CSR Policy ASR Dutch Prime Retail Fund. a.s.r. real estate investment management

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1 ASR Dutch Prime Retail Fund a.s.r. real estate investment management

2 2 Vision of CSR ASR Dutch Prime Retail Fund s vision of Corporate Social Responsibility (CSR) The optimal facilitation of the interests of tenants and investors by creating stores and retail areas that have long-term value from a financial and a societal perspective. We do this in a sound and responsible manner with engaged and aware partners and employees. The aim of the ASR Dutch Prime Retail Fund (ASR DPRF) is to establish and maintain a retail property portfolio of real long-term value. Long-term value can be created at locations that attract or have the potential to attract shoppers and retailers on a sustainable basis. Stores at these locations that meet the current and future demand are also sustainable in terms of use. These stores can be supermarkets and shops in the vicinity of residential areas and high street retail in historic city centres, which are pleasant to visit for a day out and to make non-daily purchases. A sustainable retail property is an attractive retail property: attractive for the tenant because of low energy consumption, a pleasant indoor climate and healthy surroundings for the store personnel, and attractive for consumers because of the enjoyable retail experience during a visit to the store. Investors find a sustainable retail property attractive because of its better marketability and reduced investment risks. Sustainability ensures continuity and stability for investors. Finally, a sustainable store is less burdensome on the environment as energy consumption is lower, energy losses are reduced and less wasteful of rare commodities or fossil fuels. A fund with long-term value treats stakeholders such as external property managers, consultants, tenants and contractors as sustainable partners. By cooperating with other parties in creating value, the Fund involves the whole supply chain of maintenance, refurbishment and development. In this way, ASR DPRF minimizes waste and extends the lifespan of buildings and building-parts. Through cooperation with tenants, the Fund also maximizes customer satisfaction and makes tenants more involved in the sustainability of retail premises. As an investment manager, we believe it goes without saying that Corporate Social Responsibility can be achieved only by means of sound, transparent business practices and engaged employees. This policy document ties in with the current policies of a.s.r. real estate investment management and a.s.r. Nederland concerning Corporate Social Responsibility. For more information about the CSR policies of ASR DPRF and a.s.r. real estate investment management, please visit asrreim.com/about-us/ csr-policy. To provide insight into the CSR policy of a.s.r. Nederland, please visit asrnl.com/sustainablebusiness.

3 3 Strategic objectives The CSR policy of the ASR DPRF is based on four P s (ESG factors), which cover the entire CSR-spectrum. Each P highlights the CSR policy from a different perspective, but together these are necessary to achieve our vision. The four Ps are: Property, Partners, Planet and People. Each P comes with its own strategic objectives, which you can see in the table below. The strategic objectives have been translated into annual objectives. There is also a fifth P: Profit. The Fund regards this as a self-evident parameter. After all, a good and stable return is the core business of an investment manager. The following objectives will be achieved by the end of In many cases, we can improve on that deadline. Moreover, most of the strategic objectives are of a structural nature. Property Partners Planet People Sustainable portfolio Engaged partners Contribution to society and the environment Committed organization Over 90% of portfolio to have a Green Label Portfolio asbestos safe by 2020 Energy saving measures in 5% of the Fund annually BREEAM certification for new assets, BREEAM NL In Use for shopping centres Optimal engagement of partners in chain Continuous check for compliance with CSR requirements and objectives Tenant satisfaction rating of at least 7.0 (out of 10) Active tenant participation programme Reduce energy consumption and carbon emissions by 10% compared to 2014 Maximum use of measuring options Investing in retail areas Contribution to the opportunities and development of pupils and students Personal development of employees Informed and involved employees Employee satisfaction >80% Optimal organizational embedding of CSR

4 4 Property Strategic objectives Over 90% of the portfolio will have a Green Label. Portfolio asbestos-safe by 2020 Energy-saving measures in 5% of the Fund annually BREAAM certification for new building, BREAAM NL In-Use certification for shopping centres As a real estate investment fund, property plays a central role in the ASR DPRF. The main aim is to increase the sustainability of the portfolio much further in various ways. The Fund aims to do this as much as possible at logical moments in the property cycle, for instance during regular maintenance or in case of a tenant mutation. The Fund firmly believes that sustainable property is attractive to tenants and shoppers alike. Distribution of EPA-labels (December 2016) PERCENTAGE % % 15.9% 12.7% 0 4.6% 2.7% 3.0% A B C D E F G ENERGY LABEL Over 90% of the portfolio will have a Green Label All stores of the retail property fund are EPA-certified. A large proportion of the properties owned by ASR DPRF are in historic city centres and are old buildings. ASR DPRF is aiming to have a portfolio 90% of which is green label (EPA label C or better) by In order to achieve this, properties will be made more sustainable or transformed at logical points in the operational process. In 2016, the Fund took major steps in transforming spaces above shops into living spaces with a green energy label. This will be continued in the coming years. In addition, Green Label assets have been purchased in which their energy performance has been part of the purchase proposal (e.g. supermarkets in Vianen and Arnhem). Finally, low energy performance assets have been sold.

