Investment Update Q2 2018

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1 The SLI UK Real Estate Fund quarterly update provides an overview of the market; fund performance, positioning and portfolio changes; and the fund manager s outlook for the months ahead. Economic Overview and Property Market The weakness of the UK economy in Q1 appears to have been a largely weather-related phenomenon, rather than a more fundamental slowing, with the construction and retail sectors showing signs of recovery. In the UK, investors face ongoing indecision from the UK government regarding the Brexit end state. Our base case is for a free-trade agreement (FTA) with all-uk customs union and some regulatory devolution to Northern Ireland. Real income growth should start to provide a modest tailwind to GDP growth and business investment continues to be held back by elevated uncertainty over the UK s future trading relationship with the EU. The rise in oil prices will push the energy component of CPI inflation higher, however, base effects mean that inflation is still expected to fall over the course of the year. We expect the Bank of England to increase Bank rate by 25bps in August, as the bounce in data reassures the Bank the Q1 slowdown was largely temporary. Difficulties in the retail sector have dominated the headlines over the last few months. This is now being reflected in retail rents which are now falling across the board according to MSCI s monthly index. News that half-year profits at John Lewis would be close to zero was further evidence of the mounting challenges in the industry. Demand for retail assets across the spectrum remained weak, with very little interest for larger lot sizes, which continues to weigh on the transaction volumes of larger retail parks and shopping centres. But it is the latter seeing the most distress, with yields moving out in 23 of the last 24 months to May. At the opposite end of the spectrum, industrial demand remains buoyant and in the supply-starved South East this has pushed rents 6.8% higher over the year to May, according to MSCI. Demand is broad-based, with the continued expansion of trade counters and urban logistics uses a feature. Regional rents rose by a more modest 2.4% over the period with some pockets of more balanced supply and demand. Early data on investment volumes in Q2 suggest a lower total than Q1 and the smallest number of quarterly deals for five years. There was a dramatic fall in the number of industrial deals, reflecting the dearth of stock as investors hold what they have and continue to compete very strongly for assets that do come to market. The result of that competitive demand has been continued strong capital growth in the industrial sector 16.1% for the year to May, according to MSCI which we expect to continue through the rest of 2018 given prices achieved are far outstripping valuations. London office rents are broadly static and take-up has been propped up by flexible office providers who do not drive net absorption. Take-up in the regional office markets has slowed somewhat over the first half of 2018, although grade A stock levels are low in many markets, maintaining some rental tension. UK institutions were the major net investor on the quarter, selling less real estate than any quarter since Overseas investors were only marginal net investors but a number of large deals are expected to complete early in the third quarter. Chart 1: Diverging yield margins - industrial continues to outperform 7 Margin over UK 10 Year Gilts May 2000 May 2001 May 2002 May 2003 May 2004 May 2005 May 2006 May 2007 May 2008 May 2009 May 2010 May 2011 May 2012 May 2013 May 2014 May 2015 May 2016 May 2017 May 2018 Industrial Office Retail Source: Aberdeen Standard Investments, June 2018

2 Fund Positioning Top 10 holdings Fund % Top 10 tenants % Contracted Rent Leamington Shopping Park, Leamington Spa 4.73 Sainsburys 3.58 Monument Mall, Newcastle upon Tyne 3.71 B&Q Church Street, Birmingham 3.18 Office Depot International 2.52 Isis Reach, Belvedere 2.96 Tesco 2.00 The Old Dairy, South Ruislip 2.91 Asda 1.93 Io Centre & Tradeway, Sutton 2.74 Weatherford UK Limited 1.78 The Gateway Retail Park, Beckton 2.72 Allies & Morrison LLP 1.70 Royal Avenue House. London 2.63 UK Insurance Limited 1.58 Masthead Industrial Estate, Dartford 1.97 T P Bennett LLP 1.41 Saxon Way Trading Estate, Heathrow 1.94 DSG Retail 1.41 Fund Facts Fund size Average lot size Average lease length Number of properties 82 2,409.0m 23.6m Number of tenancies years Distribution yield 3.38%* Net current assets 19.34%^ Vacancy rate 5.43% *Yield at 30/06/18. Yields are historic based on the preceding 12 months distributions as a percentage of the midmarket unit/share price at date shown. Yields will vary, do not include any preliminary charges, and investors may be subject to tax on distributions. Based on institutional income shareclass. ^ The Net Current Assets figure includes cash or cash equivalents and any short term assets and liabilities within the fund. % Contracted Rent Less than 5 years 47.3 Between 5 and 10 years 28.3 Between 10 and 15 years 13.2 More than 15 years 11.3 Performance % growth 3mths 6mths 1 yr 3 yrs* 5 yrs* SLI UK Real Estate Fund IA Property Sector (UK Direct)# Data to end June, Fund performance net of Platform 1 fees. # Peer Group comprises 10 comparable UK commercial property funds in the IA Property Sector. *Returns are annualised. Sector allocation Geographical breakdown Offices Industrial Retail Other % SLI UK Property Fund Rest of London 24.9 South East 20.4 West Midlands 11.7 North West & Merseyside Scotland North East London West End Eastern South West East Midlands City of London Mid-Town London Wales Yorkshire and Humberside %

