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COLUMBIA THREADNEEDLE INVESTMENTSMANAGING REAL ESTATE INVESTMENTS RESPONSIBLY 2019

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About Columbia Threadneedle Investments

Columbia Threadneedle Investments is a leading global asset manager providing a broad range of actively managed investment strategies and solutions for individual, institutional and corporate clients around the world. In the UK, Columbia Threadneedle is a substantial manager of property assets, with c£9.1bn1 invested across a range of funds. Our fund range comprises open-ended balanced funds, strategic partnerships, closed-ended leveraged structures, and the specialist Low Carbon Workplace strategy, which has a specific remit to undertake office refurbishments to a low carbon standard.

Columbia Threadneedle is part of Ameriprise Financial, a US-based financial services provider, and we share a strong culture and commitment to helping people feel confident about their financial future.

We are equally committed to a responsible investment approach that creates sustainable long-term value. We strive to be responsible stewards of our clients’ assets within a framework of good governance and transparency. Being a responsible investor helps us generate better investment decisions and outcomes for our clients. It is integral to our business proposition and defines how we act in the marketplace. Columbia Threadneedle is a signatory to the United Nations-backed Principles of Responsible Investment (PRI).

Managing real estate assets responsibly: our approachWe believe that investing in real estate responsibly is complementary to our core objective of delivering strong risk-adjusted investment returns for our clients. In this document, we outline our approach to managing real estate assets responsibly, and demonstrate how we apply these principles to our activities.

Key to our approach is an understanding of the environmental and social risks posed by real estate assets. We focus on mitigating those risks and seeking continuous improvement by assessing the environmental and social impacts throughout the lifecycle of our property assets. This approach is ingrained within the day-to-day activities of our business.

Completed planning project – Threadneedle Pension Fund, London SW13

1 Columbia Threadneedle Investments, as at December 2018

“ Columbia Threadneedle Investments is a major owner of real estate across the UK, diversified by region and sector, and focused on identifying the right property for the right geography. This gives us unique insight into occupational demand patterns, enabling us to track rental trends and identify value. We focus on quality assets, favouring locations with low supply and strong demand to maximise income stability. We are highly focused on tenant retention and sustainable rents.”

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Understanding riskReal estate consumes around 40% of the world’s energy and contributes up to 30% of its annual GHG emissions.2 The UK has committed to cut its carbon emissions to net zero by 2050.3 Already a focus of related regulation, real estate will be expected to play an increasing role in achieving this reduction. More widely, real estate is exposed to a variety of climate and energy-related risks, both transitional (policy, legal, technology-related) and physical (short-term events and chronic longer-term shifts). Social risks, including those arising from health and safety issues, can also have tangible consequences for property owners and managers.

Mitigating environmental, social and governance riskEffective management of Environmental, Social and Governance (ESG) issues delivers the dual benefit of reducing these risks (for instance anticipating rather than reacting to new regulation) and improving investment performance by proactively enhancing assets to improve their appeal to occupiers (shorter voids, higher rents) and investors (increased capital values).

We set ESG and climate risk objectives across the full range of real estate funds that we manage, and these objectives are assessed and implemented at an individual property level.

Enhancing sustainable outcomesEnhancing asset quality can go hand-in-hand with sustainability benefits and positive social outcomes. Sustainably managed buildings provide multiple benefits to their occupiers: lower energy and operational costs provide financial benefits, whilst working in buildings with good air quality and high levels of daylight has been shown to reduce absenteeism and stress and improve productivity and wellbeing.

For our balanced funds, identifying appropriate opportunities to enhance sustainable outcomes is integrated into our business thinking, practices and processes. In addition, our Low Carbon Workplace strategy brings sustainability benefits to the forefront, through its dedicated mandate to generate carbon and energy improvements.

GovernanceWe have an established ESG Working Group comprised of members of the Real Estate team and members of Columbia Threadneedle’s global Responsible Investment team, reporting to the Property Committee. The ESG Working Group ensures our responsible management approach is applied across our business. Our Responsible Property Investment Policy Statement applies directly to all our real estate assets.

Threadneedle Pensions Limited Pooled Property Fund (TPEN Property), Threadneedle Property Unit Trust (TPUT) and Low Carbon Workplace Fund (LCW) are independently assessed against the Global Real Estate Sustainability Benchmark. In 2018 we were delighted that all these funds achieved a green star rating, with LCW achieving the maximum of five stars with an overall score of 84. Our two balanced institutional funds, TPEN Property and TPUT, both achieved three stars and a score of 68.4 We have increased our fund participation in the GRESB Benchmark in 2019, adding our third party segregated mandates and the Threadneedle UK Property Authorised Investment Fund.