5 5 It is not ASR DPRF s goal to sell low energy performance assets, but it can form part of a sale of assets which no longer comply with the ASR DPRF s investment policy. EPA scores of high street retail properties are largely determined through installations and modifications made by tenants. ASR DPRF will continue its policy of advising tenants on how their retail properties can be made more sustainable during modification for example, by using FSC certified wood. Strict sustainability requirements are set for new construction projects. With new construction, the Fund demands that sustainable material be used and that properties are tested according to the nine BREEAM requirements. To ensure proper implementation of the Fund s policy, it has adopted a sustainability test in purchase and investment proposals. This indicates how the acquisition or investment contributes to the CSR objectives of the Fund. In addition, for every purchase there is an underlying Technical Due Diligence. Agreements between ASR DPRF and its partners shall be further discussed in the chapter Partners. Portfolio asbestos-safe by 2020 ASR DPRF believes that it has a responsibility to help reduce the presence of asbestos in its existing portfolio of stores. ASR DPRF is proactive on matters relating to asbestos and takes precautionary measures. Asbestos surveys have been carried out for the retail property portfolio. High-risk and potential risky asbestos applications have been removed. Non-risk asbestos applications are removed while refurbishments and alterations are carried out. Tenants are informed of the possible presence of asbestos and are involved in the process of cleanups in order to avoid unsafe situations. The asbestos surveys are kept in a central dossier so that the information is easily accessible within a.s.r. real estate investment management. De Nieuwe Haagse Passage, Den Haag

6 6 Energy-saving measures in 5% of the Fund annually The portfolio is being surveyed for green solutions (such as LED lighting, high-efficiency boilers, sustainable exterior walls, energy-efficient glazing, solar panels, water-saving plumbing and sedum roofs) and to identify ways in which sustainable improvements can be made in day-to-day management. The resulting actions are documented and monitored at property development level. Where possible, the Fund links sustainability improvements to the multi-year maintenance programme. This is also reflected in the use of sustainable materials, such as FSC-wood in construction work, and the prevention of wastage. Our aim is to improve the sustainability of at least 5% of our standing investments annually. The realisation of energy-saving measures will be paid extra attention in The principle that measures will be implemented at logical moments, such as a conversion or major maintenance work, will continue to apply. BREAAM certification for new building, BREAAM NL In-Use certification for shopping centres ASR DPRF assesses the property portfolio from the broad perspective of sustainability. ASR DPRF does this by taking into account all nine aspects of the BREEAM environmental rating system in the business plans for the shopping centres. For the Fund s largest assets the shopping centres and major city centre locations the goal is to be applicable for a BREEAM In-Use certificate. The Fund s aim is to be awarded a BREEAM very good certificate for new building developments. Spotlight - Conversion Conversion of office floors into residential units ASR DPRF is primarily a retail investor. That said, many of its high street properties have upper floors that are unsuitable for retail use. Some floors were previously used as office or storage space by the retailers, but most of this space has gone unused. Last year, the Fund started or finalized the conversion of its assets at Leidsestraat 30 in Amsterdam, Leidsestraat 106 in Amsterdam, Diezerstraat 65 in Zwolle and Grote Houtstraat 40 in Haarlem to ensure the most efficient use of these assets and their upper floors The Fund converted 600 sq. m. of underused or office space into six residential units, thereby revitalizing the city centres of Amsterdam, Haarlem and Zwolle. The addition of six residential units to city centre locations will have a positive impact on the housing shortage as well. The usage of upper floors as residential units is a long-term investment that helps to keep down the vacancy rate. In the future, the Fund will continue when financially feasible to transform upper floors to help with the housing needs and accommodate residential tenants. Leidsestraat 30, Amsterdam

