Mapletree Pan Asia Commercial Trust : Responses to the Substantial and Relevant Questions received from Unitholders for the Annual General Meeting on 28 July 2023

(Constituted in the Republic of Singapore pursuant to a Trust Deed dated 25 August 2005 (as amended))

RESPONSES TO THE SUBSTANTIAL AND RELEVANT QUESTIONS RECEIVED FROM UNITHOLDERS FOR THE ANNUAL GENERAL MEETING ON 28 JULY 2023

27 July 2023 - MPACT Management Ltd., as manager of Mapletree Pan Asia Commercial Trust ("MPACT" and as manager of MPACT, the "Manager"), wishes to thank all unitholders of MPACT (the "Unitholders") who have submitted their questions in advance of the 12th Annual General Meeting of MPACT ("AGM"), which will be conducted at 20 Pasir Panjang Road, Mapletree Business City, Town Hall - Auditorium, Singapore 117439 and by way of electronic means at 2.30 p.m. on Friday, 28 July 2023 (Singapore time).

Please refer to Annex A for the list of substantial and relevant questions, and the Manager's responses to these questions. Where questions overlap or are closely related, they have been merged and rephrased for clarity. For ease of reference, the questions have been grouped into the following key topics

1. Financial Performance and Capital Management
2. Business and Operational Performance
3. Strategy and Outlook
4. Others

By order of the Board

Wan Kwong Weng

Joint Company Secretary

MPACT Management Ltd.

(Company Registration No. 200708826C)

As Manager of Mapletree Pan Asia Commercial Trust

Important Notice

The value of units in MPACT ("Units") and the income derived from them may fall as well as rise. Units are not obligations of, deposits in, or guaranteed by, the Manager, or any of its affiliates. An investment in Units is subject to investment risks, including the possible loss of the principal amount invested.

Investors have no right to request the Manager to redeem their Units while the Units are listed. It is intended that unitholders of MPACT may only deal in their Units through trading on the SGX-ST. Listing of the Units on the SGX-ST does not guarantee a liquid market for the Units.

The past performance of MPACT is not necessarily indicative of the future performance of MPACT.

Annex A

A. Financial Performance and Capital Management

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What did management like about the results? What didn't management like about the results?

• This is MPACT's maiden set of results post-merger. Despite unprecedented challenges including the COVID-19 pandemic, the Russia-Ukraine conflict, along with rising interest rates and energy prices, as well as an increasingly shaky global economy, MPACT closed the financial year with:
• • 65.4% year-on-year ("yoy") growth in gross revenue to S$826.2 million;
  • 62.6% yoy growth in net property income ("NPI") to S$631.9 million;
  • 6.1% yoy growth in distribution per unit ("DPU") to 9.61 cents on a like-for-like basis (excluding the release of retained cash in FY21/22)
• Notably, the Singapore properties recorded an increase of S$33.0 million of NPI, which not only covered the rise in utility costs but also more than offset the higher cost of Singapore dollar borrowings in FY22/23.
• MPACT's yoy growth was primarily led by the contribution from properties acquired through the merger, as well as higher earnings from our core assets, VivoCity and Mapletree Business City ("MBC"). This was however dampened by higher utility costs, higher interest rates and a stronger Singapore dollar ("SGD") against the Hong Kong dollar ("HKD"), Renminbi ("RMB"), Japanese Yen ("JPY") and Korean Won ("KRW"):
• • Singapore properties: Cost of electricity for the Singapore properties were locked in at lower rates until October 2022. As a result, there was a five-month impact in FY22/23 from higher utility rates that offset higher contributions from the Singapore properties. Despite this, the Singapore properties played a vital role in driving MPACT's performance, achieving S$33.0 million of higher NPI, which not only covered the rise in utility costs but also more than offset the higher cost of Singapore dollar borrowings.
  • Overseas properties: Our overseas properties (including MPACT's 50% effective interest in The Pinnacle Gangnam) started contributing from 21 July 2022 after the completion of the merger, and delivered a total of S$289.3 million and S$216.4 million for gross revenue and NPI, respectively, in FY22/23. However, their contributions were offset by higher interest costs and further impacted by the strengthening Singapore dollar (against HKD, RMB, JPY and KRW), which weighed on contributions from these overseas properties when they were translated back into SGD.
• We will continue to deploy targeted strategies to address any market changes by proactively managing the portfolio. MPACT's enlarged scale and enhanced diversification, anchored by our core assets, will also empower us to pursue capital recycling opportunities, asset enhancement and development initiatives, and acquisitions across Asia's key gateway markets over time. We will also prioritise maintaining our balance sheet resilience, which underpins the stability of our entire franchise. We do so by safeguarding the capital structure, diversifying funding sources and ensuring financial flexibility, while keeping overall costs at a sensible level.

