nepi-2022-06-03-en

1.PERFORMANCE AND OPERATIONS

Company profile 4

CEO's statement8

Chairman's statement10

Director's report12

Strong strategic positioning23

Value creation through the six capitals25

Portfolio at a glance27

Development and extensions pipeline59

EPRA performance measures62

2.CORPORATE INSIGHTS

Executive Board of Directors70

Corporate governance73

Risk management110

Remuneration review128

Sustainability report153

Analysis of shareholders and share trading217

Beneficial shareholding of Directors218

3.FINANCIAL STATEMENTS

Statement of Directors' responsibilities221

Independent Auditor's report223

Independent assurance report on the compliance of

the presentation of the annual report prepared

in XHTML format227

Financial Statements230

4.APPENDIX

Schedule of Properties281

Glossary282

Visit our website

www.nepirockcastle.com

for more information about us and our business

The terms 'NEPI Rockcastle', the 'Group', the 'Company', 'we', 'our' and

'us' refer to NEPI Rockcastle plc and,

as applicable, its subsidiaries and/or interests in joint ventures and associates.

1.Performance and

operations

Company profile

NEPI Rockcastle is the premier owner and operator of shopping centres in Central and Eastern

Europe (CEE), with presence in nine countries and an investment portfolio of €5.8 billion.

The Group benefits from a highly-skilled internal management team which combines asset

management, development, investment, leasing and financial expertise. Geographically diverse

management skills allow NEPI Rockcastle to pursue CEE property opportunities efficiently, benefiting

from a strategic advantage in the acquisition, development and management of properties.

NEPI Rockcastle owns and operates 52 retail properties (excluding joint venture) which attracted 244

million visits in 2021. With group-level management of tenant relationships and a focus on cross-

country collaboration, the Group is the leading strategic partner for major retailers targeting CEE

countries.

The Group's financial strategy includes maintaining a profile of adequate liquidity, conservative

gearing, and a diverse debt structure, which combines secured and unsecured bank debt with

unsecured bonds listed on the Irish Stock Exchange. NEPI Rockcastle is investment grade rated by

Standard & Poor's (BBB, stable outlook) and Fitch (BBB, positive outlook).

NEPI Rockcastle's shares are listed on the Johannesburg Stock Exchange ('JSE'), Euronext

Amsterdam ('Euronext') and A2X. The Group aims to distribute at least 90% of its distributable

earnings on a semi-annual basis. Given the nature of its business, and as it is considered a more

relevant performance measure than earnings or headline earnings per share, NEPI Rockcastle uses

distribution per share as its key performance measure for trading statement purposes, in accordance

with the JSE Listings Requirements.

CEO's statement

In 2021, the Covid-19 pandemic continued to affect businesses and livelihoods, sometimes in

unexpected and novel ways. However, the world learnt to cope better with the disruptions.

Vaccinations and other medical breakthroughs reduced the burden on health systems, which allowed

governments to reopen economies and people to largely return to a normal way of life. The impact on

shopping and entertainment centres was still massive, especially in the first half of the year, when

authorities in most Central and Eastern European countries introduced trading restrictions

comparable with those of 2020. In the second half of the year, we have seen a robust recovery in

trading numbers, indicating that the appetite for traditional shopping and leisure, of the kind offered

by our Group’s properties, continues to be very strong.

For the Group, 2021 was a transitional year, from the defensive mode of 2020 to repositioning

for sustainable growth. Ensuring the safe operation of our properties, offering support to tenants and

preserving high levels of liquidity and capital, remained key management themes. At the same time,

we made the switch to a growth supporting mindset. Construction works have started on the extension

of Promenada Mall in Bucharest and the greenfield development of Promenada Craiova. Our team

signed over 1,000 new leases and renewals, more than in 2019. We continued to invest in our

properties, to make them even more attractive for customers and retailers. Occupancy and collection

rates were strong, proving the quality of our tenant mix and the strong appeal of our properties. Most

encouragingly, we have seen turnovers return to, and even exceeding, pre-pandemic levels in all the

months free from trading restrictions.

On the financial side, we resumed paying dividends in line with our policy of distributing at

least 90% of earnings to shareholders. Our balance sheet is stronger than ever, with a loan-to-value

ratio of 30.9% and available liquidity (including undrawn committed credit facilities) of €1.1 billion. A

new eight-year green bond issue in January 2022 with 2% coupon was used to restructure the debt

maturity profile, and now our Company has no material debt repayments due before 2024.

There are challenges ahead, for sure. The pandemic is not over, and the emergence of new

variants is still a threat. Some unwanted economic side effects are now becoming clear, such as higher

inflation (brought about by fiscal and monetary stimulus, among other factors) and disrupted supply

chains, which may lead to a tightening purchasing power and financial conditions in the near future.

Internally, our Group has recently gone through important personnel changes, both at executive

management and Board level, and is planning a corporate relocation of its holding company. These

changes will have to be carefully managed to ensure strategic and operational continuity.

I am confident that we will be able to successfully steer through these challenges and deliver

strong results for our shareholders. Since the publication of our 2021 results on 23 February, a war

started between Russia and Ukraine, two countries in the immediate proximity of the CEE region,

followed by many countries announcing sanctions against the Russian economy. NEPI Rockcastle has

no properties in either Russia or Ukraine and insignificant exposure to Russian or Ukrainian tenants.

Among the Group’s larger tenants, some are also operating in Russia and/or Ukraine, but we do not

expect any of them to be in existential danger. We are thus confident that NEPI Rockcastle will not be

immediately and directly affected by the events currently unfolding. Having said that, these events can

have significant indirect effects on the economies where the Group is operating, which are difficult to

predict with any accuracy at this stage.

24 March 2022

RÜDIGER DANY

Chief Executive Officer

Chairman's statement

The Covid-19 pandemic continued to be a main theme in 2021, having a significant impact on

our results for the year. It has played out, however, in a very different way compared to 2020.

Throughout the first several months most governments in CEE introduced stringent lockdowns to

combat what proved to be the peak wave of the pandemic.

From May onwards, the situation improved substantially on the back of several positive

developments. Economies grew, helped by fiscal and monetary support, but mostly as a result of

people’s natural impulse to regain their quality of life. We have seen this in our tenants’ sales

rebounding to at least 2019 levels, as soon as restrictions were lifted or relaxed. For the moment, it

seems that Covid-19 will become less of a factor in our Group’s future results.

NEPI Rockcastle’s operations have reflected this transition, with the health and safety of our

visitors and staff remaining a key priority. The Group continued to support its tenants throughout the

more difficult parts of the year, at a cost of €40.8 million in rent concessions (down from €69.5

million in 2020). The support paid off, and our partnership with our tenants is as strong as ever, as

indicated by the receivables collection rate (more than 96% as of mid-February 2022), the robust

EPRA occupancy (96%) and the retailers’ continuing commitment to our properties. Many of them

have expansion plans and our asset management team is busy finding the right solutions to

accommodate more successful concepts in our properties. Retail NOI increased by 12% versus 2020

and is expected to continue growing in 2022, as the Group completes the shift from crisis

management mode to a growth mindset.

Throughout 2021, NEPI Rockcastle continued its prudent capital allocation policy. New

financing arrangements were contracted with a view to increasing average debt maturity (5.1 years

after the latest bond issue completed in January 2022), reducing interest costs and ensuring adequate

liquidity reserves. The Group is very well capitalised and positioned for financing future growth. The

priority will be funding the existing development pipeline, which includes a balanced mix of standing

asset redevelopments and greenfield projects. I strongly believe that our team is uniquely placed to

identify and execute on opportunities that are not only directly accretive to our bottom line, but will

also increase the quality and long-term sustainability of the property portfolio. NEPI Rockcastle will

also selectively consider acquisitions of individual assets or portfolios that fit its strict quality,

dominance and sustainability criteria.

At the same time, the Group is determined to continue its policy of distributing substantially

all earnings to its shareholders as dividends.

In August 2021, I assumed the role of Chairman of the Board from Robert Emslie, who had

previously announced his retirement from the Board of Directors. I thank Robert on behalf of the

Board for his significant contribution to the Group and wish him all the best in his other endeavors.

Also in August, the Board appointed two new non-Executive Directors, Ana Maria Mihaescu and

Jonathan Lurie. The addition of Ana Maria and Jonathan enhances the Board’s expertise and

strengthens its decision-making abilities.

In July, Alex Morar (CEO) and Mirela Covasa (CFO) announced their decision to leave NEPI

Rockcastle and approached the Board to implement a succession plan. The Board worked together

with Alex and Mirela and appointed Rüdiger Dany (previously COO) and Eliza Predoiu (previously

Deputy CFO) as interim CEO and CFO, respectively, effective from 1 February 2022. The Board would

like to thank Alex and Mirela for their great service during their long tenure with the Company, and

welcome Rüdiger and Eliza into their new roles. NEPI Rockcastle will continue under the new

executive management to implement its strategy and deliver value to shareholders through

sustainable growth.

We are living through challenging times. Although the Covid-19 pandemic shows signs of

abating, the war in Ukraine has now taken center stage as a major threat. The macroeconomic

environment is also clouded by risks of significant inflation and rising interest rates. No organisation

can fully predict and defend against the potential fallout from all of the events now unfolding.

However, I sincerely believe that NEPI Rockcastle is strongly positioned to continue delivering on its

objectives and creating value for our shareholders. Our keys to success remain our superior portfolio

quality, solid financial footing and, last but certainly not least, its top-class executive team and staff.

24 March 2022

GEORGE AASE

Chairman

Directors' report

*All information in the Directors' report excludes joint ventures, unless otherwise stated

HIGHLIGHTS*

•Distributable earnings per share (‘DEPS’) for the second half (‘H2’) of 2021 were 16.78 euro

cents, which, combined with the interim DEPS of 17.64 euro cents, produces an annual DEPS

of 34.42 euro cents, 10.4% lower than 2020 (38.42 euro cents). DEPS has been affected by the

non-recurring negative impact of 6.13 euro cents from the expenses with litigation claim

related to the discontinued acquisition of Serenada and Krokus Shopping Centres in Poland.

Excluding the expenses with the litigation claim, the recurring DEPS was 40.55 euro cents,

5.5% higher than in 2020.

•The Board has declared a dividend of 16.78 euro cents per share for H2 2021, corresponding

to 100% of the DEPS for this period. The distribution will be paid in cash during March 2022.

•Net rental and related income (referred to as ‘Net Operating Income’ or ‘NOI’) was €347

million, 7.4% higher than in 2020. The NOI has been affected by the Group’s disposals during

the last two years: the Romanian office portfolio sold in August 2020 (impact of NOI loss for

2021 of approximately €14.2 million), and two Serbian retail properties sold in July 2021

(impact of NOI loss of approximately €2 million). Excluding the impact of the disposals, NOI

was 13% higher in 2021 compared to 2020.

•Retail NOI increased by 11.9% vs 2020. The key drivers were the reduction in temporary rent

concessions granted to tenants as Covid-19 support (€40.8 million recognised in 2021,

compared to €69.5 million recognised in 2020) and the increase in variable (turnover and

overage) rent from €26.6 million (2020) to €28.3 million (2021).

•There were 244 million visits in 2021, a 10.4% increase compared to 2020. On a like for like

(‘LFL’) basis, footfall increased by 9.5% vs 2020 and decreased by 27.3% vs 2019.

•Tenant turnover increased by 25.0% (excluding hypermarkets) compared to 2020 and was

15.1% lower than in the benchmark year of 2019, on a LFL basis. The superior dynamic of

turnovers compared to footfall reflects the increase in average basket size by 15.4% compared

to 2020 (18.1% compared to 2019).

•Occupancy cost ratio (‘OCR’) impacted by the effect of concessions decreased from 14.5% in

2020 to 13% in 2021 (excluding hypermarkets), only slightly higher than the benchmark of

2019 (11.9%).

•The collection rate remained high (94% of 2021 reported revenues were collected as of 31

December 2021, increasing to 96% by mid-February 2022), despite significantly lower rent

concessions granted to tenants in 2021 compared to 2020.

•Throughout 2021, non-essential stores were closed for 46 days on average (weighted by asset

value), approximately 12% of the year, with trading restrictions for certain businesses, such as

restaurants and cinemas, lasting much longer. By year end, most restrictions were lifted and

nearly 100% of Gross Lettable Area (‘GLA’) was operational.

•Rental concessions of €40.8 million were recognised in the Statement of comprehensive

income for the period, mainly as a reduction of gross rental income or expense with partial

forgiveness of receivables.

•Investment property as of 31 December 2021 was valued at €5.84 billion, compared to €5.80

billion at the end of 2020. This increase reflects a fair value gain of €34.7 million on the

previous year.

•European Public Real Estate Association (‘EPRA’) occupancy increased slightly to 96.0%,

compared to 95.7% in 2020.

•EPRA Net Reinstatement Value (‘NRV’) per share was €6.51 as of 31 December 2021, a 0.9%

increase compared to €6.45 as of 31 December 2020, mostly due to the revaluation of the

property portfolio.

•Liquidity position as of 31 December 2021 was very strong: €1.1 billion, including €499

million in cash and €620 million in undrawn committed credit facilities.