2 Sustainable real estate investment: Implementing the Paris Climate agreement – an action framework, PRI, 2016 https://www.unpri.org/property/sustainable-real-estate-investment-implementing-the-paris-climate-agreement/138.article

3 Source: Carbon Trust, December 20184 Source: https://gresb.com

2019 GRESB Report highlights:

“ We are a Responsible Investor following clearly defined principles across the entire lifecycle of our assets. We work with tenants and other stakeholders to support the health and wellbeing of occupiers as well as the surrounding community.”

nn 8% overall improvement on 2018 scores across three funds

nn LCW overall score 90 (2018, 84) & peer group position 4th out of 16 (2018, 4th out of 17)

nn TPEN Property overall score 73 (2018, 68) & peer group position 25th out of 79 (2018, 25th out of 72)

nn TPUT overall score 74 (2018, 68) & peer group position 23rd out of 79 (2018, 26th out of 72)Low Carbon Workplace Strategy

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Integration ESG into our established investment process

At Columbia Threadneedle Investments we have established processes covering the entire property life cycle, including Investment, Asset Management, Property Management, Refurbishment and Risk & Governance. Our goal is to seek continual improvement in ESG performance across these five business areas.

Completed refurbishment project (‘before and after’), Threadneedle Property Unit Trust, London EC3

1. Property investment (asset acquisition)Our Fund Managers undertake forensic due diligence and comprehensively survey all properties considered for acquisition. Consideration is given to factors including energy performance/MEES, environmental risks/impact (including flood risk), and areas for potential improvement in terms of sustainability performance. These reports inform the financial modelling we undertake and form part of a Property Risk matrix which is handed over to the Property Management team on completion of each acquisition.

2. Strategic asset managementOur Asset Managers are responsible for developing and implementing building-specific asset management strategies, with the primary objective of identifying opportunities to add value. These strategies also promote environmental, energy and water efficiency, waste management and sustainability best practices, acknowledging asset value can be enhanced by minimising environmental externalities. The strategy will also promote health and wellbeing initiatives and community engagement opportunities as appropriate to the asset. Finally, our Asset Managers seek opportunities to promote data sharing and co-operation with tenants, to enable sustainability strategies to be jointly implemented by the occupier and the management team.

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3. Refurbishment & building improvementRefurbishments undertaken by our Asset Managers offer the greatest potential to improve the environmental and/or social impact of our buildings. Our Refurbishment Guide promotes high sustainability standards and construction projects incorporate a set of minimum requirements relating to: environmental management, building quality and flexibility, health and well-being, energy efficiency, transport, water, building materials, waste management, ecology and pollution.

4. Property managementWe are active managers, seeking to continually improve the day-to-day environmental impact of our buildings, whilst maintaining high levels of occupier satisfaction and engagement. This is achieved by dedicated Oversight Managers who collaborate with third party managing agents, to deliver objectives against clearly defined targets which are set out in our Sustainability Road Map. Oversight Managers are also responsible for monitoring health and safety on all our properties, ensuring oversight through monthly reporting, meetings, and independent annual audits.

Our sustainability Road Map targets:nn Energy management & reduction: target 10% reduction in energy use by 2024

nn Green House Gas Reduction: target a 15% reduction in GHG use by 2024

nn Energy procurement: target 95% of directly managed property to have green energy tariffs by end 2019

nnWaste management: target 95% of directly managed property to have zero waste to landfill by end 2019

nn Community: identify opportunities to positively impact communities and stakeholders (eg supporting and hosting charity groups, monitoring ‘walkability’ to properties)

nn Tenant engagement: undertake regular occupier engagement and satisfaction surveys

5. Risk & governanceColumbia Threadneedle Investments’ Property team benefits from rigorous Risk and Governance controls. We have an integrated Property Governance team providing ‘first line’ risk and governance oversight. The team also provides a liaison function with Group Investment and Operations Risk and Compliance (‘second line’ functions), and with Audit (‘third line’) as required. Our investment and management process controls are also independently audited on an annual basis as part of our company’s ISAE reporting obligations.

Risk & governance controls

Acquisition

Strategic assetmanagement(including refurbishment)

Property management

Acquisition

Strategic Asset Management(including Refurbishment)

Property Management

RISK & GOVERNANCE CONTROLS

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Case Study – Low Carbon Workplace Fund

The Low Carbon Workplace Fund (LCW) was established in 2010 as a partnership between sustainability experts The Carbon Trust, fund manager Columbia Threadneedle Investments and property developer Stanhope. The strategy is mandated to acquire end-of-life commercial office buildings and refurbish them into best-in-class, energy efficient workplaces.

Occupiers of the refurbished buildings receive ongoing support from the Carbon Trust, helping them to minimise carbon emissions and increase resource efficiency.