7 7 Partners Strategic objectives Optimal engagement of partners in chain Continuous check for compliance with CSR requirements and objectives Tenant satisfaction rating of at least 7.0 (out of 10) Active tenant participation programme Cooperation with our partners is essential if ASR DPRF wants to achieve its CSR targets. The partners together form a chain in which each link is important in achieving the optimal CSR results. By ensuring that our contractors are in step with our tenants and that tenants are aligned with our shareholders, the Fund is creating social value. ASR DPRF wishes to increase partner involvement through open communication about its CSR policy through sharing specialist knowledge (with presentations and CSR as main subject during periodic consultations) and through making concrete agreements in the area of sustainability. Optimal engagement of partners in chain ASR DPRF regards the shareholders as important partners in achieving investment goals. We communicate proactively about our sustainability performances and communicate at times when there is a policy update and on the results achieved. The shareholders endorse ASR DPRF s vision of investment funds with long-term value and therefore favour sustainable investments. Each year, the shareholders have the opportunity to provide feedback on the CSR policy and receive reports on the progress of sustainability objectives and the actual score relative to the GRESB benchmark score. a.s.r. real estate investment management is part of the sustainability workgroup of IVBN (Institutional real estate investors in the Netherlands) and NRW (Dutch council for shopping centres) and is affiliated with DGBC (Dutch Green Building Council), INREV (European Institutional Non-listed Real Estate Investors), RICS (Royal Institute of Chartered Surveyors), NeVaP (Dutch Real Estate Operation Platform) and VOGON (Association of Real Estate Research Investors) to increase and share our knowledge and network in the area of CSR. In addition, ASR DPRF strives for good contacts with the government by making sound and clear contracts on tax and legal matters. It aims to have close contact with local governments as vital stakeholders regarding ASR DPRF assets and shopping areas in general.

8 8 Every year, CSR performance is measured and made transparent in the GRESB, GRESB is an independent, scientifically-based benchmark which assesses sustainability policies and their execution of real estate funds and portfolios worldwide. In 2016, ASR DPRF was awarded Green Star status with three stars. Our aim is to maintain this position and improve upon it. Continuous check for compliance with CSR requirements and objectives In our working relationship with contractors, such as commercial contractors and managers, we keep them fully informed at all times of our objectives and the fact that any contracts with them must be in keeping with our CSR policy. During the maintenance process, the Fund closely monitors to see that the CSR policy is carried out. Maintenance contracts with regular suppliers includes sustainability requirements, such as the monitoring of energy use and advice on sustainability measures. These contracts are discussed during periodic consultations. In granting maintenance contracts to suppliers, the Fund also sets CSR requirements. The technical materials and installations used must comply with CSR requirements and, in 2017, these requirements will be further tightened. To avoid conflicts of interest, we closely monitor orders to take or grant tenancies or buy or sell properties in accordance with the internal compliance guidelines. In addition, we work with ethical and responsible contractors who comply with business standards for sustainable business practices. In order to disseminate our objectives on an ongoing basis, we ensure that CSR is a standing item for discussion in the periodic sessions with our managers and most direct maintenance partners (contractors and consultants). And our commercial managers proactively seek ways to make our portfolio more sustainable in accordance with the tenant satisfaction survey. Sustainability requirements within management contracts were tightened in the previous year. In the coming years, we will continue to tighten them with regard to CSR related issues. Tenant satisfaction rating of at least 7.0 (out of 10) Our tenants are important partners. Therefore, we aim for involved, aware and satisfied tenants. Periodically, at least once every two years, a survey is carried out to measure tenant satisfaction. This survey has questions about the services of a.s.r. real estate investment management and the (possible) manager, but the tenant also evaluates the shop, the surroundings and the handling of requests and complaints. From the tenant satisfaction survey in 2016, a number of issues came to light which could lead to higher tenant satisfaction and improvements in the services of a.s.r. real estate investment management and its contractors. The current average score for tenant satisfaction is 7.2 (out of 10). The sections on services and area scored 6.9, under the target score of 7.0. On the basis of these results, a number of measures were put into place to improve tenant satisfaction. Steps will also be taken to make the tenant satisfaction survey an integral part in the handling of malfunctions and complaints. For new rental contracts, the ASR DPRF aims for so-called Green Lease contracts, in which landlord and tenant agree on the way that the leased asset will be made sustainable. In 2016, all new rental contracts were Green Lease contracts. This means that the number of standing contracts with a Green Lease are growing each year. For the coming years, we aim to further increase the number of Green Lease contracts and have more substantive talks with tenants on the realisation of Green Lease objectives.