3 Portfolio Update Transaction and Asset Management Activity Asset management strategy continues to be progressed on the portfolio with initiatives successfully enhancing both income and value. During the reporting period the Fund disposed of Maiden House, Maidenhead, for 4.0m. The Fund also completed the leasehold disposal of a further residential unit located above the commercial holding at Hampstead High Street, London, realising an additional 0.77m. Activity continued in the retail sector with a number of events taking place. At Bligh s Meadow, Sevenoaks, the Fund completed a new letting to Card Factory, providing a 10 year term at an initial rent of 61,000 per annum, and 4AG, securing a 5 year term at an initial rent of 12,300 per annum. The Fund has also restructured existing leases with: Fifth Avenue, securing an additional 15 years at an initial rent of 27,600 per annum; Between The Lines, providing an additional 10 years at an initial rent of 51,800 per annum; and Leaders, removing a break option and securing an additional 7 years term certain. At Tudor Arcade, Dorchester, a new letting to G&T World of Cards completed providing a 10 year term at an initial rent of 45,000 per annum; a regear with Dorchester Finest Foods Limited t/a Cook has secured an additional 5 years of term and rental uplift to 35,000 per annum; and a rent review with Blacks has been settled at a revised rent of 72,500 per annum (an uplift of 11.5%). At Monument Mall, Newcastle, the Fund has completed a new lease with Kiehl s providing a term of 10 years at an initial rent of 100,000 per annum. In the industrial sector, Capvar Media has entered into a 5 year lease at an initial rent of 190,883 ( 5.75 psf) at Tetron Point, Swadlincote. At Saxon Way Trading Estate, Heathrow, Key Mail, have taken a 6 year lease at an initial rent of 98,000 per annum ( psf). At io Centre, Sutton, Screwfix have renewed their lease at Unit 1 for an additional 10 year term at an initial rent of 81,435 per annum ( psf) and the Fund has completed a rent review with Kuehne & Nahel at unit 17, securing a rent of 96,405 per annum (an uplift of 33%). In the office sector, at Central Square South, Newcastle, DWF have taken a 10 year lease over the second floor at a rent of 175,216 ( psf) and GVA have taken a 5 year lease over the third floor at a rent of 75, ( psf). At One Eton Street, Richmond, British American Tobacco have signed up to a 5 year reversionary lease at a rent of 474,462 ( psf) and at 55 Princess Street, Manchester, AHR Architects have taken a new 10 year lease at an initial rent of 198,792 ( psf). A number of new investment opportunities were analysed as the Fund seeks new assets that provide an attractive blend of high quality income and asset management opportunities to add to the existing portfolio. Properties in Focus Asset Disposal Maiden House, Maidenhead South east office building comprising 22,322 sq ft of accommodation. The asset was sub-scale in relation to the wider fund and vacant. Business Parks fall within the light category of our House View and as such a disposal was viewed as optimal ahead of a renovation and re-let. Asset Management Bligh s Meadow, Sevenoaks Prime shopping centre scheme covering 100,000 sq. ft. in one of the most affluent towns in the UK. Completed a new letting to Card Factory, providing a 10 year term at an initial rent of 61,000 per annum, and 4AG, securing a 5 year term at an initial rent of 12,300 per annum. Additional existing lease enhancement activity - Fifth Avenue, securing an additional 15 years at an initial rent of 27,600 p.a.; Between The Lines, providing an additional 10 years at an initial rent of 51,800 p.a. and Leaders, removing a break option and securing an additional 7 years term.