•Loan-to-value (‘LTV’) was 30.9% as of 31 December 2021, significantly below the 35%

strategic threshold and comfortably within debt covenants.

•The average debt maturity decreased from 4.1 years as of 31 December 2020 to 3.7 years as of

31 December 2021. As a result of the eight-year unsecured green bond issue completed in

January 2022 and the early redemption of the bond notes maturing in May 2023, both in

amount of €500 million, the average debt maturity increased to 5.1 years at the end of

January 2022.

•The average interest rate, including hedging, was 2.4% for 2021, slightly higher than 2.3% in

2020.

•Investment grade credit ratings reaffirmed at BBB by Fitch Ratings (positive outlook) and

S&P Global Ratings (stable outlook).

•Environmental, Social and Corporate Governance (‘ESG’) Risk Rating from Sustainalytics

improved to 11.4/100 (end 2021) from 12.5/100 (end 2020).

•Throughout the year NEPI Rockcastle invested €75 million in developments and capital

expenditures.

•In July 2021, the Group sold two Serbian retail properties, Kragujevac Plaza and Krusevac

Shopping Park, for a transaction value of €60.8 million.

OPERATING PERFORMANCE

Trading summary

Between January and May, retail trading was disrupted by restrictions introduced to combat the

Covid-19 waves that hit all Central and Eastern European countries during that period. Restrictions

were generally less severe than in 2020. On a monthly basis, the minimum percentage of GLA open

for business was reached in January (65%), still a far higher proportion compared to the worst months

of 2020, when all non-essential stores had been closed. From May to October, there were no further

lockdowns, which allowed trading to reach, and even exceed, the levels of 2019. The waves of

infections starting in November, fuelled by the new Omicron variant, led to further restrictions. Due to

the high levels of immunisation within the population, governments refrained from fully closing stores

this time round, and stores remained open almost everywhere.

On average, throughout 2021, non-essential stores were closed for 46 days (weighted by asset value),

or approximately 12% of the year. The longest cumulative lockdowns were in the Czech Republic (130

days), Slovakia (123 days) and Lithuania (109 days), while Romania and Croatia had no full lockdowns

in 2021. Additionally, further restrictions were imposed on specific businesses (food service and

entertainment), including limitations on capacity and opening hours.

Overall, in 2021 footfall and tenant sales were higher than in 2020 on a LFL basis (by 9.5% and 25.0%,

respectively), and lower by 27.0% and 15.1%, respectively, as compared to 2019. This yearly

comparison hides significant month by month differences, reflecting the various stages in the

evolution of the pandemic. January and February were pandemic months in 2021 but not in 2020,

which led to a negative year-over-year (‘YoY’) variation. Performance in March and April was marred

by restrictions in 2021 (tenant sales were 40% lower than in 2019), but less so than in 2020 (+146.5%

in sales). The period from May to September saw a full recovery (sales were 4% higher than in the

same period in 2019), which is very encouraging and proves that customers are willing to resume

shopping in the Company’s properties when restrictions are lifted. During the last quarter, when

restrictions were reintroduced, sales dropped below 2019 levels (by 12%) but were still 28% above

2020 levels.

The average basket continued to increase in 2021, as customers tended to reduce the number of visits

to shopping centres, but buy more products during a visit. This trend started in 2020, when the

average basket was 2.7% higher than in 2019, and accelerated in 2021 (+15.4% vs 2020; +18.1% vs

2019). The tenant OCR dropped from 14.5% in 2020 to 13.0% in 2021, just above the 2019 level

(11.9%), even as it reduced rent concessions by 41% between 2020 and 2021, which shows that NEPI

Rockcastle calibrated the level of support granted to tenants properly. No major tenants went

bankrupt and insolvencies were very limited, even among smaller tenants, further proving that the

Group’s support was adequate.

Performance variations between countries are due to differences in length and severity of restrictions,

prevalent property types and government policies regarding retail support. Top performers include

Romania, where there were no full lockdowns in 2021 and the NOI returned to 2019 levels, Croatia

and Serbia (both with 2021 NOI higher than the 2019 NOI on a LFL basis). Slovakia, Lithuania and

the Czech Republic were the only countries where 2021 NOI was lower than in 2020, due to the long

periods of lockdown during the first half (‘H1’) of 2021. Compared to 2019, Poland has the worst NOI

variation, as it was the only country in the Company’s portfolio where landlords were forced by law to

waive rents during lockdown.

By retail category, the segments that recovered the most in 2021 were the ones most affected by

restrictions in 2020 that benefited from a relative relaxation: Entertainment (+39% in tenant sales in

2021 vs 2020 LFL), Services (+59%) and Food Services (+40%). This proves that entertainment and

leisure offerings will continue to provide significant appeal once restrictions are lifted. Compared to

the 2019 benchmark, the best performing segments were Fashion Accessories (-5.2%), Sporting Goods

(-2.0%), Health and Beauty (-2.5%) and Electronics (-9.3%). These segments benefitted from changes

in consumer habits, which adapted to new circumstances and routines. The fashion segment, the

largest by sales, was up by 26% vs 2020 and down by 18.7% vs 2019.

Trading restrictions and government measures

At mid-February 2022, 100% of the Group’s GLA was operational. Throughout 2021, governments in

Central and Eastern Europe (‘CEE’) became increasingly reluctant to impose hard trading restrictions

of the kind favoured in 2020, such as closing non-essential stores. Instead, they resorted to more

nuanced measures to slow contagion, like capacity limits or attendance only permitted for people with

green certificates. The appearance of the milder Omicron variant, and the progress made with

vaccinations, consolidated this trend. At present, the Company does not expect any further lockdowns

in any of the countries where it is operating.

Since the start of the pandemic, governments in CEE have adopted various measures to support

businesses affected by lockdowns, including tax relief (such as deferral of liabilities and exemptions/

discounts for property tax), employment support (such as subsidised furloughs and flexible working

hours) and liquidity-enhancing measures (such as guaranteed loans and suspension of loan

payments). These measures were gradually rolled back in 2021. In terms of specific legislation

affecting NEPI Rockcastle’s business, Poland introduced the most intrusive rules, suspending lease

agreements and waiving the payment of rents and service charges for certain periods. Recently these

measures had no effect as new lockdowns were avoided, a situation the Group expects to continue.

ADAPTING TO THE CHANGING RETAIL ENVIRONMENT

Active asset management

In 2021, the focus in asset management was on positioning the portfolio for a return to growth.

Several extension and refurbishment projects were initiated or continued. The key objectives were

reducing vacancy and optimising the tenant mix, particularly by expanding successful tenants, right

sizing and upgrading units and bringing in retailers with no prior presence in the region. Another

objective was the introduction of new digital services, communication tools and platforms, aimed at

making the shopping experience more convenient and increasing loyalty.

At the same time, the measures taken in 2020 in response to the pandemic were reinforced and

updated. These included the protection of customers and safe operation of properties by

implementing the strictest health and safety standards, supporting tenants affected by restrictions,

reacting to changes in consumer behaviour and managing the cost of maintaining and operating

properties.

Specific asset management measures initiated, continued or finalised in 2021 include:

–CCC group’s new concept, Half Price, opened stores in four Polish properties: Galeria

Warminska, Focus Mall Zielona Gora, Solaris Shopping Centre and Platan Shopping Centre.

–A new TK Maxx (2,000m2) was opened in Focus Mall Zielona Gora.

–The redevelopment of Ozas Shopping and Entertainment Centre (Lithuania) continued with

the opening of a swimming pool (1,600m2) and several new stores and food service units,

including Pet City, Vapiano, Gastrobar +++, Olive Kitchen and Grill London.

–A new cinema (1,500m2) operated by Cinema City opened in Shopping City Buzau (Romania).

–Several new stores were opened in Forum Liberec Shopping Centre (Czech Republic),

including three LPP brands (Sinsay, Cropp and Mohito), Gap and the city’s first Under

Armour.

–The redevelopment of Bonarka City Center (Poland) continued with the opening of several

stores, including Eobuwie (1,000m2), CCC (800m2), Deichmann (800m2), Pepco (500m2) and

the first S’portofino in the Group’s portfolio (300m2). Primark will open a store by the end of

the year.

–Three Inditex brands opened stores in Shopping City Targu Mures (Romania): Bershka

(800m2), Pull & Bear (700m2) and Stradivarius (600m2).

–The extension and refurbishment of Paradise Center (Bulgaria) was completed in 2021, with

the opening of several stores with a total area of 4,200m2, including Pepco and eMag.

Property operating expenses increased in 2021 compared to 2020 due to higher energy costs (utility

expenses increased by 17%). The higher minimum wages had an impact on security and cleaning

expenses (+5%) and maintenance expenses (+14%). These cost pressures are expected to continue in

2022.

Tenant support

The Group continued to apply a fair and balanced approach to tenant support across its entire

portfolio, along the same principles as in 2020. It focused on providing support to small and medium

local and national retailers, for whom such assistance was critical. Negotiations for support provided

to international anchors and large local chains also included lease improvements (such as extension of

terms, higher sales-based rents with more frequent reconciliation and removal of tenant unilateral

extension or termination options) or agreements for new store openings. Where longer-term deals

were agreed, clawback mechanisms were implemented (in the form of conditional concession

reversals or step rents). In addition to, or instead of, temporary rent reductions, NEPI Rockcastle

supported tenants through the deferral of rent payments, marketing contribution relief and the

reduction of non-critical operating expenses included in service charges.

During 2021, due to fewer trading restrictions on average and stronger tenant performance, the total

amount provided as income concessions related to Covid-19 (including rent, service charges and

marketing) decreased from €72.0 million in 2020 on a cash basis (€69.5 million recognised in the

profit or loss of 2020) to €40.9 million on a cash basis in 2021 (€40.8 million recognised in the profit

or loss of 2021). The balance of concessions from 2020 and 2021 subject to straight-lining amounts to

€2.6 million (2020: €2.5 million).

Rent concessions represented on aggregate approximately 8% of total retail income (contractual base

rent plus service charge contributions and marketing fees), and 12% of retail NOI, on a grossed-up

basis (before concessions).

As a result of negotiation efforts and improvements in performance, the collection rate for reported

revenues, adjusted for concessions, in 2021 was 94% at portfolio level as of 31 December 2021 and

increased to 96% by mid-February 2022.

Leasing

Leasing activity picked up significantly during 2021 as tenants started focusing on expansion. During

the year, 447 new leases (for 90,000m2 of GLA) and 714 renewals (for 140,000m2 of GLA) were

signed. International tenants accounted for 46.5% of new leases signed in terms of GLA. Many other

leases were extended via the addenda signed in relation to the pandemic concessions. More GLA was

leased in 2021 than covered by lease agreements expiring in the year, which led to a decrease in

vacancy by one percentage point (from 5% to 4%). Lease terms are typically very similar to pre-

pandemic times (Euro-based, minimum five years, base rent plus service charges, marketing fees and

additional turnover rent and annual indexation). Weighted average unexpired lease term (‘WAULT’)

was 3.6 years on 31 December 2021. The decrease from 31 December 2020 (4.1 years) is partly due to

the expiration of break options with some large tenants, which reclassifies the lease to short term for

the purpose of calculating WAULT, irrespective of its actual term.

Some of the major new leases signed in 2021 are set out below (some stores with opening dates after

31 December 2021):

•Bonarka City Center, Krakow, Poland: Primark (the first in the Group’s portfolio,

5,800m2), Half Price (2,900m2) and Pepco (500m2).

•Alfa Centrum Bialystok, Bialystok, Poland: Half Price (2,100m2), Biedronka (1,400m2)

and Home & You (500m2).

•Mega Mall, Bucharest, Romania: Sinsay (1,300m2).

•Shopping City Ramnicu Valcea, Ramnicu Valcea, Romania: Decathlon (1,000m2).

•City Park, Constanta, Romania: Sinsay (900m2) and JD (500m2).

•Shopping City Sibiu, Sibiu, Romania: Sportisimo (700m2).

•Mammut Shopping Centre, Budapest, Hungary: Gravity (700m2) and Pepco (400m2).

•Braila Mall, Braila, Romania: Cropp (700m2).

Digital transformation

The Group continued to adapt its business to the digital transformation accelerated by the pandemic.

The efforts were focused on creating an omnichannel experience for customers and on digitising

business processes and operations.

The key omnichannel projects are:

•Launch and rollout of the customer loyalty app – Spot, in Romania and Bulgaria. For 2022,

the plan is to rollout the app across the portfolio.

•Pilot project for an online marketplace launched in Bulgaria in January 2022. Customers will

access shopping centers' products online and offline.

•A unified customer data structure was implemented enhancing future customer interactions

across all channels of communication.

DEVELOPMENT UPDATE

NEPI Rockcastle maintains a flexible approach to developments, enabling it to revise pipeline

expenditure and to focus on committed ongoing projects.

The main projects envisaged by the development plan are detailed below.

Extension of Promenada Mall

Bucharest, Romania

The Group intends to add 58,400m2 of retail and office GLA by the end of 2025. Construction permits

have been obtained and the works on the underground parking have started.

