Responsible Property Investment (RPI) Summary Policy

Introduction

DTZ Investors is a full service vertically integrated real estate manager. We have been operating in the UK since 1968 and in Continental Europe since 1999.

We recognise that we have a fiduciary duty to our clients to achieve the best returns possible from the assets we manage on their behalf. However achieving those returns should not be at an undue cost to wider society. DTZ Investors therefore understands its responsibility to manage those assets in a manner that is sensitive to the environment, provides social benefit and does not put the reputation of either DTZ Investors or our clients at risk through poor corporate practices.

In 2013 we became a signatory to the United Nations Principles for Responsible Investment (UNPRI), a voluntary framework for incorporating environmental, social and governance (ESG) issues into investment decision-making and ownership practices. In the same year, we developed a formal Responsible Property Investment (RPI) Strategy applicable to all of our UK portfolios. This document is a summary of that detailed policy which is available to our clients upon request.

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Our approach

With increasing scrutiny of the environmental performance of buildings from occupiers and investors alike, rising energy costs, increasing legislation governing acceptable performance standards for buildings and increased taxation of climate change emissions and waste, DTZ Investors believes that the sustainable credentials of buildings will make an increasing difference to the long-term obsolescence and investment performance of property. Consequently, our strategy focuses on understanding the impact of these issues on future value and minimising the risk to our portfolios. Integrating environmental, social and corporate governance (ESG) considerations into our investment process from pre-acquisition to disposal (see diagram on left) is critical to our approach to RPI.

Our approach rests within the context of our clients’ financial performance objectives as well as legislative requirements. Our specific policies will, as a minimum, be compliant with UK statutory requirements and EU directives, including: the Carbon Reduction Commitment Energy Efficiency Scheme (CRC), the European Savings Opportunity Scheme (ESOS), the Minimum Energy Efficiency Standards (MEES) and the Heat Network Metering and Billing Regulations 2014 (see Annex A for a brief description of the schemes and our compliance procedures). Beyond this we aim to lead in the establishment of best practices in the real estate industry. In deciding upon the policies that we should adopt we follow a proportional cost-benefit led approach. This does not mean that all initiatives must be self-financing or indeed that there must be a proven economic reward, but means that we will consider the relationship between the financial cost of any investment or activity and our evaluation of ESG rewards. Importantly we will also consider our portfolios in the context of market practice and ‘peer group’ properties to guard against depreciation risk and obsolescence (sometimes referred to as ‘future proofing of investments’).

To maintain coordination and leadership, we have established a committee of experts who are representative of our fund management, energy & sustainability and property management teams. It is this committee that has been responsible for the development and approval of the policies and targets set out in this document (Appendix B), and that is responsible for overseeing the implementation of this policy, reporting on results and future modifications. Furthermore, we are committed to fostering the right culture and appropriate training to enable all employees to understand the objectives of our responsible investment policies as well as relevant legislation and best practices.

Acquisition / disposal and design stages

• Sustainability risk assessmentsare carried out at pre-acquisitionto identify potential ESG issuesand mitigation measures. Issueswith direct financial relevance areintegrated into our valuation process.

Improvements/renovations

• We have developed fit out andrefurbishment guides to ensureour contractors take into accountsustainability at the earliest possiblestage

• Sustainability improvement plans arecarried out across all assets, and formpart of annual business planning.

Benchmarking and review

• We participate in the Global Real Estate Sustainability Benchmark(GRESB) and use the results to identify opportunities for performance and ESG policies.

Operation and maintenance

• Our property managers (and thirdparty suppliers) must adopt our RPIpolicies to ensure asset performanceis monitored, benchmarked andmaintained

• Our assets are covered by anEnvironmental Management System(EMS) to minimise their impact on theenvironment.

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Our policy

The policies contained in the RPI strategy are applicable to all of our discretionary managed property portfolios and to our advisory mandates in so far as concerns the scope of our contractual services and ability to influence the management of portfolios. These policies are designed to be specific and measurable so that we may evaluate and report upon the success of this policy and its implementation in future years.

Our strategy is reviewed by the RPI committee on an annual basis. The intention is that the RPI strategy is a constantly evolving approach, responding to innovation within the market and the needs of our stakeholders. As a result, we will be expanding our strategy to include additional outline guidance on topics such as:

Our RPI policies are designed to provide guidance in ten core areas:

Energy efficiency

Occupier wellbeing

Impact on local communities

Recycling, waste reuse and reduction of consumption of materials

Water efficiency

Air pollution

Flood risk

Transport

Refurbishment & Development

Ground and water pollution

Renewable Energy

Health & Wellbeing

Sustainable Procurement

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Asset Improvement & Performance Management

We have undertaken a full audit across the asset portfolio to create a baseline from which all future performance can be measured. The audit process also created the opportunity to examine in detail every asset and put in place a “property improvement plan” which is the starting point for a comprehensive assessment of the options available for driving improvement.

This property improvement planning process examines the options available for any building and then tests those options against economic, commercial and operational criteria to create the short list for implementation.

This process of continuous improvement is measured against our own baseline and reported internally on a quarterly and annual basis. We also benchmark externally utilising and contributing to GRESB.

Engagement – Occupiers, Staff & Stakeholders

We have put in place a formal tenant engagement strategy which allows us to communicate effectively the aims of the RPI strategy and then take feedback from tenants which then helps shape the approach moving forward.

Our own staff and key suppliers benefit from regular hosted seminars to help with the general understanding of our RPI strategy and how they help deliver our objectives.

Our wider stakeholder engagement includes regular dialogue and participation in thought leadership with groups such as the UK Green Building Council. DTZ Investors supports the principles of the UK Stewardship Code, and has developed a policy with our approach in relation to each of the seven principles.