4 Performance Overview UK commercial real estate continued its stable performance over the period with capital values and rental growth remaining positive. Industrial and long income type sectors continue to generate the strongest returns while sentiment in the retail sector is weakening. The Fund slightly underperformed the IA Property (UK Direct) Sector for Q recording a return of 1.1% against the 1.3% for the sector. The IA Property Sector unit price movement has been distorted over the medium term due to various pricing basis changes and market value adjustments applied to a section of the contributors. (*1)Source: Standard Life Investments / Morningstar. Fund returns net of Platform 1 fees. Peer group comprises 8 comparable UK commercial property funds in the IA Property Sector. Forecasts and Outlook Investor sentiment and activity continues to illustrate that the hierarchy of sector preference remains largely unchanged. The industrial sector remains the favoured sector call as investors seek to take advantage of the structural shift towards online retailing. The alternative sectors remain another sector call favoured by many investors. Typically targeting these sectors for their long, stable inflation-linked leases, alternative sectors remain highly sought-after as we move into an environment of predominantly income-led returns. However, the subsectors are diverse and the risks associated with these sectors equally so. Investors are broadening their investment requirements in the alternative space. Rather than purely seeking defensive long income, investors are more comfortable with operational alternative sectors and their associated diversification benefits. Residential and student accommodation are already firmly established in this regard. Our five-year total return forecast for all property is below market consensus. We do not see inward yield shift contributing positively to total returns going forward. Rather, returns will be driven by income and, as such, a key focus will be appropriate management of income risk at the asset and portfolio level. The focus on income is reflected in our projected sub sector returns which have UK Sector Outlook Q Year View Very Heavy Heavy Neutral Light Very Light South East Industrial (SE ex ( Provincial Industrial (Rest of UK) Build to Rent (Rest of UK) Major City Prime Shops Leisure Parks Rest of South East Offices (ex Grade A Rest UK Offices Build to Rent ( Regional Shop Centres (>50k m²) Medium Town Prime Shops Retail warehouses Bulky Goods Hotels Retail Fashion Parks Supermarkets Alignment to House View: Q Sector become more divergent in the short term, with industrials and income-focussed sectors, including PRS, expected to be the strongest performing areas of the market. We continue to believe that UK property dynamics remain supportive although the returns from the UK commercial real estate market are expected to be moderate. UK real estate continues to provide an elevated yield compared to other assets in a low growth environment. Given the backdrop of continuing heightened macro uncertainty, however, we expect to see more polarised performance between prime and secondary assets and across the sectors. We will continue to implement asset management initiatives across the portfolio aimed towards maintaining income and capital preservation alongside appraising select favourable investment opportunities. Outer London Offices Solus RW Other Rest of UK Offices Business Parks Grade A City Offices West End & Midtown Offices House View Forecasts District Shop Centres (<50k m²) Secondary /Small Shops Secondary Shopping Centres Inner London Offices Grade B City Offices 6.6% -1.7% Very Heavy Heavy Neutral Light Very Light South East Industrial (SE ex ( Provincial Industrial (Rest of UK) Build to Rent (Rest of UK) Major City Prime Shops Leisure Parks Rest of South East Offices (ex Grade A Rest UK Offices Build to Rent ( Regional Shop Centres (>50k m²) Medium Town Prime Shops Retail warehouses Bulky Goods Hotels Retail Fashion Parks Supermarkets Outer London Offices Solus RW Other Rest of UK Offices Business Parks Grade A City Offices West End & Midtown Offices District Shop Centres (<50k m²) Secondary /Small Shops Secondary Shopping Centres Inner London Offices Grade B City Offices UK Real Estate Fund 6.6% 29.7% 28.9% 24.3% 12.9% -1.7% 4.3% Other 0% Source: Aberdeen Standard Investments, 30 June Figures above reflect forecast % annual total returns over the next 3 years. Projected returns are unleveraged, not risk adjusted and do not reflect the inclusion of transaction costs. We do not expect the structure of all our property funds to exactly match the above as there are stock specific, transaction costs and liquidity issues that may work against each fund achieving the ideal structure. Figures above exclude cash and cash like assets. Source: Aberdeen Standard Investments Note the forecast projections shown are three year annualised forecasts covering the period of Q Q

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