Development of Promenada Craiova

Craiova, Romania

A new shopping centre in Craiova, one of Romania’s largest cities, will be developed by the third

quarter of 2023. The new mall will have 52,300m2 of retail GLA. Site preparation works have been

completed.

Development of Promenada Plovdiv

Plovdiv, Bulgaria

The Group plans to develop a new shopping centre in Plovdiv, Bulgaria’s second largest city, by the

end of 2024. The new mall will have 57,800m2 of retail GLA. The project is currently under

permitting.

Extension and redevelopment of Bonarka City Center

Krakow, Poland

A redevelopment of Bonarka, which includes the extension by 4,500m2 of GLA and the

accommodation of a Primark unit, is ongoing. The estimated completion date is in the fourth quarter

of 2024.

Development of Vulcan Residence

Bucharest, Romania

The construction of the Group’s first residential project has started. The project will deliver 18,300m2

of residential space (252 apartments) and additional 270 parking bays for sale and is expected to be

completed in the first quarter of 2023.

During 2021, the Group spent €75 million on developments and capital expenditures.

In February 2022, NEPI Rockcastle acquired a land plot in Galati, Romania for a mixed-use real estate

project. As part of the medium and long-term local expansion strategy, the envisaged development

will consolidate the Group’s position in Galati and in the region.

NEPI Rockcastle will continue to invest in developments contributing to growth and improving long

term portfolio prospects, continuously monitoring and revising the development pipeline in line with

its evolving objectives and constraints. During 2022, the Group estimates to invest €173 million in

development and capital expenditure related to its ongoing projects and will consider new

development opportunities depending on how market circumstances evolve.

DISPOSAL OF TWO SERBIAN PROPERTIES

As previously announced, the Group sold two properties in Serbia, Kragujevac Plaza and Krusevac

Shopping Park (including extension plots), in line with its strategy to focus on core dominant

properties in countries with investment grade credit rating. The sale agreement was signed in June

and completed in July. The transaction value was €60.8 million, at a €2 million premium to book

value.

ESG FOCUS

Environmental and social initiatives

NEPI Rockcastle continued to consistently rollout its sustainability strategy in 2021 as follows:

–72% of the Group’s assets have “Very good” or “Excellent” BREEAM certifications.

–A plan to extend the electric cars charging network, based on partnerships with Tesla and

Enel, continued to be implemented.

–Progress was made with key initiatives, such as in-vessel waste compost equipment and LED

lighting fixtures replacement, in line with the zero waste to landfill and zero carbon emissions

targets.

–The Company continued its green financing strategy started in 2020:

–all the revolving credit facility (‘RCF’) agreements were linked to ESG performance;

–a green loan agreement was concluded with the International Finance Corporation

(‘IFC’), undertaking that all proceeds will be allocated as per the Green Finance

Framework; and

–a successful €500 million green bond issuance was completed in early 2022.

NEPI Rockcastle’s focus on sustainability and social responsibility over the past years led to the Group

receiving its first EPRA sBPR Award in 2021.

Changes to the Board of Directors and management team

As announced on 23 July 2021, George Aase has taken over from Robert Emslie as Chairman of the

Board, effective 18 August 2021. Mr Emslie had previously announced his intention to retire from the

Board as of that same date. Mr Aase has been an Independent non-Executive Director of NEPI

Rockcastle since 2018 and has served as Chairman of the Audit Committee and member of the

Nomination and Remuneration Committees.

The Group also announced the appointment of two new Independent non-Executive Directors, Ana

Maria Mihaescu and Jonathan Lurie, effective 18 August 2021.

Further to the announcement dated 23 July 2021 that Alexandru Morar (CEO) and Mirela Covasa

(CFO) have decided to leave NEPI Rockcastle, the Company announced on 4 January 2022 the

appointment of Rüdiger Dany (previously Chief Operating Officer (COO)) and Eliza Predoiu

(previously Deputy Chief Financial Officer) as interim Chief Executive Officer (CEO) and interim Chief

Financial Officer (CFO) respectively. The appointments are effective from 1 February 2022 and last for

an initial period leading up to the announcement of the Company’s 2022 interim results for the six

months ending 30 June 2022.

Mr Dany joined the company on 6 July 2021 and was appointed as COO effective on 18 August 2021.

Mr Dany has over thirty years of extensive professional experience in retail, commercial real estate,

leasing and asset management. He has worked in international environments across Europe

(including Germany, Poland, Slovakia, Czech Republic, Greece, Turkey, Lithuania, Serbia and

Romania) for some of the largest international retail and real estate companies, including ECE,

Atrium and Multi Corporation. Mr Dany held various senior management positions, such as executive

member and COO of Atrium Group and Multi Corporation, Senior Managing Director Poland, Czech

Republic and Slovakia and Managing Director Czech Republic, Slovakia and Romania for ECE

Projektmanagement. He was responsible for strategy, business transformation, asset development,

greenfield projects, optimizing operating assets, supporting mergers and acquisitions and team

leadership for country and regional organizations.

Mrs Predoiu has over 14 years of finance and real estate expertise, including seven years with the

Group. She joined NEPI Rockcastle in 2014 as Financial Controller and was promoted to Deputy CFO

in December 2018. She has proven expertise in multi-million funding projects, complex business

transactions and integration processes of mergers, systems and controls. Prior to joining the

Company, Mrs Predoiu was Deputy Manager at PricewaterhouseCoopers (‘PwC’), where she spent six

years handling local and cross-border audit assignments and advisory projects in the Romanian and

Cypriot offices.

The Board of Directors thank the former CEO and CFO, Alex Morar and Mirela Covasa, for their hard

work and significant achievements, leading NEPI Rockcastle to become the largest retail real estate

group in the CEE region and wish them success in their future endeavours.

Relocation of parent company

On 29 November 2021, NEPI Rockcastle announced that its Board of Directors has approved the

migration of the Company’s seat of incorporation from the Isle of Man to the Netherlands. As Dutch

law does not currently permit companies incorporated outside of the European Union (‘EU’) to

migrate directly to the Netherlands, it is envisaged that the migration be performed in two inter-

conditional stages: an initial migration to Luxembourg (an EU jurisdiction), followed by a subsequent

migration to the Netherlands. Structured in this way, the migration of the Company to the

Netherlands is not anticipated to impact either the corporate continuity of NEPI Rockcastle or the

trading in Group shares, which would remain available to be traded on the JSE, Euronext Amsterdam

and A2X.

The migration is subject to shareholder approval and is envisaged to be completed by the end of 2022,

with updates on the matter to be provided in due course.

ACCOUNTING, AUDIT AND VALUATION MATTERS

Accounting of Covid-19 impact on 2021 results

Rent discounts

During 2021, the Group results reflected rent concessions worth €40.8 million, as illustrated in

following table.

Covid-19 discounts, by type

2021

(€ million)

2020

(€ million)

Rent and service charge reliefs (including marketing fees)

imposed by governments (Poland)

16.0

16.3

Discounts granted as partial forgiveness of receivables

17.8

47.0

Variable discounts contingent upon tenants’ performance

(negative variable rent)

5.0

5.1

Discounts granted as lease incentives, subject to straight-

lining

2.1

3.6

Total Covid-19 discounts for the period (on a cash

basis, straight-lining effects excluded)

40.9

72.0

Straight-lining net effect of the discounts granted after

signing of the addenda

(0.1)

(2.5)

Statement of comprehensive income impact

40.8

69.5

Tenant receivables

As of 31 December 2021, tenant receivables amounted to €46.9 million (VAT included, net of

provisions), of which €14.6 million were overdue. This balance is adjusted for provisions and rent

reliefs and concessions, either imposed by law or negotiated. The collection rate for 2021, adjusted for

concessions granted, was 94% as of 31 December 2021, increasing to 96% by mid-February 2022. The

Group expects to fully collect the outstanding tenant receivable balance.

External independent audit opinion

The audit report on the NEPI Rockcastle’s Consolidated Financial Statements has been issued by PwC

Isle of Man, after having audited and obtained the necessary documentation from PwC local offices in

jurisdictions where the Group operates through subsidiaries. The local PwC offices audit the separate

financial statements of the respective subsidiaries and issue their interoffice audit reports to PwC Isle

of Man. The audit opinion is unmodified.

Valuation

NEPI Rockcastle fair values its portfolio biannually. Fair value is determined by external, independent

professional valuers, with appropriate and recognised qualifications and recent experience in the

location and category of property being assessed.

Appraiser

Locations

Percentage of

portfolio

Colliers International

Romania

35%

Jones Lang LaSalle

Bulgaria, Croatia, Czech Republic,

Hungary, Serbia, Slovakia

32%

Cushman & Wakefield

Hungary, Lithuania, Poland

33%

As of 31 December 2021, the entire property portfolio had been independently valued by external

appraisers. The property appraisals continued to be performed within the context of the Covid-19

pandemic and the related restrictions implemented to contain the virus. However, property markets

remain functional, with transactional volumes and other relevant evidence at levels where an adequate

quantum of market evidence exists upon which to base valuation opinions. The external appraisers

substantially preserved the exit yields unchanged from the December 2020 valuation, adjusting the

short-term cash flows to factor in each property performance.

For the year ended 31 December 2021, the Group recognised a fair value gain in relation to investment

property portfolio of €34.7 million.

EPRA INDICATORS

EPRA indicators

31 Dec 2021

31 Dec 2020

EPRA Earnings (€ thousand)

210,159

240,770

EPRA Earnings per share (€ cents per share)

34.51

39.81

EPRA Net Initial Yield (‘NIY’)*

6.75%

6.70%

EPRA topped-up NIY*

6.79%

6.75%

EPRA vacancy rate

4.0%

4.3%

EPRA Net Reinstatement Value (‘NRV’) (€ per share)**

6.51

6.45

EPRA Net Tangible Assets (‘NTA’) (€ per share)**

6.48

6.42

EPRA Net Disposal Value (‘NDV’) (€ per share)**

5.82

5.79

EPRA Cost ratio (including direct vacancy cost)

8.3%

10.5%

EPRA Cost ratio (excluding direct vacancy cost)

8.2%

10.3%

* Does not include investment property held for sale (€1.8 million).

** NRV, NTA and NDV measures implemented effective from 1 January 2020. For the Group, EPRA NRV corresponds to

former EPRA NAV and EPRA NDV corresponds to former EPRA NNNAV.

The Group joined EPRA in 2018, and won the Silver Award for Best Practices Recommendations

(‘BPR’) for financial reporting in 2019, as a recognition of its commitment to transparency in

reporting and compliance with industry best practices. The Group has further improved its financial

reporting and BPR compliance, achievements which were recognised by EPRA in 2020 and 2021

through the Gold Award, the highest standard for transparency of financial performance measures.

CASH MANAGEMENT AND DEBT

The Group had strong liquidity as of 31 December 2021, with €499 million in cash and €620 million

in undrawn committed credit facilities.

NEPI Rockcastle’s gearing ratio* (interest bearing debt less cash, divided by investment property) was

30.9% as of 31 December 2021, below the strategic threshold of 35%.

As of 31 December 2021, ratios for unsecured loans and bonds showed ample headroom compared to

covenant thresholds.

• Solvency Ratio: 39%, compared to a maximum covenant threshold of 60%.

• Consolidated Coverage Ratio: 4.06, compared to a minimum covenant threshold of 2.

• Unencumbered consolidated total assets/unsecured consolidated total debt: 263% actual,

compared to a minimum covenant threshold of 150%.

*The reported gearing ratio (LTV) excludes the €33.6 million right-of-use assets and

associated lease liabilities as of 31 December 2021.

Liability management and bond issue

In June 2021, the Group concluded a green unsecured financing agreement with the IFC which

matures in June 2028 in amount of €73.5 million. The loan was disbursed in July 2021.

Also in June 2021, the Company repaid five of its secured bank loans from Slovakia and Poland

totalling €242 million.

In 2021, NEPI Rockcastle renegotiated the contractual terms related to its unsecured committed

revolving credit facilities, as follows:

•– the RCF from Raiffeisen Bank International was extended for one year, until January 2024,

with the maximum principal available maintained at €150 million;

•– the RCF from BRD-Groupe Société Générale and Garanti Bank was extended for three

years, until July 2024, with the maximum principal available increased to €170 million;

•– the RCF from ING Bank was extended for three years, until July 2024, with the maximum

principal available maintained at €100 million; and

•– the Group also changed the contractual terms of the RCF from a four-bank syndicate by

extending the maturity with one year, until December 2024, and by increasing the available

principal to €200 million.

Subsequent to the year-end, in January 2022, the Group issued its second green €500 million

unsecured eight-year Eurobond, carrying a 2% fixed coupon, with an issue price of 98.713%. The bond

issue was used for liability management, to repay the €500 million bond maturing in 2023.

Cost of debt

The average interest rate of the Group’s debt, including hedging costs, was approximately 2.4% during

2021, slightly higher than 2.3% in 2020.

As of 31 December 2021, fixed-coupon bonds represented 87% of NEPI Rockcastle’s outstanding debt.

Of the remaining long-term debt exposed to Euribor, 62% was hedged with interest rate caps and 38%

with interest rate swaps.

The Company continually evaluates its financing options, while keeping in mind the strategic objective

to broaden its investor base and maintain an optimal capital structure.