9 9 Green Leases PERCENTAGE New leases signed Total active leases YEAR Active tenant participation programme The Fund welcomes feedback from tenants and it uses that information in both the making of more sustainable investments and in maintaining the long term relationships. We can also find out what our tenants are looking for and which developments are being made by the retail market. Our tenants experience can also be applied elsewhere. We hold periodic consultations with larger tenants (such as chain stores) and CSR is a standing item on the agenda. In 2017, tenant participation will be developed further. Leading issues will be the exchange of energy usage data, the following up and sharing of ideas that come from these talks, the improvement of Green Lease requirements, and the establishment of mutual agreements. Insight into energy usage can result in a reduction of energy usage and better insights about which assets are energy-efficient or inefficient. ASR DPRF recently agreed to share data on energy consumption with some large chain stores. Sterkstore, Vleuterweide, Utrecht

10 10 Hooge Steenweg, s-hertogenbosch In control The Risk Management of a.s.r. real estate investment management has a number of key principles which apply to ASR DPRF. First, the Fund conducts Risk Management in accordance with the AIFMD licence it received from the AFM at the beginning of In addition, IT Risks are done in accordance with the DNB s Cobit standards and the management of Integrity Risks is done on the basis of DNB s SIRA (Systematic Integrity Risk Analysis). Finally, the Risk Management model (ERM COSO) is based on the central Risk Management of a.s.r. Nederland, supplemented by local real estate risk management tools. Dutch Insurance Code Governance principles refer to the Dutch Insurance Code which was implemented in January The Dutch Insurance Code is mandatory for all supervised insurance companies. Therefore, this also applies to the directors of a.s.r. real estate investment management and its MT members. This code states the terms and conditions which Risk Management must comply with, including the monitoring by Audit (third line of defence) based on the Three Lines of Defence model. Evaluation of processes and reports Purchase, sale and investment proposals from a.s.r. real estate investment management are also reviewed by the Compliance Officer and Business Risk Manager. They monitor from the second line of defence and check that all procedures (including CDD and environmental requirements) and fund restrictions are applied in the correct manner. All key processes are identified and described in an AO/IC and ISAE framework. Every month, the Internal Control team tests the ISAE 3402 controls. The external accountant (auditor) checks this ISAE control framework every year. Every quarter, the Business Risk Manager reports the ISAE test results to the Business Risk Committee and his/her own periodic observations on real estate risks and the findings which have arisen from all processes. This enables the Fund to monitor the speed at which a.s.r. real estate investment management resolves incidents (NFR dashboard reportage, MIC/ISAE). Code of ethics a.s.r. real estate investment management has implemented a code of ethics which consists of a varied range of integrity policy documents against bribery and corruption. These documents contain various rules of conduct for the proper implementation of this Code of Ethics.

11 11 Planet Strategic objectives Reduce energy consumption and carbon emissions by 10% compared to 2014 Maximum use of measuring options Encouraging activities in inner cities and retail areas Contributing to the opportunities and development of pupils and students Planet stands for the contribution ASR DPRF makes to nature, society and the environment. As property is generally a major factor in the pollution of the planet, the Fund sees it as its duty to ensure that ASR DPRF works to achieve a lower carbon footprint with less waste, reduced water consumption and lower emissions of greenhouse gases. Moreover, ASR DPRF is not only focussing on partners but also on other stakeholders in Dutch society, e.g. users of retail areas and civil society partners such as schools, universities and charity organizations. Reduce energy consumption and carbon emissions by 10% compared to 2014 To minimize carbon emissions, the Fund is aiming to scale back its energy consumption, water consumption and waste production. The portfolio portion of directly controlled investments makes 100% use of green electricity. In addition, by 2020, the Fund aims to reduce the energy consumption and carbon emissions of those parties contracted to us by 10% of the 2014 figures. Maximum use of measuring options An important aim is to expand the monitoring of usage as much as possible including a Data Management System to cover energy and water consumption and waste management. This is necessary in order to manage usage and thus achieve a controlled reduction in carbon emissions. But monitoring alone is not enough. With a regular in-depth usage analysis per property, deviations can be more quickly identified and corrected. The analysis also includes energy consumption data received from tenants. This objective is a key issue for Amadeus, The Hague Lijnbaan, Rotterdam

