Cromwell European REIT - Annual Report 2021

An integrated investment process approach alongside ongoing review and governance > Fund and mandate target assessment > Fund and mandate strategy review > Portfolio diversification > Market, risk and environment assessment > Ongoing strategic review > Hold / sell analysis > Risk evaluation > Strategic and tactical asset / portfolio disposal > Sourcing, screening and underwriting > Evaluation, risk assessment and due diligence > Fund-level impact analysis > Debt sourcing and execution > Investment committee approval > Annual business plan and budget execution > Risk monitoring and management > Cash and debt management > Investor and regulatory reporting Research | Thematics | House View INVESTMENT PROCESS Vertically integrated services > Investor Relations > Fund and Investment Management > ESG > Research > Transaction Management > Asset Management > Development and Project Management > Legal, Risk and Compliance > Accounting, Tax and Reporting > Treasury I n v e s t m e n t S t r a t e g y E x e c u t i o n P o r t f o l i o R e a l i s a t i o n M a n a g e m e n t through monitoring key asset and market risks and identify “outliers”, as visualised in the chart on page 6 in Chair’s Letter to Unitholders. The tools include the following: • An enhanced property risk matrix across three broad categories, encapsulating 13 risk factors (asset risk, market / location risk, execution / financial risk), that provides a framework to assess existing properties, proposed investments, and potential divestments. The matrix visualises how the identified asset enhances or detracts from the existing portfolio risk / return profile and lays out the assessed risks in a standardised framework to consider against the projected returns; • Dynamic portfolio optimisation tool that provides a real- time measure of CEREIT’s overall risk and return via producing an “efficient frontier curve”. The tool maps out a dynamic efficient frontier of CEREIT’s investable universe, based on our investment team’s evaluation of expected returns and an assessment of the overall risk profile of a typical CEREIT property across each asset class in identified cities and countries; and • Approved by a Board with majority independent directors INVESTMENT PROCESS Research-backed approach to acquisitions The Manager’s approach to investment combines research-based fundamental market analysis with rigorous evaluation of property-specific variables and financial forecasts to enable the Manager to select assets that meet our investment criteria and enhanced risk adjusted returns. The initial asset selection entails top-down comprehensive analysis including a number of criteria covering mega trends and a mixture of cities and countries. The initial selection process identifies long-term sector mega trends and fundamental real estate attributes to identify countries and sectors that will provide attractive returns. Once top-down comprehensive data analysis has yielded targeted city locations and asset type, the bottom-up investment strategy process includes the refinement of the data of portfolio optimisation. For this part of the process, the investment management team has developed proprietary analytics tools that provide the Board with a broad framework to assist them in the evaluation of the proposed acquisitions and divestments. This in turn allows the asset management team to optimise the portfolio CROMWELL EUROPEAN REIT 17 ANNUAL REPORT 2021