2021 EARNINGS DISTRIBUTION

The Board has declared a dividend of 16.78 euro cents per share for the second half of 2021,

corresponding to 100% of the distributable earnings per share for this period. The distribution will be

paid in cash during March 2022.

PROSPECTS AND EARNINGS GUIDANCE

Distributable earnings per share for 2022 expected to be at least 24% higher relative to the 2021

distributable earnings per share of 34.42 euro cents per share. This guidance does not consider the

impact of potential political instability in the region or major disruptions (such as broad lockdowns,

trading restrictions or other measures impacting purchasing power) and assumes a continuation of

the trading trends observed to date. This estimate is highly dependent on potential future measures

which could be taken by governments of the CEE countries where the Group operates, such as further

restrictions on trading or state support to tenants and/or landlords. This guidance can be modified or

withdrawn in the future if material changes unfold.

This guidance has not been reviewed or reported on by NEPI Rockcastle's auditors and is the

responsibility of the Board of Directors.

21 February 2022

Strong strategic positioning

NEPI Rockcastle's strategy is based on a sustainable business model which combines the high-quality

of assets with the success of the tenants and prudent financial management, enabling the Group to

deliver sustainable income growth over the long-term.

INVESTMENT APPROACH

The Group is committed to invest selectively in assets that meet its rigorous investment criteria.

Retail assets must be or have the potential to be dominant. Size is critical to achieve a

comprehensive offering and an optimum tenant mix, including a large proportion of food and

fashion anchors with a substantial leisure and entertainment area. Good location, access,

visibility, design and technical specifications, and potential for extension reduce the

threat of significant future competition.

Professional active management of such properties creates significant and valuable growth

opportunities.

NEPI Rockcastle pursues low-risk development, redevelopment and extension

opportunities, in a non-speculative phased manner. Construction costs are committed to on a

gradual basis, following the achievement of pre-leasing targets agreed by the Board and are limited to

the availability of internal sources of financing.

OPERATIONAL EXCELLENCE

The Group's strong corporate culture is focused on planning, quality of execution, sustainability,

ethics and early risk assessment.

The Group has great in-house expertise in all key functions, combining investment,

development, asset and property management, leasing, accounting and finance skills, in an integrated

approach.

Outstanding knowledge and expertise in the CEE retail markets is illustrated by best-in-

class indicators, such

as consistently high collection and occupancy rates, low occupancy cost for tenants, increase in tenant

sales and footfall and strong organic growth despite operating in low inflation environments.

Preventative maintenance decreases long-term capital expenditure, service charge levels and non-

recoverable expenses.

With a broad platform across nine CEE countries and 244 million visits, the Group is focused

on adapting its business model to the changing consumer preferences and building strong, trust-based

relationships with leading retailers across CEE, sharing both a long-term vision and the capacity for

innovation.

PRUDENT FINANCIAL STRATEGY

Growth is funded through a combination of equity issues and debt.

The debt strategy focuses on a targeted 35% loan-to-value, maintaining high interest coverage

ratios and diversifying financing sources to optimise cost of debt. Debt funding is biased towards

Group level unsecured bonds and revolving facilities, adding secured bank debt only when it decreases

the overall cost of funding. As at 31 December 2021, the LTV ratio was 30.9%, while 91% of

total assets were unencumbered.

Value creation through the six capitals

Financial capital

•€2.3 billion debt

•€3.6 billion equity

(share capital and share premium)

■Loan-to-value ratio of 30.9%, below the strategic threshold of 35%

■Average cost of funding of 2.4% (2020: 2.3%)

■Repaid €242 million bank loans in Slovakia and Poland

■Concluded the first bilateral agreement with IFC for €73.5 million green funding

■Increased the existing revolving credit facilities by €45 million up to €620 million

■BBB investment grade credit rating by S&P and Fitch reaffirmed in the year, outlook changed

to stable and positive, respectively

Human capital

Dedicated team of professionals across:

» asset management

» finance and treasury

» investment

» development

Strong leadership team

On the ground management teams

Experienced Board of Directors

■Sector specific specialists across asset management, finance and deal making

■Best in class operational and financial performance ratios

Intellectual capital

•Strong name and reputation

•Operating systems and processes

•Robust Corporate Governance

•Access to capital (debt and equity)

■Access to CEE acquisition pipeline

■Strong partnership with CEE retailers

■94% collection rate (despite Covid-19 context)

Social and Relationship capital

•Engaged stakeholder relationships

•Investor roadshows

•Active monitoring of legislative and regulatory changes

•Community support projects

■Dedicated resources to stakeholder relations

■EPRA Gold Award and EPRA Bronze Award for compliance with Best Practices

Recommendations for financial reporting and for sustainability reporting, respectively

■In the Top 10 Sustainalytics rated companies in Real Estate Management (low risk -

11.4/100)

■MSCI AA ESG rating leader among 79 companies in the real estate management and

services industry

Manufactured capital

•Local property portfolio

•Local investments

■€5.8 billion investment property portfolio

■Modern, high-quality assets (over 96% of the properties are less than 15 years)

■Dominant regional malls with city centre location

■Social destinations, located in densely populated areas with good macrodynamics

Natural capital

•Energy

•Water

•Land

■Green Finance Framework implemented in 2020

■66% of the Group's energy consumption comes from renewable energy sources

2.Corporate insights

Executive Board of Directors

RüDIGER DANY (59)

Interim Chief Executive Officer

BSc

Rüdiger Dany has extensive professional experience in international environments across Europe for

some of the largest international retail and real estate companies including ECE, Atrium and Multi

Corporation.

During his tenure with Multi Corporation (affiliated with Blackstone), Mr Dany played an important

role in optimising and expanding their property management portfolio for institutional investors. As a

Board Member and COO of Multi, his major achievement was the value enhancement of Blackstone’s

property portfolio and the successful opening of new shopping centers, developments and extensions

of existing shopping centers. Mr Dany has also driven the creation of an innovation group within

Multi to elabourate business opportunities by using modern PropTech tools, both B2B and B2C.

Mr Rüdiger Dany was appointed as an Executive Director and Chief Operating Officer on 18 August

2021, and as Interim Chief Executive Officer on 1 February 2022.

ELIZA PREDOIU (37)

Interim Chief Financial Officer

BCom, ACCA

Eliza Predoiu has diverse finance and real estate expertise, including seven years in the Company. She

has proven expertise in multi-million funding projects, complex business transactions and integration

processes of mergers, systems and controls.

Prior to joining NEPI, she was Deputy Manager at PricewaterhouseCoopers, where she spent six years

handling local and cross-border audit assignments and advisory projects in the Romanian and Cypriot

offices.

Mrs Predoiu joined the Company in 2014 and was promoted as Deputy Chief Financial Officer in

2018. She was appointed as Interim Chief Financial Officer on 1 February 2022.

MAREK NOETZEL (43)

Executive Director

MSc, MRICS

Marek Noetzel has been active on the Polish retail real estate market since 2002, gaining his

professional experience at Cushman & Wakefield. As Head of the Retail department, he was

responsible for commercialisation, development, asset management, investment and financial

consultancy services, working for multiple international and national clients.

Mr Noetzel joined Rockcastle in 2016 and played an important role in establishing the office in Poland

and expanding operations abroad.

He was appointed as an Executive Director of NEPI Rockcastle on 15 May 2017, is currently

responsible for asset management of the Western portfolio and he supports the acquisition of

properties in Poland, Hungary, Slovakia, Czech Republic and Lithuania.

Corporate governance

The Board governs the Group based on sound principles of ethical leadership, business, social and

environmental sustainability and equitable stakeholder engagement. In its governance process, the

Board monitors compliance with the King IV Report on Corporate Governance in South Africa,

Johannesburg Stock Exchange Limited Listings Requirements, Euronext Amsterdam and A2X

guidelines. Based on material compliance with King IV principles, the Group voluntarily aligned its

Governance Framework to relevant provisions in the UK and Dutch corporate governance codes,

following the proportionality principle and considering the one tier board governance structure it has

in place. The Group is following COSO (Committee of Sponsoring Organisations of the Treadway

Commissions) principles in deﬁning its internal controls system and enterprise risk management

framework.The Group has complied with the Isle of Man Companies Act, particularly with reference

to the incorporation provisions as set out in the Isle of Man Companies Act, and has operated in

conformity with NEPI Rockcastle’s Articles of Association during the year under review.

As a result of the information included herein, the Board is satisﬁed with the corporate governance

arrangements implemented at Group level.

Corporate Governance Framework

Based on King IV principles and further aligned to the UK and Dutch governance codes, where

applicable, the Group governance framework comprehensively covers key governance areas, such as:

•leadership, ethics, corporate citizenship

•strategy, performance and reporting

•governing and delegation structure

•functional areas governance

•stakeholders relationship management.

Core leadership principles at Board level

The Board voluntarily adopts best practice governance policies designed to align the interests of the

Board and management with those of shareholders and other stakeholders, and to promote the

highest standards of ethical behaviour and risk management. The members of the Board individually

and collectively cultivate a strong set of values and lead by example.

Integrity

•Directors must act in good faith and in the best interests of the organisation.

•Directors should avoid conﬂicts of interest. In cases where a conﬂict cannot be avoided, it

should be disclosed to the Board and proactively managed as determined by the Board, while

subject to legal provisions.

•Directors should act ethically, beyond mere legal compliance.

•Directors should set the tone for an ethical organisational culture.

Competence

•Directors should ensure that they have sufficient knowledge of the organisation, industry and

the funds it uses and affects, as well as the key laws, rules, codes and standards applicable to

the organisation.

•Directors must act with due care, skill and diligence, and take reasonable steps to become

informed about matters requiring their decision.

•Directors should continuously develop their competence to lead effectively.

Accountability

•Directors acknowledge their responsibility for decisions, policies and steering mechanisms

they employ in the governing of the Group.

•Directors are willing to answer for the execution of their responsibilities towards the Group.

Transparency and confidentiality

•Directors should be transparent in the way they exercise their governance role and

responsibilities.

•Directors shall respect the conﬁdentiality of information acquired in their capacity as

members of the Board and shall not disclose such information to third parties without proper

and speciﬁc authority, or unless there is a legal or professional duty to do so.

•Conﬁdential information acquired as a result of professional and business relationships shall

not be used to the personal advantage of the Directors or any third parties.

Strategic oversight

In carrying out their oversight role, the Board actively engages in setting the long-term strategic goals

for the organisation, reviews and approves business strategies, corporate ﬁnancial objectives, ﬁnancial

and funding plans (ensuring they are consistent with the strategic goals) and monitors the Group's

performance in executing such strategies.

The Group has a robust strategic framework for long-term value creation, which has been reviewed

and endorsed by the Board. The Board is essential in helping the Company articulate and pursue its

purpose, with a focus on addressing issues increasingly important to investors, communities it

operates in and consumers. The Board strongly believes that the Company's ability to design a strong

long-term strategy and to manage environmental, social and governance matters, demonstrates the

good governance ultimately required to achieve sustainable growth and the mere existence of the

Company in the long run.

The Group's strategy is designed and proposed by the management team and adopted in the Board. It

is structured around ﬁve major strategic directions, with each of the directions further drilled down to

more granular objectives. The Board takes an active role in monitoring how the Company is achieving

its strategic objectives.

Role of the Board

The Board assumes collective responsibility for directing, governing and controlling the Group, while

providing effective corporate governance, promoting an ethical corporate culture and ensuring that

the organisation is a responsible corporate citizen. Furthermore, the Board acts as a link between the

stakeholders and the Group and ensures that there is transparent and effective communication with

stakeholders on both positive and negative aspects of the business.

A clear division of responsibilities at Board level is in place to ensure a balance of power and authority,

including between the roles of Chairman, Lead Independent Director and Chief Executive Officer,

which are clearly deﬁned and segregated. This was designed to ensure that, either at Board or

management level, no individual can hold single and unlimited control over signiﬁcant decision

making process.

The Board meets regularly, at least four times a year, and is responsible for setting the Group's

strategy, approving major matters, governing risk management processes and monitoring the overall

Company performance. The Board oversees the overall effectiveness of the internal controls

framework, which is designed to ensure that assets are appropriately safeguarded, operations are run

efficiently, effectively and economically, proper accounting records are maintained, the published

ﬁnancial information is reliable, laws and regulations are complied with.

There are no external advisers who regularly attend or are invited to attend Board meetings.

The Board's role consists of two fundamental dimensions: decision making and oversight.

The decision making role is exercised through the formulation or approval of fundamental policies

and strategic goals and the approval of signiﬁcant actions in relation to implementing the Group's

strategy.

The oversight role concerns the review of selected management decisions, monitoring operational

performance, monitoring the adequacy of systems and internal controls, supervising the

implementation of aligned policies across the Group.

The Board makes major policy decisions, participates in strategic planning, delegates to management

the authority and responsibility for day-to-day affairs and reviews management's performance and

effectiveness.

