average Term of Fixed Rate Debt (years) 2.0 Interest Coverage Ratio (“ICR”) 18 (times) 2.8 Adjusted ICR 19 (times) 2.7 Debt Maturity Profile (As at 31 December 2021) (S$ million) PRUDENT AND DISCIPLINED CAPITAL MANAGEMENT The Manager adopts a proactive and prudent approach to capital management for financial flexibility and sustainability in the long term. Its key capital management strategies include ensuring OUE C-REIT has access to diversified funding sources, optimising the cost of debt financing, managing liquidity and refinancing requirements. With the completion of the partial divestment of OUE Bayfront on 31 March 2021, the Manager utilised the net divestment proceeds of approximately S$262.6 million to redeem convertible perpetual preferred units ("CPPUs") and pare down borrowings. Consequently, the amount of outstanding CPPUs has reduced from S$375.0 million to S$220.0 million. MANAGING CAPITAL FOR STABILITY AND SUSTAINABILITY In June 2021, S$150.0 million of five-year 3.95% fixed rate notes were issued to refinance existing borrowings. Further, the Manager secured its maiden sustainability-linked loan of S$540.0 million in October 2021. The loan incorporates interest rate reductions linked to predetermined sustainability performance targets pertaining to energy and water efficiency, in line with OUE C-REIT’s commitment to reduce the environmental impact of its portfolio. Beyond addressing 2021 refinancing requirements, part of the loan facilities were used to refinance debt due in 2023 and 2024. The resultant debt maturity profile is well-spread out, with an average term of 3.0 years as at 31 December 2021. For FY 2022, only S$171 million of borrowings are due for refinancing in December. As at 31 December 2021, OUE C-REIT’s total debt was S$2,256.6 million, inclusive of the proportionate share of loans at OUB Centre Limited and BPH PropCo LLP 16 . Aggregate leverage of 38.7% as at 31 December 2021 was lower YoY, and within the regulatory limit of 50%. The Manager will continue to actively explore refinancing of loans ahead of their maturity to further extend OUE C-REIT’s debt maturity profile and mitigate refinancing risks, while keeping borrowing costs stable. The weighted average cost of debt stood at 3.2% per annum as at 31 December 2021. 2025 2026 2023 2024 2022 SGD Loan Share of OUB Centre Limited's SGD Loan MTN RMB Loan Share of BPH Propco LLP's SGD Loan 171 271 272 23 504 100 400 306 150 60 37 A N N U A L R E P O R T 2 0 2 1