The Fund’s strategy

The Fund's strategy can be summed up as follows:

Growth of the Fund to € 1.1 billion at year-end 2020
Focus on retail assets classified as Experience and Convenience
Increasing share of Experience and Convenience to at least 80% of the portfolio value
Optimisation of the portfolio through redevelopments and active asset management

Responsible investment strategy at Fund level:

The ambition is to be in the leading group of sustainable real estate funds. We want to set the standard in our sector and create and sustain stakeholder valuethrough effective integration of material ESG issues that lower risks and future-proof our real estate investment.
The Fund's long-term ambition is to retain its four-star ranking according to the Global Real Estate Sustainability benchmark (GRESB)

Responsible investment strategy at asset level:

Focus on assets with an above-average sustainability performance (environmental impact, stakeholder value and community engagement).

Diversification guidelines and investment restrictions

The Fund applies a defined set of Investment Restrictions in the execution of its strategy. The Fund will adhere to the following Investment Restrictions to focus on its core activity and to limit risks. In the Fund Plan 2018-2020 the diversification guidelines have been slightly expanded.

Diversification guidelines	Current portfolio	Conclusion
≥ 80% of investments invested in assets classified as Experience and Convenience	77.0% in assets classified as Experience and Convenience	Not compliant (*)
≥ 90% of investments invested in low or medium risk categories	96.6% in low and medium risk	Compliant
Investment restrictions when the total investments of the Fund are > € 750 million
< 15% invested in single investment property	There is one investment property exceeding 15%	Not compliant (**)
< 10% invested in non-core properties (non-retail investment properties)	0% concerns non-core Retail properties	Compliant
No investments that will have a material adverse effect on the Fund’s Diversification Guidelines.	There have been no investments in 2017 that have a material adverse effect on the Fund's diversification guidelines	Compliant
Restrictions on (re)development activities < 5% of the Fund's total investment portfolio value
a. only Assets from the Fund's porfolio qualify for (re)development	In 2017 all (re)development activities were executed only for assets of the Fund's portfolio	Compliant
b. the activities are exclusively targeted at optimising the quality of the portfolio	All activities were targeted at optimising the quality of the Fund portfolio	Compliant
c. not allowed if it has a negative impact on the Fund’s Diversification Guidelines	There was no negative impact on the Fund's diversification guidelines	Compliant
d. signed commitments relating to at least 60% of the rental income of the Asset is required	Commitment > 60%	Compliant
e. (re)development is undertaken by and for the risk and account of Bouwinvest Retail Development, a wholly owned subsidiary of the Fund	All (re)development activities are undertaken by and for the risk and account of Bouwinvest Retail Development	Compliant
f. all financial risks in connection with the work to be conducted as part of the (re)development will be contractually excluded by Bouwinvest Retail Development and transferred to external developers or contractors. Examples of such risks are: design and building risks and cost and planning risks	All financial risks in connection with the work to be conducted as part of the (re)development are contractually excluded by Bouwinvest Retail Development and transferred to external developers or contractors	Compliant
g. zoning risks remain with the Fund, however starting the building activities in relation to a (re)development is conditional upon obtaining the relevant zoning permits	The building activities in relation to a (re)development were conditional upon obtaining the relevant zoning permits	Compliant

(*) Increasing the share of Experience and Convenience to at least 80% of the portfolio value is part of the Fund’s strategy. This will be realised primarily through new acquisitions, investments in the redevelopment of standing assets and divestments of assets classified as ‘Other Retail’.

(**) The management made an exception for the investment property Damrak 70 Amsterdam, due to its unique retail location and it’s low risk profile.

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Report of the Board of Directors

Diversification guidelines and investment restrictions