More precisely, in line with the Articles of Association, the Board has the following main

responsibilities:

•appoints the CEO, CFO and any other Executive Director;

•establishes a framework for the delegation of authority to Executive Directors and further to

the next lines of management;

•makes strategic decisions with respect to signiﬁcant ﬁnancing transactions in which the Group

may engage, following the recommendation received from CFO;

•oversees equity management process, according to the Articles of Association;

•makes strategic decisions with respect to acquisitions, disposals and CAPEX, when these

exceed the Investment Committee's or the CEO's authority;

•adopts the Group's strategy and budget based on management's proposal;

•steers the Group in achieving its core targets and monitors operational performance

compared to budget and forecasts, including the execution of the investment and

development strategy;

•monitors the ﬁnancial performance of the business, including its going concern and viability,

reviews the ﬁnancial and operational results and approves the ﬁnancial statements and

Annual Report;

•facilitates effective communication with the stakeholders and provides a commentary on the

ﬁnancial results, enabling investors to assess the Group's economic value;

•ensures that the Group's IT systems are integrated and support the business strategy and

internal processes;

•ensures that management fosters a culture of ethical conduct;

•oversees that management has implemented proper policies and procedures to guide the

Group's operations across all signiﬁcant processes;

•provides oversight of enterprise risk management and approves the Group's Risk Policy and

Risk Appetite;

•ensures an effective, risk-based internal audit and monitors the effectiveness of the internal

controls;

•oversees that the combined assurance model covers effectively the organisation's signiﬁcant

risks and material matters, through a combination of:

■line functions that own and manage risks on a daily basis;

■specialist functions that facilitate and oversee risk management and compliance;

■internal auditors;

■independent external assurance service providers, e.g., external auditors; and

■other external assurance providers, such as sustainability and credit rating agencies.

The Chairman of the Board is an Independent non-Executive Director who acts as a link between the

Board and the executive management. According to the Group's Corporate Governance Framework,

the Chairman:

•cannot be appointed as member or Chair of the Audit Committee or of the Risk and

Compliance Committee;

•cannot chair the Remuneration Committee;

•must be a member of the Nomination Committee and can chair it; and

•cannot be appointed as Chief Executive Officer or any other Executive Director.

The Chairman has the following main responsibilities:

•set the ethical tone;

•foster proper corporate governance;

•oversee the formal succession plan for Board members;

•oversee the performance evaluation process, the onboarding of new Directors and the

continuous development of Board members;

•take a lead role in removing non-performing Directors;

•ensure that any material misconduct amongst the members of the Board is investigated and

responded to properly and in a timely manner;

•ensure that Directors are mindful of their duties and responsibilities and foster proper

functioning of the Board and Committees;

•see that a Lead Independent Director is nominated in order to ensure back-up; and

•ensure that amicable relationships are maintained with major shareholders and other

stakeholders.

Lead Independent Director

•lead in the absence of the Chairman;

•serve as a sounding board and trusted adviser of the Chairman;

•act as an intermediary between the Chairman and other members of the Board, if necessary;

•chair discussions and decision-making by the Board on matters where the Chairman may

have a conﬂict of interest; and

•lead the performance appraisal of the Chairman.

Group governance structure

The Group's governance structure establishes the fundamental relationships among the Board, its

Committees and management. The Group has a one tier Board, comprising non-Executive and

Executive Directors. In order to discharge its responsibilities in a proper and professional manner, the

Board nominates sub-Committees and delegates some of its responsibilities, while retaining ﬁnal

accountability.

Responsibility for the day-to-day operations of the Group is delegated to the Executive Directors and

then further on to the management teams. An Operational Mandate approved by the Board is in place

to ensure that delegation to management contributes to role clarity and to the effective exercise of

authority and responsibility.

The Executive Directors on the Board are the Chief Executive Officer ('CEO'), the Chief Financial

Officer ('CFO'), other Executive Directors (including the Chief Operating Officer - 'COO'). Subject to

the provisions of the applicable regulations, the Board may appoint Executive Directors, specify their

duties and delegate powers to them. The CEO and the CFO have the following roles:

CEO

•ensure that a long-term strategy, in line with the Group's mission and vision, is developed,

advanced to the Board for approval and then deployed;

•steer the development of the Group, establish performance goals and allocate resources to

ensure growth, achievement of strategy, compliance with applicable laws and regulations and

responsible citizenship;

•ensure that a positive and ethical working environment exists and that the ethics policies

approved by the Board are implemented;

•act as chief spokesman for the Group;

•foster communication between the Executive Directors/Management and non-Executive

Directors; and

•maintain investor relations.

•The CEO does not have other professional commitments and is not a member of governing

bodies outside the Group, except for private companies managing personal investments.

CFO

•establish and manage the accounting and ﬁnancial functions of the Group, including

establishing policies and practices for effective accounting and ﬁnancial performance

monitoring;

•take responsibility for ﬁnancial and ﬁscal compliance, as well as general reporting of business

performance;

•oversee the compilation of realistic budgets and their implementation, including limiting

expenses and managing variations between projected and actual performance indicators;

•identify funding requirements and ensure that these are met in a cost-effective manner;

•supervise ﬁscal research, projections, analysis and optimisation;

•interact and maintain relationships with external auditors, regulators, analysts, rating

agencies; and

•maintain investor relations.

The CFO does not have other professional commitments and is not a member of governing bodies

outside the Group, except for private companies managing personal investments.

In 2021, the Board, directly or through its sub-Committees:

Board appointments

Directors are appointed by the Board or by shareholders, as per the provisions of the Articles of

Association. Board appointed Directors need to be re-appointed by the shareholders at the next

Annual General Meeting ('AGM').

In addition to the power of shareholders to remove Directors, the Board is entitled to remove any

Director without shareholders approval, in accordance with the provisions of the Articles of

Association.

The Group has a strict retiring-by-rotation policy, i.e., each year, one third of the Directors retire by

rotation and may stand for re-appointment by the shareholders, except for the ﬁrst AGM when all

Directors must retire and stand for re-appointment.

The Board appointments are conducted in a formal and transparent manner following

recommendations made by the Nomination Committee to the Board. The candidates' proﬁles are

carefully analysed and new appointments always take into account the necessary mix of background,

experience, competencies, independence requirements and diversity principles, as set out in the Board

Proﬁle Paper. High proﬁle and experienced recruitment agencies may be used to identify and assess

new Director candidates, based on the decision of the Nomination Committee. The background and

references of the candidates are carefully checked and multiple information sources are used.

The independence of each newly proposed Director is assessed by the Nomination Committee and

presented to the Board, as well as reassessed annually, based on clear criteria deﬁned in the Corporate

Governance Framework. Director’s independence is reassessed formally on an annual basis by the

Nomination Committee for all the Directors, and any changes are discussed by the Board and

disclosed in the Annual Report.

A formal onboarding programme is in place for newly appointed Directors, under the close

coordination of the Chairman of the Board and with support from the CEO. The onboarding

programme is designed to help the new Director become familiar with the Group's business, strategy,

policies and structure, as well as the Board's and the Committees' operational approach. The

programme covers general ﬁnancial, social and legal affairs, ﬁnancial reporting, as well as aspects that

are specific to the Company and its business.

Board profile, diversity and independence assessment

The Board comprises a mix of non-Executive and Executive Directors. Non-Executive Directors are

key advisors to management, counselling on the strategic direction, objectives and action plans, taking

into account business opportunities and the Group's risk appetite.

In order to ensure that the Directors' varied backgrounds and experience provide NEPI Rockcastle

with an appropriate combination of knowledge and expertise that is necessary to manage the business

effectively, the Group developed a Board Proﬁle Paper. The paper describes the competencies,

expertise and background expected from Directors individually, as well as the Committees and the

Board, collectively. It also sets out principles of diversity, independence and representation of

Executive versus non-Executive Directors. The Board, based on an annual self-assessment of the

Group's current set-up and needs, is satisﬁed with the skill set, mix of knowledge, diversity of cultures

and background of its Directors as of 31 December 2021.

Independent non-Executive Directors play a crucial role in acting as a sounding panel to the

Executives and the non-Independent non-Executive Directors, ensuring Board discussions and

decisions are conducted in an objective manner and in the best interest of the Group.

Speciﬁc guidance is provided by King IV and has been followed by the Group in establishing criteria

for evaluating the independence of its Directors on an annual basis.

The following criteria, in line with the Corporate Governance Framework, have been used by the

Nomination Committee to assess the independence of the Board's non-Executive Directors for 2021:

Director

Criteria

Assessment

Robert Emslie*

√

Independent

George Aase

√

Independent

Andre van der

Veer

√

Independent

Antoine Dijkstra

√

Independent

Andreas Klingen

√

Independent

Ana Maria

Marinescu

√

Independent

Jonathan Lurie

√

Independent

Andries de Lange

√

non-Independent^

Steven Brown**

√

non-Independent

Sipho Vuso Majija

(alternate to

Steven Brown)

√

non-Independent

(alternate)

* the Director left the Board on 18 August 2021, therefore the last independence assessment was performed in January 2021

** shares in NEPI Rockcastle’s shareholders, material for the Director’s wealth, were considered for marking criteria 4 ^ the

Director's independence was re-categorised in March 2022 and the Board considered that he will act in an independent

capacity going further

A non-Executive member of the Board may continue to serve in an independent capacity for longer

than nine years if, upon Board’s assessment, conducted annually, it is concluded that the member

exercises objective judgement and there is no interest, position, association or relationship which,

from the perspective of a reasonable and informed third party, is likely to inﬂuence unduly or cause

bias in decision making. No Director currently exceeds the nine years threshhold.

Directors in the Board as of 31 December 2021

Years of service in the Board*

Alex Morar

8.3

Andre van der Veer

7.6

Mirela Covasa

6.9

Marek Noetzel

Antoine Dijkstra

5.6

George Aase

3.3

Andreas Klingen

2.7

Steven Brown

1.7

Andries de Lange**

1.6

Ana Maria Mihaescu

0.3

Jonathan Lurie

0.3

Rüdiger Dany

0.3

* length of service to both NEPI and Rockcastle, before the merger, has been considered.

** since August 2016, Mr de Lange acted as Alternate Director for Mr de Beer (previous Director on the NEPI Rockcastle

Board), during the latter's tenure as Director at NEPI, subsequently continuing to act as such within NEPI Rockcastle plc,

from August 2017 until September 2019. The related length of service is not considered.

Board membership in 2021

With effect from 18 August 2021, Ms Ana Maria Mihaescu and Mr Jonathan Lurie were appointed as

Independent non-Executive Directors. At the same date, Mr Rüdiger Dany was appointed as Chief

Operating Officer and Executive Director.

Further to the announcement of 18 May 2021 in respect of Mr Robert Emslie’s retirement from his

role of Chairman of the Board, Mr Emslie left the Board effective 18 August 2021, after more than 5

years with the Company.

The following Directors were re-elected by shareholders at the Annual General Meeting held on 18

August 2021:

•Andreas Klingen, as Independent non-Executive Director with 98.53% of the votes; and

•Alex Morar, as Executive Director and CEO with 99.56% of the votes.

As of December 31, 2021, the Board comprised 12 members, 8 non-Executive Directors and 4

Executive Directors.

The members of the Audit Committee were re- appointed at the AGM as follows:

•Andreas Klingen, member and Chairman, with 98.07% of the votes;

•Andre van der Veer, member, with 94.63% of the votes;

•Antoine Dijkstra, member, with 98.47% of the votes; and

•Ana Maria Mihaescu, member, with 99.96% of the votes.

Details of the non-Executive Directors background and expertise as of December 2021, are set out

below:

GEORGE AASE (59)

BSc, CPA

Career

George Aase is an experienced CFO, with expertise gained in publicly traded real estate ﬁrms,

technology companies and Fortune 100 US multinational industrial ﬁrms. He is a highly strategic and

business-oriented senior ﬁnance executive with extensive experience in leadership roles. His core

specialties include corporate ﬁnance, capital markets, IPO transactions, debt ﬁnancing, international

ﬁnancial operations, international ﬁnance and controlling and investor relations, with over 12 years'

experience in the real estate sector. He led three major initial public offerings in London, Zurich and

Frankfurt. Mr Aase also possesses extensive ﬁnancing and debt restructuring experience and has

managed various portfolios connected with major acquisitions and underwriting. Mr Aase was

appointed as Independent non-Executive Director on 28 August 2018 and as Chairman of the Board

effective 18 August 2021.

Appointments at 31 December 2021

NEPI Rockcastle

Chairman of the Board

Chairman of the Nomination Committee

Member of the Investment Committee

Member of the Remuneration Committee

Other listed companies

ANDREAS KLINGEN (57)

MBA (RSM)

Career

Mr Klingen has more than 25 years of experience in the ﬁnancial services sector, most of which is in

Banking in Central Eastern Europe and Commonwealth of Independent States ('CIS'). He held various

senior positions within Investment Banking at Lazard, Frankfurt and JP Morgan, London. Thereafter,

he became Head of Group Development of Erste Group, Vienna, and Deputy CEO of Erste Bank, Kiev.

He has been working as an independent adviser since 2013.

Since 2005, Mr Klingen served as a Supervisory Board member or a non-Executive Director in 14

institutions in 11 different countries in Central Eastern Europe and the CIS. He was appointed as an

Independent non-Executive Director of NEPI Rockcastle on 17 April 2019 and as Lead Independent

Director effective 28 September 2020.

