Manulife Us Reit · SGX:BTOU

Manulife Us Reit — Manulife US REIT U.S. Tax Seminar (2019)

11 slides from Manulife Us Reit's conference presentation, 2019

1. Slide 1: US-REITs & S-REIT Investment

   US-REITs & S-REIT Investment Manulife US REIT U.S. Tax Seminar Manulife Tower David H. Kaplan dkaplan@sandw.com +1 (617) 338-2856

2. Slide 2: Background

   Background  US Congress passed REIT Act in 1960 › REITs typically don’t pay corporate income taxes › Allow investors access to commercial real estate › Public and private REIT tax structures widely used  1984 Tax Reform Act passed portfolio interest exemption rules › Portfolio interest paid exempt

3. Slide 3: Tax Advantage: REIT vs Corporation

   Tax Advantage: REIT vs Corporation Traditional C Corporation Tax-Advantaged REIT Corporation Earns Return on Investment REIT Earns Return on Investment   Tax on Income of the C Corporation No Tax on Income of REIT*   Corporation Pays Dividend to Shareholders REIT Pays Dividend to Shareholders 

4. Slide 4: Why are REITs Utilized?

   Why are REITs Utilized?  As a regarded taxable entity, a REIT serves as a blocker for non-U.S. persons › A non-U.S. shareholder will generally not be treated as engaged in a U.S. trade or business solely as a result of its investment in a REIT › U.S. tax return filing requirements are generally min

5. Slide 5: Qualification as a US REIT

   Qualification as a US REIT  To maintain REIT status, various requirements (ORIAD) must be met: › Organization & Capital Structure › Revenue from Real Property › Income from Other Sources › Assets › Distributions of Income © 2019 Sullivan & Worcester LLP 5

6. Slide 6: Case Study: MUST Original US REIT Structure

   Case Study: MUST Original US REIT Structure • US REIT Income: • Not taxed if distributed S-REIT • Interest: • U.S. withholding: Portfolio interest exemption SG Equity Sub SG FinCo • Not subject to taxation in Singapore • Dividends: • U.S. withholding on US REIT Intercompany distributed earnings Loan

7. Slide 7: 2017 U.S. Tax Legislation

   2017 U.S. Tax Legislation  Limitations on deduction of interest › Section 163(j)* › Section 267A  Section 163(j) limits business interest deductions to 30% of adjusted taxable income › There is an exception to this limitation for an “electing real property trade or business”  Section 267A denies

8. Slide 8: Case Study: MUST Existing Tax Structure

   Case Study: MUST Existing Tax Structure1 Sponsor Unitholders Manulife (9.8% limit) No 30%2 withholding tax on interest and principal on shareholder’s loan - US 0% Tax Portfolio Interest Exemption Rule Zero tax in Singapore - Foreign sourced income not subject to tax Distribution from US to Singapore

9. Slide 9: The Barbados Solution: Detail

   The Barbados Solution: Detail Elect to be fiscally • Structure adopted by Manulife transparent for US tax U.S. REIT and Keppel-KBS U.S. S-REIT REIT • Interest: SG Equity Barbados • U.S. withholding: Sub GP Portfolio interest exemption Barbados • Subject to taxation in Holdco Barbados (by Barbados GP

10. Slide 10: 2018 Proposed Regulations

    2018 Proposed Regulations  Proposed Section 163(j) regulations generally provide that if a REIT holds assets treated as real property under the REIT rules or shares in other REITs, it is eligible to be an electing real property trade or business  Proposed Section 267A regulations narrow the Sectio

11. Slide 11: Opportunity: Back to the Future

    Opportunity: Back to the Future • US REIT Income: • Not taxed if distributed S-REIT • Interest: • U.S. withholding: Portfolio interest exemption SG Equity Sub SG FinCo • Not subject to taxation in Singapore • Dividends: • U.S. withholding on US REIT Intercompany distributed earnings Loan • Not subje

Manulife US REIT — Manulife US REIT U.S. Tax Seminar (2019) on 6ix