12 12 Eindstraat, Breda KVO-ster Winkelcentrum Floriande, Hoofddorp Encouraging activities in inner cities and retail areas ASR DPRF invests in shops and shopping centres, and is committed to ensuring that its shopping areas function (or continue functioning) properly. This is why the Fund contributes to associations involved in city centre management and neighbourhood-oriented activities in shopping centres. Various employees participate in these city centre associations and proactively contribute to healthy city centres and an increase in general prosperity. We also sponsor neighbourhood and city centre initiatives designed to ensure that shopping centres are a pleasant experience for visitors. Through its contribution to shopkeeper s associations, ASR DPRF contributes to a sustainable relationship between consumers and shopkeepers, but also with people who live in the region. In many areas, the shopping centre with its various social facilities is the heart of the neighbourhood. In 2016, in the Terwijde Shopping Centre, a barbecue was successfully held with around 650 people taking part. ASR DPRF was proud that its tenant shopkeepers were in a position to offer a free barbecue and warmly encourages these kinds of activities in other retail areas. Contribution to the opportunities and development of pupils and students As a company, we believe that the young are the future. That s why every year we guide multiple MBO, HBO and WO interns and offer WO traineeships. This significantly increases their chances on the work market. Moreover, we can learn from our students and be inspired by them. The goal is to offer at least four internships and one traineeship every year. In addition, every year several colleagues give one or more guest lectures to HBO institutions and universities and we have a (multi-year) collaboration agreement with the inter-faculty student association FRESH Students. Together with them, we periodically organise substantive activities, such as an in-house day, property tour or symposium.

13 13 People Strategic objectives Informed and engaged employees Optimal organizational anchoring of CSR Employee satisfaction rating > 80% (a.s.r. reim) Personal development of employees (a.s.r. reim) People is about sustainable employability, opportunities for development, rights, physical and mental health, and satisfaction and awareness of the employees. The first six aspects are well-represented in the policy of a.s.r. real estate investment management and a.s.r. Nederland. The main focus of ASR DCRF s CSR policy is on engaging employees and firmly anchoring the principles within the organization. Informed and engaged employees The ASR DCRF wants to offer its employees the tools to incorporate their CSR knowledge in their work and to be as aware of it as possible when making choices. This can be done through the organisation and attending of internal and external masterclasses, seminars, and/or congresses on CSR. In addition to these sessions, we keep everyone informed through a monthly newsletter. In 2016, there was a masterclass held by Ahold on sustainable business practices and preparations were made for a sustainability day throughout the company which aimed to inspire employees in becoming more aware on how their work could impact the CSR objectives of ASR DPRF. Also, ASR DCRF staff each have at least one personal CSR-related goal, on which he or she is assessed every year. Optimal organizational anchoring of CSR For controlling and monitoring all CSR-related actions and measures, the Fund has appointed a sustainability manager. This manager reports regularly to the Fund Director of ASR DPRF and the Fund Management Team of a.s.r. real estate investment management. The sustainability manager forms, together with an asset manager and analyst, ASR DPRF s core team in matters relating to CSR. They also form part of the CSR team of a.s.r. real estate investment management which meets on a regular basis and ensures that CSR is further embedded into the business line. head office a.s.r. Nederland, Utrecht

14 14 Employee satisfaction rating > 80% (from CSR Policy, a.s.r. reim) a.s.r. real estate investment management periodically commissions what is known as the Great Place To Work survey. This survey measures employee satisfaction on such factors as credibility, respect, honesty, pride and fellowship. The survey results are analysed and then discussed in all departments and business lines. Action is taken where necessary to improve the position of a.s.r. real estate investment management as an employer. After the last GPTW survey (2015), it showed a satisfaction rating of 80% and we have therefore been declared by Great Place To Work as one of the best workplaces in the Netherlands. The goal is at the very least to maintain this satisfaction rating. Partly due to the current employee satisfaction rating, the decision was made to increase the earlier objective from > 75% to > 80%. Personal development of employees (from CSR Policy a.s.r. reim) The main focus of a.s.r. Nederland s HRM policy is the personal development of its employees in terms of professional expertise, competences and skills. Each employee is entitled to a training budget. In addition, every year a number of individual employees are given the opportunity of taking additional courses at a higher professional or university level in order to increase their knowledge and remain employable on a sustainable basis. For more information on a.s.r. s human resource management, we would refer you to the full HRM Policy of a.s.r. Nederland. BAM presentation, a.s.r. head office in Utrecht

15 15 Vathorst, Amersfoort

16 16 Contact a.s.r. real estate investment management Archimedeslaan BA Utrecht Edwin van de Woestijne Fund Director ASR Dutch Prime Retail Fund Lizzy Butink Sustainability manager a.s.r. real estate investment management Colophon 2016 a.s.r. real estate investment management Text a.s.r. real estate investment management Photography Corné Bastiaansen Joni Israeli John Gundlach Rons Eskens Design Cascade visuele communicatie, Amsterdam