Appointments at 31 December 2021

NEPI Rockcastle

Lead Independent Director of the Board

Chairman of the Audit Committee

Chairman of the Sustainability Committee

Member of the Nomination Committee

Other listed companies

Deputy Chairman of the Supervisory Board of NLB dd

Member of the Supervisory Board of Credit Bank of Moscow PJSC*

Member of Board of Directors Kyrgyz Investment and Credit Bank

* Effective 14 March 2022, Mr Klingen is no longer a Director in Credit Bank of Moscow

ANTOINE DIJKSTRA (58)

MSc, COL (INSEAD)

Career

Antoine Dijkstra started his career at Credit Agricole in Rotterdam, Paris and Frankfurt. Mr Dijkstra

has extensive experience in banking and investment management, with a focus on public sector

related entities and ﬁnancial institutions. He held various board and managing roles within AIG,

NIBC (Netherlands), Harcourt Investment Management (Zurich), JP Morgan/Bear Stearns (UK) and

Gulf International Bank (Bahrain). Currently he is a senior advisor to several companies, member of

the Board of Trustees of SMU University and member of the Executive Committee of Cox School of

business in Texas, USA. Mr Dijkstra was appointed as Independent non-Executive Director of NEPI in

2016 and Independent non-Executive Director of NEPI Rockcastle on 15 May 2017.

Appointments at 31 December 2021

NEPI Rockcastle

Chairman of the Risk and Compliance Committee Member of the Audit Committee

Member of the Nomination Committee

Member of the Sustainability Committee

Other listed companies

ANDRE VAN DER VEER (54)

BPL, MPL

Career

After completing a Masters' degree in Banking and Economics in 1991, Andre van der Veer joined

Rand Merchant Bank (RMB) where he founded the agricultural commodities and derivatives trading

group in 1995. He headed the trading, derivatives structuring and proprietary trading teams and in

2003 joined the RMB Equity Global Markets team.

He became Head of RMB Equity Proprietary Trading desk in 2009, with a mandate to invest in debt

and equity instruments globally. Mr van der Veer founded Foxhole Capital during 2012 as a family

office specialising in global real estate securities in listed and private equity markets. He was a non-

Executive Director of Rockcastle from 2014 to 2017, and also the Chair of Rockcastle's Investment

Committee.

Mr van der Veer was appointed as Independent non-Executive Director of NEPI Rockcastle on 15 May

2017.

Appointments at 31 December 2021

NEPI Rockcastle

Chairman of the Remuneration Committee

Chairman of the Investment Committee

Member of the Audit Committee

Member of the Risk and Compliance Committee

Other listed companies

ANDRIES DE LANGE (48)

CA (SA), CFA

Career

After qualifying as a chartered accountant, Mr Andries de Lange joined the Industrial Development

Corporation of South Africa Limited and then Nedbank Limited where he gained experience in debt

ﬁnance, debt and equity restructurings and private equity. He joined Resilient REIT Limited, a South

African based property focused company which listed on the JSE in 2004, holding several positions

including Financial Director between 2006 and 2011, and thereafter Chief Operating Officer from 2011

until 2020. Mr de Lange was appointed as non-Independent non-Executive Director of NEPI

Rockcastle on 27 May 2020 and was re-categorised as as Independent Director as of March 2022.

Appointments at 31 December 2021

NEPI Rockcastle

Member of Remuneration Committee

Member of Nomination Committee

Other listed companies

STEVEN BROWN (41)

CA (SA), CFA

Career

Mr Brown has a strong background in the property industry, commencing as a listed property analyst

in 2008 for Corovest. Following this, he joined Standard Bank's Global Markets division in the equity

derivatives ﬁnance team and thereafter joined the South African real estate division focusing on

structured lending and equity transactions. Since 2013, Mr Brown has been involved with a number of

listed real estate companies focusing on deal origination and structuring. Mr Brown is currently the

Chief Executive Officer and Managing Director of Fortress REIT Limited, a company that he joined in

December 2015, following the acquisition by Fortress REIT Limited of Capital Property Fund. He was

appointed as non-Independent non-Executive Director of NEPI Rockcastle on 28 April 2020.

Appointments at 31 December 2021

NEPI Rockcastle

Member of the Investment Committee

Member of the Risk and Compliance Committee

Member of the Sustainability Committee

Other listed companies

CEO Fortress REIT Limited

ANA MARIA MIHAESCU (66)

BSc, IDP (INSEAD)

Career

Ana-Maria Mihaescu has 30 years of banking and finance experience. Ms Mihaescu worked for the

International Finance Corporation (IFC) for 20 years, most recently as IFC’s Regional Manager for

Central and Eastern Europe. She also represented the IFC on the boards of investee companies, banks,

leasing companies and private equity funds. Ms Mihaescu was the first Country Manager for IFC in

Romania. She is an alumnus of the Bucharest Academy of Economic Studies and received a certificate

for the International Directors Program from INSEAD. Ms Mihaescu was appointed as an

Independent non-Executive Director effective 18 August 2021.

Appointments at 31 December 2021

NEPI Rockcastle

Member of the Audit Committee

Member of the Remuneration Committee

Member of the Sustainability Committee

Other listed companies

Non-Executive Director Medlife SA

JONATHAN LURIE (45)

CFA

Career

Jonathan Lurie has 20 years of real estate investment experience at leading firms across all major

European geographies and asset classes. Mr Lurie is the Managing Partner of Realty Corporation Ltd,

a real estate and PropTech investment and advisory firm, and a senior adviser to McKinsey & Co,

where he provides strategic advice on real estate transactions, financing, capital allocation,

management, and operations, to leading institutional investors and developers globally. Mr Lurie

previously held various senior executive positions at Blackstone and was Executive Director and Head

of Real Estate Investment Management – Europe for Goldman Sachs. Mr Lurie held management and

supervisory board positions in several large-scale European property companies such as OfficeFirst

AG (IVG), Multi Corporation, Anticipa, Logicor, Blackstone Property Management, GSW AG (now

Deutsche Wohnen AG), Songbird Estates plc (owner of Canary Whart Group plc), Corestate Capital,

TLG Immobilien and Round Hill Capital. Mr Lurie graduated as an Economics Major with Highest

Honors from Princeton University and has an MBA from the Wharton School, University of

Pennsylvania. He is a member of the International Council of Shopping Centers (ICSC). Mr Jonathan

Lurie was appointed as an Independent non-Executive Director effective 18 August 2021.

Appointments at 31 December 2021

NEPI Rockcastle

Member of the Investment Committee

Member of the Risk and Compliance Committee

Other listed companies

2021 was a year with intense activity for the Company and for its Board, in the context of managing

the Covid-19 pandemic as well as multiple projects at Group level, including the succession planning

for the CEO and the CFO. The schedule of meetings is detailed in the table below. The participation

rate in the Board and Committees meetings in 2021 was 100% for all Directors (members of the Board

or Committee at the respective date).

Date

Board of

Directors

Investment

Committee

Audit

Committee

Risk and

Compliance

Committee

Remuneratio

n Committee

Nomination

Committee

Sustainability

Committee

Meetings

13-Jan-21

27-Jan-21

28-Jan-21

10-Feb-21

11-Feb-21

17-Feb-21

22-Feb-21

23-Feb-21

24-Feb-21

4-Mar-21

12-Mar-21

17-Mar-21

16-Apr-21

23-Apr-21

7-May-21

13-May-21

14-May-21

18-May-21

19-May-21

15-Jun-21

17-Jun-21

9-Jul-21

16-Jul-21

5-Aug-21

13-Aug-21

17-Aug-21

18-Aug-21

30-Aug-21

15-Oct-21

4-Nov-21

12-Nov-21

16-Nov-21

17-Nov-21

25-Nov-21

26-Nov-21

Development, evaluation and succession planning

In accordance with the Corporate Governance

Framework, the Board ensures that its performance, proﬁle, composition, competences and expertise,

and those of its Committees, its Chair and individual members, support continued improvement.

Keeping up to date with trends, industry-speciﬁcs, legal and regulatory developments, economic,

social and governance topics, is a constant priority and the Directors' development programme

includes dedicated sessions covering such areas.

A formal succession plan is in place to ensure that sufficient knowledge, skills and expertise are

available for the Board to effectively govern the Group, to safeguard a smooth transition and preserve

knowledge and experience at Board level. Succession planning includes:

•identifying the knowledge, skills and experience the Board should collectively possess to

effectively fulﬁl its roles and responsibilities;

•ensuring an appropriate balance in terms of diversity, expertise and knowledge among the

Directors, in accordance with the Board Proﬁle Paper;

•identifying qualiﬁed individuals suitable for nomination and recommending them to the

shareholders at the AGM;

•achieving continuity through a smooth succession of Directors (including Board and

Committees leadership) that balances perspective and independence with experience and

knowledge; and

•satisfying best practice within the legal and regulatory framework applicable to the Group, in

particular, compliance with the JSE, A2X and Euronext listing requirements, and with the

statutory obligations in the various jurisdictions where the Group operates.

Following the announcement of 23 July 2021, when the CEO and the CFO published their intention to

pursue opportunities outside the Group, the Board, through its Nomination Committee, triggered the

succession process, for identification of suitable replacements. The process was extensive and run in a

transparent and objective manner, with the support of professional international recruitment

agencies, and it considered both internal and external candidates.

On 4 January 2022, the Board announced the appointment of Rüdiger Dany (the Chief Operating

Officer) and Eliza Predoiu (the Deputy Chief Financial Officer) as interim Chief Executive Officer and

interim Chief Financial Officer, respectively. The appointments are effective from 1 February 2022 for

an initial period leading to the announcement of the Company’s 2022 interim results for the six

months ending 30 June 2022.

Directors' dealings and related parties' transactions

Dealing in Company's securities by Directors, their associates and key Group employees is regulated

and monitored in accordance with the applicable stock exchange listing requirements, guidelines,

legislation, regulations and directives.

To prevent the risk of insider trading and to ensure that none of the restricted persons abuse, and do

not place themselves under suspicion of abusing inside privileged information, the Group has adopted

a formal Dealing Code, available and communicated to all employees and Directors. The Dealing Code

sets out obligations for the Group's Directors, managers, staff and persons closely associated with

them, under the Market Abuse Regulation and stock exchange listing requirements and guidelines,

regarding clearance to deal and notiﬁcations of transactions in the Group's securities. Through its

Dealing Code, the Group prohibits all Directors and employees from using conﬁdential information,

not generally known or available to the public, for personal beneﬁt.

NEPI Rockcastle maintains a closed period from the end of a ﬁnancial period until publication of the

ﬁnancial results for that period, as well as when sensitive information not yet available publicly is

known by the Company's employees or Directors. The Group announces closed periods to its

employees and the Company's Directors, and, during such periods, all those with insider knowledge

are banned from dealing.

In compliance with JSE Listings Requirements, the Company announces publicly all its Directors,

dealings in the Company's securities, through SENS (Stock Exchange News Service).

All Directors' and Directors' related parties' interests are disclosed according to the Declaration of

Interests Policy. All Directors' direct and indirect securities holdings as of year-end are also published

in the Annual Report.

According to the Group Code of Ethical Conduct, Board members are alert to conﬂicts of interest and

ethical conduct and should generally refrain from the following:

•engaging in personal business that may compete with the Group;

•demanding or accepting substantial gifts from the Group or from any of its employees or

partners, for themselves or their spouse, registered partner or other life companion, foster

child or relative by blood or marriage up to the second degree;

•providing unjustiﬁed advantages to third parties at the Group's expense;

•taking advantage of business opportunities that the Group would be entitled to;

•allowing in any other way the inﬂuence of third parties to compromise or override

independent judgement;

•using conﬁdential information related to the Group for their own personal beneﬁt;

•making use of inside information to make a proﬁtable investment;

•taking advantage of his position as Director to earn proﬁt for him/herself; and

•making personal use or advantage of an opportunity obtained through the Group.

Potential conﬂicts of interest related to topics on the agenda are checked at each Board meeting. Any

potential conﬂict of interest would be declared and discussed in the Board meeting. The Board would

decide on the measures to be implemented and the degree of further involvement of the respective

Director in the matter at hand. Any conﬂict of interest deemed signiﬁcant by the Board during the

year would be disclosed in the Annual Report. Such information considers, but is not limited to,

related party transactions and cross-shareholdings.

Company Secretary function

The Company Secretary function assists the Board in ensuring that the Group complies with statutory

and regulatory requirements. The Company Secretary function also ensures that the Board members

are informed of their legal responsibilities.

Company Secretary function covers the following main responsibilities:

•ensures that the procedures for the appointment of Directors are observed and that the

process is traceable;

•ensures that Board matters such as onboarding of new members, development programmes,

training and evaluation are properly organised and any activity or information relating to the

Board is properly stored;

•sees that agenda and materials are distributed in time, that detailed minutes of Board

meetings are kept and that Board decisions are distributed, tracked and reported upon in

collabouration with the Executive Directors;

•ensures that proper procedures are followed at Board level and that the statutory obligations

and obligations under the Articles of Association are complied with;

•ensures that rules regarding conﬂict of interest management applicable to the Board, as

deﬁned in the Declaration of Interests Policy and Code of Ethical Conduct, are observed, and

keeps evidence thereof;

•provides corporate governance advice to the Board members on all governance matters and

issues;

•supports the Chairman in making the Board members aware of signiﬁcant relevant laws,

regulations and codes, as well as circulating emerging information to Group entities;

•generally supports the Chairman of the Board in the organisation of the affairs of the Board;

•prepares communications for Group entities and stakeholders, as instructed by the Board;

and

•coordinates and guides the activity of the persons appointed as Secretary of Board

Committees.

