The Fund’s strategy

The Fund’s aim is to achieve a stable portfolio that can profit from the changing retail market, mainly due to its well-distributed portfolio of high-quality assets that is sufficiently resilient and future-proof to withstand the future risks in the retail market. This includes a net asset value of invested capital of more than € 1 billion and a good spread in terms of locations, segments and tenants that provides sufficient comfort to absorb these risks and continue to generate solid returns in an evolving retail market.

Based on the market trends and developments described above, the Fund's strategy can be summed up as follows:

Focus on retail properties classified as Experience and Convenience that closely correlate with the polarisation and urbanisation trends in the Netherlands. These properties also show little sensitivity to the online sales trend;
Increasing share of Experience and Convenience to at least 80% of the portfolio value;
Optimisation of the portfolio through acquisitions, disposals, redevelopments and active property management;
Responsible Investment: continuing the improvement of the Fund’s sustainability performance.

Diversification guidelines and investment restrictions

The Fund applies a defined set of diversification guidelines and 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.

Diversification guidelines	Current portfolio	Conclusion
≥ 80% of investments invested in assets classified as Experience and Convenience	79.6% in assets classified as Experience and Convenience	Not compliant (*)
≥ 90% of investments invested in low or medium-risk categories	93.3% in low and medium-risk	Compliant
Investment restrictions
< 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% related to non-core Retail properties	Compliant
No investments that will have a material adverse effect on the Fund’s Diversification Guidelines.	There were no investments in 2018 that have a material adverse effect on the Fund's diversification guidelines	Compliant
(Re)development activities < 5% of the Fund's total investment portfolio value	There were no (re)development activities > 5% in 2018	Compliant
a. only Assets from the Fund's porfolio qualify for (re)development	In 2018, all (re)development activities were were related to 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, the start of building activities related to a (re)development is conditional upon obtaining the relevant zoning permit	The building activities related 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'.

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

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Report of the Board of Directors

Diversification guidelines and investment restrictions