Cromwell European REIT - Annual Report 2021

CEO INTERVIEW 4. WHAT ARE THE KEY RISKS THAT YOU SEE POTENTIALLY IMPACTING CEREIT’S BUSINESS OPERATIONS AND BOTTOM LINE IN FY 2022? Coming into 2022, I see three main risks which we will have to consider when we are navigating the business environment. Inflation Risk Short-term European inflation will be higher than we had anticipated prior to Russia’s invasion of Ukraine, due to energy and commodity price rises. Oxford economics’ most recent forecast for Eurozone inflation stands at over 5.0% in 2022. Strong labour markets are expected to create wage price growth, but this is unlikely to outpace inflation and this will likely lead to a reduction in real incomes. These factors are likely to adversely impact immediate European growth prospects, but we remain positive mid to long-term. Despite concerns over economic growth, higher inflation is still likely to see some moderate monetary tightening over the short to medium-term. Oxford Economics expects that the interest rates in Eurozone may rise in FY 2022 before levelling out in 2023. While interest rates are expected to increase moderately, the yields may not be impacted in the same way, leading to a narrowing spread as shown on the chart on the following page. Nearly all of CEREIT’s lease agreements with tenant- customers have rent review clauses indexed to the selected inflation rate benchmarks. This is expected ESG INTEGRATION WITHIN INVESTMENT PROCESS Implementation of initiatives across the platform alongside continuous improvement Improve ESG performance by collecting, monitoring and reporting ESG-related information at corporate level and across investments In-house data analytics | Industry and tenant feedback Engage actively with tenant- customers, service providers and investors to improve ESG-related performance at all levels Collaborate with service providers to minimise environmental impact and increase positive social impact for investors Activate change within the real estate industry by driving ESG initiatives through consultation and collaboration INVESTMENT PROCESS Ongoing implementation initiatives > Building certification > Industry benchmarking > Carbon pathway mapping FOCUS ON STRENGTHS PIVOT TO LOGISTICS 12