The Board is satisﬁed with the competence, qualiﬁcations and experience of the Company Secretary

Function.

Delegation to Committees

Without abdicating accountability, the Board delegates certain functions to well-structured

committees. The following requirements are considered when setting up Committees, in line with the

governance framework:

•the Chairman of the Audit and the Remuneration Committees must be an Independent

Director;

•the Nomination Committee should only consist of non-Executive Directors, and the majority

should be independent;

•the Remuneration Committee should consist of non-Executive Directors, in majority

independent;

•Directors who are not members of a Committee may attend meetings to gain/offer

information, but will not vote; and

•the CEO will not be a member of the Remuneration, Audit or Nomination Committees, but

may attend by invitation.

The Board considers the allocation of roles and responsibilities and the composition of membership

across committees holistically, to achieve the following:

•effective collaboration through cross-membership between Committees where required,

coordinated timing of meetings and avoidance of duplication or fragmented functioning in so

far as possible;

•where more than one committee has jurisdiction to deal with a speciﬁc matter, the role and

positioning of each committee in relation to such matter are deﬁned, to ensure

complementary rather than competing approaches; and

•a balanced distribution of power in respect of membership across committees, so that no

individual would dominate the decision-making process and no undue reliance would be

placed on a single individual.

The Board nominated the following Committees, necessary to discharge some of its duties:

•Audit Committee;

•Investment Committee;

•Remuneration Committee;

•Risk and Compliance Committee;

•Nomination Committee; and

•Sustainability Committee.

The role of each Committee, together with responsibilities, accountability and operating guidelines are

documented in the Committees Charters. The Committees Charters are approved by the Board and

are reviewed periodically, considering regulatory guidance and industry best practices, to ensure the

Board and its Committees are adaptive and responsive to new requirements and continue to practice

strong oversight.

The membership of the Committees is reviewed annually by the Board, to ensure effective discharge of

their duties and oversight through an appropriate mix of knowledge, background and independence.

The Committees are appointed by the Board, and any of the members may be removed by the Board,

except for the Audit Committee.

Committees’ activity in 2021

Audit Committee/6 meetings/100% attendance rate

Independent non-Executive Directors

Andreas Klingen (Chairman)

Andre van der Veer

Antoine Dijkstra

Ana Maria Mihaescu

•oversee the integrated accounting and reporting process, including ﬁnancial reporting;

•oversee the independence of internal and external auditors;

•evaluate and coordinate the internal and external audit process in order to ensure an effective combined

assurance model;

•nurture and improve communication and contact between relevant stakeholders in the Company;

•monitor control framework implemented to ensure compliance with legal requirements;

•satisfy itself of the expertise, resources and experience of the Group's Finance function;

•deal appropriately with any concerns or complaints relating to accounting practices, the content or auditing of

the Group's ﬁnancial statements, internal controls or any other relevant matters; and

•assist the Board in carrying out its IT governance role, by obtaining the relevant assurances that IT risks are

adequately addressed by the controls in place and by providing oversight over the entire IT management

framework.

Risk and Compliance Committee/4 meetings/100% attendance rate

Independent non-Executive Directors

Antoine Dijkstra (Chairman) Andre van der Veer

Jonathan Lurie

Non-Independent non-Executive Directors

Steven Brown

The Risk and Compliance Committee is established to assist the Board in:

•exercising oversight over enterprise risk and compliance management processes; and

•ensuring the Group has implemented an effective approach for risk management that will enhance its ability to

achieve its strategy and business objectives.

The Risk and Compliance Committee ensures that the enterprise risk management and compliance processes are widely

disseminated throughout the Group, are integrated into its day-to-day activities, and that risk assessments are

performed on a continuous basis.

Sustainability Committee/3 meetings/100% attendance rate

Independent non-Executive Directors

Andreas Klingen (Chairman) Antoine Dijkstra Ana Maria Mihaescu

Non-Independent non-Executive Directors

Steven Brown

Executive Directors

Mirela Covasa

The Sustainability Committee oversees and reports on the Group's organisational ethics, responsible corporate

citizenship (including the environment, health and public safety, the impact of the Group's activities and of its products

or services), sustainable development and stakeholder relationship management. The members of the Committee are

knowledgeable and mindful of economic, social and governance matters and the Group's material issues in this regard.

The Committee oversees how the consequences of the Group's activities and outputs affect its status as a responsible

corporate citizen. The oversight is performed against targets included in the sustainability strategy, covering the

following areas:

•environment, i.e., minimise the effects of the Group through responsible use of resources, controlled pollution

and waste disposal, controlled carbon footprint, green buildings, protection of biodiversity;

•economy, including the communities support and contribution to creating new jobs;

•workplace, including employment equity, diversity and inclusion, fair remuneration, health and safety;

•society, including public health and safety, consumer protection, community development and protection of

human rights; and

•governance, including how the Board is steering the Company based on an ethical foundation.

The Sustainability Committee approves the ESG strategy, veriﬁes progress towards the implementation of such a

strategy and reviews the Group's Sustainability Report.

The CFO, as the Executive Director part of the Sustainability Committee, is the executive manager overseeing the overall

ESG agenda in the Group.

Remuneration Committee/6 meetings/100% attendance rate

Independent non-Executive Directors

Andre van der Veer (Chairman)

George Aase

Ana Maria Mihaescu

Non-Independent non-Executive Directors

Andries de Lange

The role of the Remuneration Committee is to support the Board in discharging its responsibilities related to the Group

Remuneration Policy and remuneration approach. The Remuneration Committee is responsible to:

•review and approve the Group's Remuneration Policy, while ensuring that the policy, practices and

performance indicators are aligned to the Board's vision, values and overall business objectives, and are

designed to motivate Directors and employees to pursue the Group's growth and success;

•monitor implementation and administration of the Remuneration Policy;

•annually review and recommend to the Board the remuneration to be paid to the non-Executive Board

members;

•annually review and recommend to the Board the Executive Directors remuneration, in accordance with the

Remuneration Policy and targets achievement; and

•ensure staff and Directors' remuneration is aligned with market trends and Group strategy.

Nomination Committee/4 meetings/100% attendance rate

Independent non-Executive Directors

George Aase (Chairman)

Antoine Dijkstra

Andreas Klingen

Non-Independent non-Executive Directors

Andries de Lange

•identify suitable Board candidates in order to ﬁll vacancies, based on the criteria deﬁned in the Board Proﬁle

Paper, to ensure the appropriate mix and diversity;

•ensure there is a succession plan in place for key management and Board members;

•formally assess the independence of non-Executive Directors;

•assess the composition of the Board sub-Committees on an annual basis or whenever necessary;

•arrange the evaluation of the performance of the Board members on an annual basis; and

•arrange for an appropriate training and development programme for the Board members, as well as an

induction programme for the newly appointed Directors.

Investment Committee/4 meetings/100% attendance rate

Independent non-Executive Directors

Andre van der Veer (Chairman) George Aase

Jonathan Lurie

Non-Independent non-Executive Directors

Steven Brown

Executive Directors

Alex Morar Marek Noetzel

•consider potential investments (including mergers and acquisitions, listed securities, capital expenditure for

developments or extensions and purchases of land) and disposals, in line with the strategic goals of the Group;

•approve investments if within its mandate or further recommend to the Board for consideration and approval.

Audit Committee

According to the corporate governance requirements and in full alignment with best practices, the

Audit Committee:

•consists of at least three Independent non-Executive Directors;

•is chaired by an Independent non-Executive Director who is not the Chairman of the Board;

•consists of members fully conversant with ﬁnance and accounting principles, and who are

knowledgeable about the affairs of the Company; and

•consists of members who must have a fair understanding of International Financial Reporting

Standards, internal controls, external and internal audit processes, corporate law,

sustainability issues and information technology.

The Chairman of the Board may attend meetings by invitation, but cannot be nominated as member

or Chair.

According to its charter, the Audit Committee has the following responsibilities:

A. In relation to external audit:

•nominate for appointment the external auditor;

•review the auditor's fees and terms of engagement, and ensure that the appointment complies

with relevant legislation;

•assess the external auditor’s independence and objectivity;

•review external audit reports to ensure that prompt action is taken by management in all

relevant areas;

•review any signiﬁcant disagreement between management and the external auditor;

•evaluate the performance of the external auditor and the quality and effectiveness of the audit

process; and

•develop a process to ensure that the Audit Committee receives notice of any irregularities

reported to the Independent Regulatory Board for Auditors.

B. With respect to the financial reporting processes:

•evaluate the Group Annual Report for reasonableness, completeness, consistency and

accuracy prior to issuance and approval by the Board;

•evaluate signiﬁcant management decisions affecting the ﬁnancial statements, including

changes in accounting policy, resolutions requiring a major element of judgement and the

clarity and completeness of proposed ﬁnancial and sustainability disclosures;

•oversee compliance with all applicable tax regulations, ensure that the Company has

implemented a transparent taxation policy and that this is appropriately disclosed, as well as

advise management on various decisions related to taxation matters;

•in consultation with external and internal auditors, review the integrity of the Group's

ﬁnancial reporting processes;

•consider the external auditor's opinion about the quality and appropriateness of the

Company's accounting policies;

•determine whether and how the external auditor should be involved in the review of the

content of ﬁnancial reports published, other than the ﬁnancial statements;

•review complex and/or unusual transactions; and

•recommend to the Board whether it should issue a going concern statement, based on the

assessment provided by the CFO.

C. With respect to internal controls:

•gain an understanding of the Group's key risk areas and the internal controls structure;

•evaluate whether management is setting the appropriate 'control culture' by communicating

the importance of internal control and the management of risk and by overseeing that all

employees understand their roles and responsibilities;

•review the effectiveness and efficiency of the internal controls system;

•review and assess the reports and recommendations on internal controls issued by the

internal and external auditors;

•consider how management is held accountable for the security of computer systems and

applications, and the contingency plans for processing ﬁnancial information in the event of

systems breakdown, fraud or misuse;

•gain an understanding of whether internal control recommendations made by internal and

external auditors have been implemented by management; and

•prioritise and direct the audit effort to high-risk areas of the business.

D. In relation to internal audit:

•review and approve the Internal Audit Charter;

•review the effectiveness of the Internal Audit function, its staffing and resources and its

capacity to carry out the Annual Audit Plan;

•review the activities and organisational structure of the Internal Audit function and ensure no

unjustiﬁed restrictions or limitations exist and that the Internal Audit function remains

independent;

•ensure that internal audit activities comply with the relevant rules and regulations;

•review and approve the risk assessment results and the Annual Audit Plan;

•review internal audit reports, including management's action plans to address risk and

control deﬁciencies noted by the Internal Audit function;

•monitor the implementation of action plans based on reports provided by the Internal Audit

function; and

•escalate to the Board, if necessary, signiﬁcant audit ﬁndings and control deﬁciencies which

require Board attention and prioritisation.

E. With respect to ethical and legal compliance:

•oversee controls implemented to address compliance with applicable laws, regulations and

policies;

•oversee whistleblowing process and investigations results;

•review internal audit reports concerning any compliance reviews and investigations; and

•review management's monitoring of compliance with the Board's guidelines.

F. With respect to information technology management:

•ensure that a technology architecture that enables the achievement of strategic and

operational objectives of the Group has been deﬁned;

•oversee that information technology management processes are formalised and that an

effective control environment for managing related risks and achieving objectives, as well as

preserving information privacy and security, has been designed and implemented effectively;

•ensure that proper policies and processes have been implemented to ensure ethical and

responsible use and disposal of technology and information, both hardware and software;

•oversee that effective mechanisms have been implemented to identify and respond to security

incidents;

•oversee that monitoring of developments in technology is in place, including the capturing of

potential opportunities and the management of disruptive effects on the organisation and its

business model; and

•ensure that proper value assessments are performed before investing in information and

technology.

The Board supports and endorses the Audit Committee, which operates independently of

management and is free from any organisational impairment.

The Audit Committee assists the Board in fulﬁlling its responsibilities and has unrestricted access to

information, including records, property and personnel of the Group.

The Audit Committee has considered and found:

•the expertise and experience of the Chief Financial Officer are appropriate for the position,

and the arrangements for the Finance function are adequate, for the size and complexity of

the Group; and

•the expertise and experience of the Internal Audit Director are appropriate for the position,

and the arrangements for the Internal Audit function are adequate given the size and

complexity of the Group.

The Audit Committee, following the mandate received at the Annual General Meeting, approved the

2021 external auditor's terms of engagement, fees and scope of work at Group level. Based on

interactions with the external auditor and the quality of the external auditor's reports, the Audit

Committee considered the expertise and independence of the external auditor, including the partner

rotation policy, and concluded they are satisfactory.