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Seeing the strong performance of Singapore properties and weaker performance of the acquired properties from MNACT, unitholders would have received higher DPU if the acquisition had not gone through. Looking forward, when does the board think that unitholders will benefit from this acquisition? In another word, higher DPU.

The unit price used to be strong focusing on its local assets, VivoCity and MBC, and trading well above book value. The decision to bail out MNACT with our valued units and raising its gearing to 40% have dragged us down together with it. We could have weathered the post-pandemic situation just fine. How are these North Asian assets doing now? Are there any signs to yield accretion from those purchases?

With the acquisition completed a year ago, can the manager help unitholders better understand the realised benefits of increasing the portfolio size and overseas expansion as compared to being Singapore-centric, especially given the strength of the Singapore dollar and the stability of the Singapore real estate market?

• Although Singapore is a relatively stable market, opportunities for growth are limited if we remain confined to Singapore. In addition, Unitholders have provided as a point of feedback over the years that growth is a priority. As such, overseas expansion into Asia, a region with a shared background and familiarity, is necessary.
• The merger with MNACT provided a ready platform with extensive reach and scale in Pan Asia, along with established local operational teams with extensive experience. Growth and expansion through a ready platform is therefore much easier as opposed to buying individual assets and trying to build an operational team from scratch.
• Since the announcement of the merger, the overall economic environment has weakened and global markets have faced significant uncertainties.
• Key factors that affected MPACT's FY22/23 earnings were higher utility rates, higher interest rates and strengthening of SGD against the HKD, RMB, JPY and KRW that further affected the contributions from MPACT's overseas properties when translated back into SGD. These factors have wide-ranging impact across different sectors and markets, not just MPACT.
• Despite these, operationally in local currency terms, the overseas assets recorded mostly stable performance. However, the stronger Singapore dollar had resulted in negative foreign exchange impact which weighed on their contributions.
• Notably, the Singapore properties recorded an increase of S$33.0 million of NPI, which not only covered the rise in utility costs but also more than offset the higher cost of Singapore dollar borrowings in FY22/23.
• While we acknowledge the ongoing uncertainties across different markets, such uncertainties will continue to exist in one form or another. As such, there can never be a
  "perfect time" or "perfect portfolio" to make such acquisitions.
• We continue to believe in the long-term fundamentals of the markets we are in and the role each market plays in MPACT's next chapter of growth.