LCW has completed eight refurbishment projects with an end value of c£300m, delivering an average EPC improvement rating from “E” to “B” and generating emissions which are on average 67% lower than the ECON 19 Benchmark.7

Example – 41 Luke Street, City of London, EC2A

The property is located in the popular Tech City postcode of EC2A, which at the time of purchase was characterised by diminishing supply, presenting an opportunity for rental growth.

The fundamentals of the building were good, with high ceilings and large windows providing excellent natural lighting. However, as it had been previously occupied for 25 years by a single occupier, it provided the opportunity to instigate a full LCW compliant refurbishment, with the scope of adding additional floor area.

Customised low carbon design plans were developed in order to maintain the buildings unique metal frame. The building fabric was upgraded to improve insulation, airtightness and to imbed phase-change materials.

Internally, the refurbishment included adaptive lighting and air conditioning responding to occupancy; replacement opening windows (to new building insulation standards) and air conditioning interface for mixed mode use; roof mounted photo-voltaic array generating electricity; people detection and energy/carbon monitoring of the building in use; low energy building services throughout (lift, lighting, specific fan powers and air conditioning); and meters and monitors to enable the implementation of the Low Carbon Workplace standard.

The building has received BREEAM5 excellent certification and the EPC rating6 was significantly improved from a D to B.

The tenant took a 10-year lease (TBO 24/11/2021) at a rent of £1,995,252 (£65.39 psf).

The agreed headline rent reflected a 30% premium above the market ERV growth over the 12 months prior to practical completion.

5 http://www.greenbooklive.com/search/buildingsearch.jsp?id=202&sectionid=0&partid=10023&projectType=&certNo=&productName=41+Luke+Street&companyName=&developer=&buildingRating=Excellent&certBody=&assessorAuditor=&addressPostcode=&countryId=56&postcode=&scale=7.5 6 https://www.ndepcregister.com/reportSearchAddressListReports.html?id=c337b553bf2e1a58f0591fb2f90d96fd 7 Source: Carbon Trust December 2018

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Case Study – 60-68 Wimbledon Hill Road, Wimbledon

Our objective was to repurpose an obsolete 1970’s office building and significantly increase the net lettable floor area through planning to take advantage of favourable occupational market conditions. Retaining the existing concrete frame resulted in a quicker build period, which was important to reduce the impact of construction traffic on the immediate environment, in particular the Wimbledon Girls School opposite the site. Retention of the frame was also an important sustainability driver, given the embodied carbon in the structure.

Example – Consented refurbishment, Threadneedle Pension Fund, Wimbledon

Consultation with the local community during the pre-application process raised concerns over the ground floor use due to the school opposite the premises, which resulted in a voluntary exclusion of fast food users from the scheme and the incorporation of a public amenity square at the corner of the site.

The team held regular meetings with local community groups to listen and react to concerns, and organised site visits for pupils of the neighbouring school, teaching the students about property development in complex urban environments.

Working with Community and Planning departments, the original designs were amended to remove the proposed fifth floor and reduce the number of car parking spaces from 24 to eight, reducing car usage and associated carbon emissions in Wimbledon town centre.

The scheme has been rated BREEAM8 ‘Very Good’ and is expected to deliver a significantly improved EPC rating of B (from a previous rating of E) demonstrating improvements in energy and water use, health and wellbeing, pollution, transport, materials, waste, ecology and management processes.

The project is due for completion in summer 2019.

8 http://www.greenbooklive.com/search/displaycompany.jsp?sectionid=10104&companyid=32008703&partid=10023&productgroupid=48497407&id=0

Important Information:For the Threadneedle Pensions Limited Pooled Property Fund (TPEN Property):Key risksNo Capital Guarantee: Positive returns are not guaranteed and no form of capital protection applies.Property Liquidity Risk: It may be difficult or impossible to realise an investment in the fund because the underlying property concerned may not be readily saleable.Property Valuation Risk: The value of a property is a matter of a valuer’s opinion and the true value may not be recognised until the property is sold.Property Market Risk: The performance of the fund would be adversely affected by a downturn in the Property market in terms of capital value or a weakening of rental yields.Uninvested Cash: Due to the illiquid nature of property and the time it can take to buy or sell assets, under normal circumstances up to 20% of the fund’s assets may be help in cash deposits. In exceptional circumstances, the level of cash held by the fund may be significantly higher. Holding high levels of cash will have an impact on the performance of the fund and its distributable income until the excess cash is invested in property assets. The Threadneedle Pooled Pension Funds Key Features Document (KFD) is available on the institutional site of www.columbiathreadneeedle.co.uk. The KFD gives a summary of information about Threadneedle Pension Limited’s pooled pension funds in order to help you decide if you want to invest in funds, as well as a full list of risk factors applying to the funds. Please refer to the ‘Risk Factors’ section of the Key Features Document for all risks applicable to investing in any fund and specifically this Fund. Threadneedle Pensions Limited. Registered in England and Wales, No. 984167. Registered Office: Cannon Place, 78 Cannon Street, London EC4N 6AG, United Kingdom. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.