We have plans to produce an annual sustainability report to be made in publicly available in 2016 showing the results of the first two years of policy implementation, with a view to integrating this in our annual reporting.

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The implementation of the DTZ Investors RPI strategy and the overall approach to ESG has a number of benefits for our clients, our tenants and our other stakeholders. These can be summarised as follows:

Benefits

Active management across our portfolio leading to greater efficiency

Reduced consumption of commodities across our assets and portfolio leading to reduced costs of occupation

Driving greater portfolio performance through efficiency

Enhanced levels of stakeholder engagement with occupiers, staff, communities and relevant bodies

Effective management of risk

Future proofing of buildings and assets

Robust and effective approach towards property improvement planning.

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Annex ALegislation that is changing the way we must operate:

CRC The CRC Energy Efficiency Scheme is a mandatory reporting and pricing scheme to improve energy efficiency in large public and private organisations. CRC operates in phases. Phase 1 ran from April 2010 until the end of March 2014. We are now in phase 2 that runs from 1 April 2014 to 31 March 2019. Qualification for the scheme is based on electricity usage. Organisations which participate within the CRC are required to monitor their energy use, and report their energy supplies annually. Participants must purchase and surrender allowances for their emissions. The allowance price for 2015/16 is £16.10/tonne of CO2 and can be expected to rise over time. Qualifying organisations have to comply legally with the scheme or face financial and other penalties. More information is available on the Environment Agency CRC web pages. https://www.gov.uk/crc-energy-efficiency-scheme-qualification-and-registration

ESOS The ESOS Regulations 2014 were introduced to give effect to a European directive. The Energy Saving Opportunity Scheme (ESOS) is a mandatory energy assessment scheme that applies to large UK undertakings and their corporate groups. Organisations that qualify for ESOS must carry out ESOS assessments every 4 years with the first deadline for compliance on 5 December 2015. These assessments are audits of the energy used by their buildings, industrial processes and transport to identify cost-effective energy saving measures. There is no regulatory requirement for participants to implement the energy saving opportunities identified. This is for each organisation to determine themselves. The regulator may issue civil sanctions including financial penalties if an organisation does not meet the scheme’s obligations. More information is available on the Environment Agency’s web pages at https://www.gov.uk/government/publications/comply-with-the-energy-savings-opportunity-scheme-esos

MEES The regulations that introduce Minimum Energy Efficiency Standards (MEES) on the non domestic property sector in England & Wales satisfy the government’s obligation under the Energy Act 2011 that aims to reduce emissions of greenhouse gases and the demand for energy. The equivalent Scottish legislation, currently in production, will follow the same principles. Here’s a summary of the key dates and implications:

• Minimum energy efficiency standard for buildings will be set at an E EPC rating

• From 1st April 2018 it will apply to all new leases & also lease renewals

• From 1st April 2023 it will apply to all leases including where one is already present

• Exemptions are possible on certain criteria including diminution of value

• All exempted properties will require to be registered on a central DECC database

• Local authorities will be responsible for enforcement. There will be fixed penalties for non compliance ranging from £5,000 - £150,000.

The Heat Network (Metering and Billing) Regulations 2014

These regulations implement the requirements in the Energy Efficiency Directive (EED) with respect to the supply of distributed heat, cooling, and hot water. Article 9 of the legislation requires that final consumers of district heating, district cooling, and communal heating and hot water systems are provided with competitively priced individual meters where it is cost effective and technically feasible. Where individual meters are installed, final consumers should be provided with billing information that is accurate and based on actual consumption where it is cost effective and technically feasible to do so.

Those supplying and charging final customers for heating or cooling through a network must make a notification under regulation 3 to the regulator on or before 31 December 2015. The notification and assessment process will need to be completed at least once every 4 years.

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Key RPI policy procedures that help us remain compliant

CRCEnergy Efficiency Sceme

ESOSEnergy Saving

Oportunity Scheme

MEESMinimum Energy

Efficiency Standards

Heat Network Regulations

Quarterly environmental reporting covering supplies and use of energy across all our assets which provide the basis for calculating our portfolio’s carbon footprint

Property improvement plans and EPC+ programmes identify opprtunities for energy efficiency in existing assests. Detailed ESOS audits are carried out on key assets

CRC evidence retained as part of EMS procedures

Technical feasibility assessment carried out for qualifying properties

Programe of identification of relevant heat networks

EPC assessments for fit-outs and refurbishments at pre-aquisition stage

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The following short-term targets have been set for the two-year period ending December 2016:

• Increase number of smart metersinstalled on energy and water suppliesby at least 10% each year

• Encourage tenants to share energy andwater data with a view to obtaining atleast 10% of tenant energy data eachyear

• Improve occupiers’ awareness ofefficient occupational behaviour andtenant fit-outs

• Assess the energy risk associated toall properties via enhanced EnergyPerformance Certificate (EPC)assessments

• Produce sustainability improvementplans for all directly-managed assets

• Reduce CO2 emissions per squaremetre by 5%

• Establish baselines for all individualassets and monitor and reporton energy, water, waste and CO2emissions for all UK portfolios

• Promote green travel plans tooccupiers

• Use ISO 14001 certified contractorswhenever possible

• Conduct occupier surveys for at least50% of each portfolio each year

• Engage actively with at least one keyindustry body.

As we progress through our programme, we anticipate reviewing these targets annually with the aim of achieving continuous improvement in the environmental performance of our buildings and our approach to sustainability and corporate governance.

Annex BTargets to December 2016

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www.dtzinvestors.com

©Cushman & Wakefield D341 02/16

Chris CooperChief Executive, DTZ Investors

Direct Phone: +44 (0) 20 3349 0300Mobile: +44 (0)7771 635213 Christopher.Cooper@dtzinvestors.com