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	-	Singapore will continue to constitute a significant component of the portfolio to
			provide underlying portfolio stability.
	-	China is a huge market that cannot be ignored. The long-term prospects of the
			country remain compelling. Post-COVID reopening and in the midst of global
			economic uncertainty, the Chinese government has implemented stimulus policies
			and support measures to boost market confidence and demand. Its continued
			commitment to rebalance the economy by growing domestic demand and
			capabilities can be expected to benefit long-term sustainability.
	-	Hong Kong is a recovery story after going through prolonged COVID-19 restrictions
			as well as the social incidents between 2019 and 2020. We have started to see
			gradual recovery in shopper flows at Festival Walk after Hong Kong's progressive
			relaxation of health measures from the second half of FY22/23 and the reopening
			of its border with China. With the positive renewal of Arup, a major tenant at Festival
			Walk, near-full committed occupancy achieved at the end of FY22/23, as well as
			signs of rental stabilisation, the outlook looks more promising.
3	What is the dividend payment per year?
	• Please see the following table for distributions to unitholders over the past five years. For
		more information, you can refer to page 4 of MPACT's FY22/23 Annual Report ("AR").
			Financial Year	Distribution per Unit (Singapore cents)
			FY18/19	9.14
			FY19/20	8.00
			FY20/21	9.49
			FY21/22	9.53
			FY22/23	9.61
	• MPACT's distribution policy is to distribute at least 90% of its taxable income, as well as
		its tax-exempt income. For FY22/23, MPACT made four distributions to Unitholders,
		including the clean-up distribution for the period from 1 April 2022 to 20 July 2022 paid
		on 25 August 2022.
	• Following the announcement on 27 October 2022, MPACT has adopted a quarterly
		reporting framework with effect from 3Q FY22/23. Consequently, distributions to
		Unitholders have also been changed to a quarterly basis since 3Q FY22/23.

4 Will the continued high interest rate affect MPACT's business?

What is the manager's view on the current and future interest rate environment?

Considering that the percentage of fixed-rate debt has decreased from 80.3% to 75.5%, could the manager shed light on how the REIT is optimising its hedges to mitigate interest rate risks?

In addition, when do the interest rate swaps reach their expiration dates, and what is the average duration of these swaps?

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• The higher finance expenses incurred in FY22/23 were mainly due to the interest expenses incurred by the overseas properties, interest expenses incurred on the acquisition debt (refers to debt drawn to partially fund the merger with MNACT) and higher interest rates on the existing Singapore dollar borrowings.
• We manage MPACT's balance sheet by maintaining (i) a mix of fixed and floating rate debt, (ii) sufficient financial liquidity, (iii) well-distributed debt maturity profile, and (iv) diversified funding sources. This is a risk-based approach that aims to give a reasonable level of certainty over interest expenses while giving MPACT the ability to adapt and capture opportunities to optimise the balance sheet.
• As a result of prudent capital management, MPACT has remained well-capitalised with diversified sources of fundings. As at 31 March 2023, MPACT has approximately S$1.6 billion of cash and undrawn committed facilities available, approximately 75.5% of the gross debt has been fixed through fixed rate debt, interest rate swaps and cross- currency interest rate swaps, and the debt maturity profile was well-spread with no more than 22% of debt expiring in any financial year.
• Based on unhedged debt as at 31 March 2023, if benchmark rates were to increase/decrease by 50 basis points, with all other variables being held constant, DPU on a full-year basis would be approximately 0.16 Singapore cents lower/higher, or approximately 1.7% lower/higher.
• The interest rate environment is expected to remain volatile with rates remaining high for the time being.
• The interest rate swaps that have been put in place have different expiry dates and will progressively mature over different time periods. In consideration of the volatile interest rate environment, the average tenure of the interest rate swaps that we have executed in recent times is about 2-3 years in order to retain some flexibility to adapt when interest rates move favourably.
• As the older fixed rate debts and interest rate swaps progressively mature, the overall cost of financing is expected to increase if interest rates remain elevated. MPACT is committed to staying disciplined and vigilant in managing the capital structure, and we will continue to monitor the market and adapt our strategies as needed to ensure stability.

Does the REIT manager have any plans to undertake equity fundraising in order to reduce its leverage, considering that historically, the REIT maintained a leverage of 33%-34% when the portfolio was focused on Singapore (which may have been less risky)?

• The aggregate leverage ratio has risen from 33.5% as at 31 March 2022 to 40.9% as at 31 March 2023 due to the merger and the debt taken on to partially fund the cash consideration of the merger. Note that prior to the merger, the leverage ratios of MCT and MNACT were 33.8% and 42.1%, respectively (as at 30 June 2022).

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