For the Threadneedle Property Unit Trust (TPUT):In the UK, the Trust is an unregulated collective investment schemes for the purposes of Section 238 of the Financial Services and Markets Act 2000. Accordingly, this document must not be communicated to retail persons in the UK but may only be communicated to persons described in the Financial Services and Markets Act 2000 (Promotion of Collective Investment Schemes) (Exemptions Order) 2001 and to persons whom units are permitted to be promoted in accordance with the FCA’s Conduct of Business rules. This document is approved for UK purposes by Threadneedle Asset Management Limited and Threadneedle Portfolio Services Limited. Authorised and regulated by the Financial Conduct Authority. Investors are advised that the protections afforded by the UK regulatory system may not apply to an investment in the Fund and compensation will not be available under the UK Financial Services Compensation Scheme. In Jersey, the Trust, which is regulated by the Jersey Financial Services Commission, is treated as an unclassified fund for the purposes of the Collective Investment Funds (Jersey) Law 1998. The Manager of the Trust is Threadneedle Investments (Channel Islands) Limited, Registered No. 82489. Registered in Jersey and regulated by the Jersey Financial Services Commission. The correspondence address for the Trust is IFC 1, The Esplanade, St Helier, Jersey, JE1 4BP. Units in the Trust may only be promoted in accordance with the aforementioned legislation.This document should not be circulated to private investors.This document does not constitute or form any part of any offer to issue or sell, or any solicitation of any offer to subscribe or purchase, any units nor shall it or the fact of its distribution form the basis of, or be relied on in connection with any contract therefore. Recipients of this document who intend to apply for units are reminded that any such application may be made solely on the basis of the information and opinions contained in the prospectus and seek independent taxation advice.This Fund is not registered for sale outside the United Kingdom and may not be offered to the public in any other country. This document must therefore not be issued, circulated or distributed other than in circumstances which do not constitute an offer to the public and are in accordance with applicable local legislation. The Manager of the Partnership is Threadneedle Portfolio Services Limited, whose Registered Office is: Cannon Place, 78 Cannon Street, London EC4N 6AG. Registered in England and Wales, No. 285988. Authorised and regulated by the Financial Conduct Authority.

For The Low Carbon Workplace Fund:In the UK, the Trust is an unregulated collective investment scheme for the purposes of Section 238 of the Financial Services and Markets Act 2000. Accordingly, this document must not be communicated to retail persons in the UK but may only be communicated to persons described in the Financial Services and Markets Act 2000 (Promotion of Collective Investment Schemes) (Exemptions Order) 2001 and to persons whom units are permitted to be promoted in accordance with the FCA’s Conduct of Business rules. Approved for UK purposes by Threadneedle Asset Management Limited and Threadneedle Portfolio Services Limited. Authorised and regulated by the Financial Conduct Authority. Investors are advised that the protections afforded by the UK regulatory system may not apply to an investment in the Fund and compensation will not be available under the UK Financial Services Compensation Scheme.In Jersey, the Trust, which is regulated by the Jersey Financial Services Commission, is treated as an unclassified fund for the purposes of the Collective Investment Funds (Jersey) Law 1998. Units in the Trust may only be promoted in accordance with the aforementioned legislation. This document should not be circulated to private investors. This document does not constitute or form any part of any offer to issue or sell, or any solicitation of any offer to subscribe or purchase, any units nor shall it or the fact of its distribution form the basis of, or be relied on in connection with any contract therefore. Recipients of this document who intend to apply for units are reminded that any such application may be made solely on the basis of the information and opinions contained in the prospectus and seek independent taxation advice. The Manager of the Partnership is Threadneedle Portfolio Services Limited, whose Registered Office is: Cannon Place, 78 Cannon Street, London EC4N 6AG. Registered in England and Wales, No. 285988. Authorised and regulated by the Financial Conduct Authority.

Important Information: For internal use by Professional and/or Qualified Investors only (not to be used with or passed on to retail clients). Past performance is not a guide to future performance. The value of investments and any income is not guaranteed and can go down as well as up and may be affected by exchange rate fluctuations. This means that an investor may not get back the amount invested. The value of investments and any income from them can go down as well as up. This material is for information only and does not constitute an offer or solicitation of an order to buy or sell any securities or other financial instruments, or to provide investment advice or services. The analysis included in this document has been produced by Columbia Threadneedle Investments for its own investment management activities, may have been acted upon prior to publication and is made available here incidentally. Any opinions expressed are made as at the date of publication but are subject to change without notice and should not be seen as investment advice. Information obtained from external sources is believed to be reliable, but its accuracy or completeness cannot be guaranteed. Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies. columbiathreadneedle.com Issued 10.19 | Valid to 06.20 | J29985 | 2801844

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