Cromwell European REIT - Annual Report 2021

MANAGER’S REPORT EXECUTIVE SUMMARY The Manager is pleased to report on CEREIT’s operational resilience and credible performance in FY 2021, despite macro uncertainty and ongoing effects of the COVID-19 pandemic. The Board maintained a 100% distribution payout ratio and declared FY 2021 DPU of 16.961 Euro cents, which on a headline basis was 2.6% lower y-o-y, but 0.5% higher on a like-for-like basis 1 . Operating cashflow was again strong at €96.9 million, representing more than 100% of the distributable income and a 9.4% increase y-o-y. Notably, like-for- like portfolio NPI growth was 2.3% y-o-y, with light industrial / logistics sector improving by 3.0%, office segment up by 2.1% and CEREIT’s ‘other’ segment also up by 0.9%. CEREIT’s property valuations increased for the fourth consecutive year and are now, on average, 10.2% above their respective purchase prices, an additional testament to the portfolio’s resilience. CEREIT’s capital structure continued to be optimised further in FY 2021. Over the last 15 months, the Manager further diversified CEREIT’s sources of funding, raising close to €700 million through bonds, equity and perpetual securities. The issue of S$100 1 If the €2.8 million capital gains (equivalent to 0.55 Euro cents) paid out in FY 2020 are excluded to provide like-for-like comparison COVID-19 impact on CEREIT’s portfolio is negligible; some mid-term downside risks remain in the office sector and from SME tenant-customers No material tenant-customers re-profiling requests during FY 2021 No material doubtful debt provisions taken in FY 2021 FY 2021 operating cashflow is higher than 100% of Distributable income of €93.6 million Planned CAPEX for 2022 is not impacted by COVID-19 restrictions CEREIT has very little car park income exposure other than at Central Plaza (The Netherlands), a positive during the lockdowns Fourth-wave lockdowns have applied pressure on certain tenant-customers’ profitability Retail and hospitality tenant-customers, in particular gym and restaurant operators continue to be impacted by recent lockdowns Shorter duration office leases continue to reflect lingering COVID-19 impact Continued weakness in Poland and Finland office sector, with tenant-customers in Poland office receiving higher incentives (30-35%) A tenant-customer wind up in France caused the office portfolio’s occupancy to drop further CEREIT’s office portfolio occupancy dropped at year-end (94.3% as at June vs 93.2% as at September vs 91.9% as at December) Overall, CEREIT’s portfolio remained resilient to COVID-19 effects > ~42% exposure to the resilient light industrial / logistics sector > DHL and UPS are amongst large tenant-customers benefitting from ecommerce pick-up > ~21% of CEREIT’s rent comes from government and related entity leases > ~71% of CEREIT’s rent comes from MNCs and large domestic corporations > ~8% of CEREIT’s rent comes from SMEs million of five-year perpetual securities in November 2021 was a particular highlight, achieving an effective fixed rate in Euro of 3.55% for five years with S$50 million in Singapore’s first sustainability-linked cross- currency swap arranged through OCBC bank. Cromwell’s asset management team continued to lease up vacant space with 223 new and renewed leases signed, covering 217,529 sqm of space or 12.2% of the portfolio by NLA, at a positive rent reversion of 5.0% on average. As a result, CEREIT finished the year with occupancy at 95.0% and WALE at 4.6 years as at 31 December 2021, mainly due to strong light industrial / logistics leasing activity in Denmark, Germany and France. In FY 2021, the Manager completed €212.6 million in light industrial / logistics acquisitions at a blended NOI yield of 6.3%, further rebalancing the portfolio to this sector. The acquisitions were partially funded through the €100 million equity private placement in February 2021 and the S$100 million of five-year perpetual securities in November 2021. The Manager is committed to continuing to increase CEREIT’s portfolio exposure towards majority light industrial / logistics through accretive acquisitions and selective divestments of non-core assets. FOCUS ON STRENGTHS PIVOT TO LOGISTICS 34