In order to fulﬁl its responsibility to monitor the integrity of ﬁnancial reports issued, the Audit

Committee has reviewed the accounting principles, policies and practices adopted during the

preparation of ﬁnancial statements and examined relevant documentation related to the Annual

Report. The Committee is comfortable that appropriate ﬁnancial reporting procedures have been

established and are operating in respect of all Group entities. The Audit Committee reviewed:

•the clarity of the disclosures included in the ﬁnancial statements; and

•the basis for signiﬁcant estimates and judgements.

The Audit Committee monitors the effectiveness of the internal controls system, including controls

over financial reporting.

The Audit Committee is satisﬁed with the design and effectiveness of the controls, is comfortable that

any weakness may not result in a material ﬁnancial loss, fraud, corruption or error, and that the

Company implemented mechanisms to identify and address such signiﬁcant weaknesses in due time.

The Audit Committee complied with its Charter, as well as its legal and regulatory responsibilities, and

recommended the Annual Report to the Board for approval.

Risk and Compliance Committee

The Risk and Compliance Committee takes a forward- looking view regarding the risks that the Group

may face and aims to enable the effective implementation of mitigating measures and overall

enterprise risk management.

The Risk and Compliance Committee:

•consists of at least three Directors;

•is chaired by an Independent non-Executive Director, who is not the Chairman of the Board;

and

•includes members with sufficient knowledge about the affairs of the Group, qualiﬁcations and

experience to fulﬁl their duties effectively.

The Risk and Compliance Committee assumed the following responsibilities during 2021:

a)With respect to risk management framework:

•oversee the annual review of the risk management policies, and recommend them for Board's

approval;

•monitor implementation of the risk management policy, processes and organisation;

•make recommendations to the Board concerning the Group risk appetite and risk proﬁle and

monitor that risks are managed within those levels, as approved by the Board;

•oversee that the risk management plan is widely disseminated throughout the Group and

integrated into day-to-day activities;

•ensure that risk is managed on a continuous basis;

•acknowledge the mitigating action plans committed by the business functions, and review risk

response and implementation status for major risks at Group level;

•ensure that a framework is in place to anticipate unpredictable risks and to ensure emerging

risks are identiﬁed and addressed in due time;

•review risk reporting; and

•assess compliance with all relevant legislation and regulations, including regulations

concerning risk reporting.

b)With respect to the compliance management system:

•oversee the compliance management framework;

•oversee the development and annual review of the compliance policies, and recommend

updates for Board's approval;

•monitor implementation of the compliance policy, processes and organisation, including rules

and mechanisms to ensure compliance with laws, prevention of fraud and corruption and

avoidance of conﬂict of interest; and

•monitor labour and employment relationships.

Sustainability Committee

The Sustainability Committee consists of a diverse mix of Independent and non-Independent

Directors, to ensure sufficient knowledge and expertise.

The Sustainability Committee supports the Board in discharging its responsibilities in the following

areas:

•ensure that the Group is a good corporate citizen and monitor progress in achievement of the

sustainability targets at Group level;

•monitor the Groups' effects on the environment, health and public safety based on reports

provided by management;

•ensure comprehensive, timely and relevant sustainability reporting;

•oversee Code of Ethical Conduct and related policies implementation and report on the

Group's organisational ethics; and

•assess regularly the Group's culture, the tone from the top and whether these are in

accordance with the Group's mission, vision, values and strategy.

Remuneration Committee

The Remuneration Committee:

•consists of at least three Directors, the majority of whom must be Independent non-Executive

Directors; and

•is chaired by an Independent non-Executive Director, who is not the Chairman of the Board.

The Directors serving on the Remuneration Committee have diverse, complementary backgrounds

and are independent of the management and the Company.

The Remuneration Committee assumed the following responsibilities during 2021:

•oversee the annual review of the Remuneration Policy and principles;

•monitor implementation and administration of the Remuneration Policy;

•determine remuneration for Executive Directors, in alignment with the Remuneration Policy;

•monitor remuneration principles implemented to ensure that employees are properly

incentivised based on individual and Group performance;

•ensure that the Group's remuneration principles are aligned with the strategy, in order to

create long-term value for the Group; and

•recommend the fees paid to non-Executive Directors.

When determining the Remuneration Policy and practices, the Remuneration Committee is guided by

the following principles: clarity, simplicity, risk, predictability, proportionality and alignment to

Group culture.

Nomination Committee

The Nomination Committee:

•consists of at least three Directors, the majority of whom must be Independent non-Executive

Directors;

•is chaired by an Independent non-Executive Director, who may also be the Chairman of the

Board.

The Nomination Committee is tasked with the following:

•periodically assess the skill set required to competently discharge the Board's duties,

considering the Group's strategic direction;

•review and make recommendations regarding Board composition, competencies, structure,

size and diversity, to ensure that vacancies are ﬁlled with suitable candidates, in line with

criteria deﬁned in the Board Proﬁle Paper;

•develop strategies to address Board diversity;

•develop and review Board succession plans, Director induction programmes and continuing

development programmes, aiming to maintain an appropriate mix of skills, experience,

expertise and diversity;

•identify existing Directors who are due for re-election by rotation at AGM;

•arrange the performance evaluation for Board members;

•review and make recommendations regarding Board appointments, re-elections and

terminations;

•prepare a description of the role and skill set required for appointments;

•identify suitable candidates to ﬁll Board vacancies and nominate them for Board approval;

•propose extensions of Board appointments;

•ensure that, upon appointment, all Directors receive a formal letter of appointment that sets

out the duration and responsibilities of the appointment; and

•review disclosures made by the Group regarding Board appointments, re-elections and

terminations.

Investment Committee

Members of the Investment Committee must have signiﬁcant property investment, retail and relevant

market knowledge. The Investment Committee Chair must be a non-Executive Director with adequate

ﬁnancial and investment experience.

The senior management of the Group is responsible for identifying new investment opportunities,

optimising the performance of existing assets (for example, through refurbishments, extensions and

re-tenanting), and, where necessary, proposing the disposal of assets which no longer contribute to

the Group's income growth strategy. The CEO will coordinate and monitor all acquisitions, capital

expenditures and disposals, and will recommend those which exceed his mandate, to the Investment

Committee.

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The Committee is responsible for formulating the overall investment strategy of the Group and for

establishing investment guidelines. The Committee's activity complies with all applicable ﬁduciary,

prudence and due diligence requirements, which experienced investment professionals would utilise,

and with all applicable laws, rules and regulations issued by relevant local and international bodies.

The purpose of the Investment Committee is to:

•consider management recommendations for mergers, acquisitions, investments, capital

expenditure and disposals, and make proposals to the Board for approval;

•authorise transactions that fall within its mandate and analyse and recommend to the Board

those transactions that fall outside its mandate; and

•evaluate and monitor investments performance over time.

The Board and the Committees considered their activity during 2021 and conﬁrmed that they are

satisﬁed that they have fulﬁlled their responsibilities in accordance with their charters and the

Corporate Governance Framework.

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Stakeholder engagement and relationship management

The Board oversees stakeholder relationship management, while responsibility for the day to day

execution has been delegated to the Executive Directors and further on, to line management.

NEPI Rockcastle has a transparent information communication policy, enabling stakeholders to

assess the Group's economic value and prospects. The Company encourages proactive engagement

with shareholders, including during the Company's semi-annual results presentations and Annual

General Meetings, where Directors are available to respond to shareholders' inquiries on how the

Board has executed its governance duties.

The Group's Corporate Governance Framework is in full alignment with the relevant governance

codes of reference and fosters equal treatment and open dialogue with stakeholders, based on an

aligned understanding of objectives. The Executive Directors have regular discussions on operational

trends and ﬁnancial performance with relevant stakeholders, where they believe this to be in the

Group's best interests. No information is shared preferentially only to some stakeholders, unless it is

available to all.

The Group's non-Executive and Executive Directors ensure that all shareholders are treated equally

and equitably, and that management recognises, protects and facilitates the exercise of all

shareholders' rights, through constant, open and timely communication. The Board seeks to protect

the interests of minority shareholders and the Dealing Code has strict provisions designed inclusively

to ensure such protection.

The Group actively manages its relationship with all categories of stakeholders using the means

considered most appropriate for each category, and communicates formally in a number of ways:

•news, announcements or press releases are issued in response to events or routine reporting

obligations;

•business updates are published regularly, depicting Company’s performance;

•the reviewed Interim Financial Statements and Interim Condensed Consolidated Financial

Results are published in August each year, outlining performance for the six months ended 30

June. The results announcements are followed by Results Presentations and conference calls.

The presentation and the reports are posted on the Group's website;

•the Audited Consolidated Financial Statements and Condensed Consolidated Financial

Results are published in February each year, for the year ended 31 December, including

detailed management commentary. These are also followed by Results Presentations

announced publicly on the corporate website, which any stakeholder may attend; and

•the Annual Report is published in March each year, comprising reporting on all relevant

matters.

In compliance with the JSE Listings Requirements, the Company announces publicly all dealings of its

Executive and non-Executive Directors in the Company's securities through SENS, as well as any

changes to its Directors or Committees structure.

In relation to the Covid-19 pandemic, the Group continued to keep stakeholders regularly informed of

how it has affected its portfolio, operations and ﬁnancial position. The Group has published on its

website regular updates and has transparently disclosed the issues it faced, as well as the safeguards it

has implemented to manage its operations, while protecting its viability and going concern.

Key investor relations calendar in 2021

February

Audited Consolidated Annual Financial Statements

Results presentations and investors meetings

102

March

Publication of 2020 Annual Report

May

Business update Q1 2021

Potential redomicile from Isle of Man

June

Disposal of Serbian properties

July

Changes to the Board and succession planning for

executive management

August

Trading statement

Annual General Meeting of shareholders

Publication of Interim Condensed Consolidated Financial

statements for the six months ended 30 June 2021

Results presentation webcast

S&P affirms credit rating at BBB and revises outlook from

negative to stable

September

EPRA BPR Gold Award and SBPR Bronze Award

November

Business update Q3 2021

Fitch affirms rating at BBB and revises outlook from stable

to positive

Update on the redomicile from Isle of Man

December

Pre-closing update

The Board is required through King IV to provide a fair, balanced and understandable assessment of

the Group's position and prospects in its external reporting. The Board considers that this Annual

Report and Audited Consolidated Financial Statements, taken as a whole, meet all requirements and

provide the information necessary for shareholders to assess the Directors' governance of the Group.

Major stakeholders

Shareholders

The Group is committed to providing all shareholders with timely and equal access to relevant

information through open, honest and transparent communication.

The Group engages with shareholders on a wide range of topics, including remuneration, strategy,

risk management, corporate governance and other topics falling outside of the usual ﬁnancial

topics.

Financing

partners

The Group has a wide range of relationships with banks, ﬁnancial institutions and bondholders

and maintains open communication with its ﬁnancing partners. Compliance with loan covenants

is closely monitored by ﬁnance management and the Audit Committee, and reported according to

the applicable ﬁnancing agreements.

Analysts

NEPI Rockcastle holds semi-annual results presentations and participates in conferences.

Information is provided through analyst presentations, road shows, annual reports and interim

reporting. In 2021, the Company continued to adapt its interactions due to Covid-19 travel,

quarantine and social distancing restrictions.

NEPI Rockcastle openly addresses analysts' questions concerning all aspects of the business and

communicates frequently during the year to answer queries.

Tenants

NEPI Rockcastle maintained a high occupancy rate and stable rent levels across the portfolio,

while adopting a fair and equitable approach with tenants, aimed at ensuring the long-term

success of the retail ecosystem. Leasing activity continued, with commercial terms mostly

unchanged compared to 2019, while more focus was put into the receivables collection process.

Suppliers

NEPI Rockcastle maintains professional relationships with all its suppliers and ensures they

understand performance standards and requirements. Where possible, NEPI Rockcastle will have

service level agreements or terms of reference for its relationships with suppliers, which include

performance expectations.

103

Government and

local authorities

NEPI Rockcastle endeavours to build mutually beneﬁcial relationships with governments in the

jurisdictions where the Group operates, acknowledging that the Group is a major taxpayer and

that it creates job opportunities both during project development and afterwards, in the

operational stage. NEPI Rockcastle engages with local authorities both directly and via its

property managers and external consultants.

Employees

NEPI Rockcastle maintains professional working relationships with its employees, while at the

same time fostering a culture of collabouration, encouraging new ideas, proactivity and

ownership. Despite the Covid-19 pandemic, the Group did not change its approach towards

employees, while implementing the necessary safety and distancing measures to ensure they are

protected.

Communities and

environment

NEPI Rockcastle, as a good corporate citizen, always considers the impact of its projects and

operations on society, the community and the environment.

Details on communities engagement during 2021 are included in the Sustainability Report, pages

176-181 of this Annual Report.

Internal controls and compliance management system The Group applies the three lines of defence

approach, with a view to further strengthen the system of internal controls and track compliance with

relevant laws and regulations. As such, the system of internal controls is structured on the following

lines:

•the first line of defense, line management (senior management, local management) is the

function that owns risks and is responsible for operational processes within the Group. Line

management is in charge of deﬁning guidelines, implementing and executing internal

controls, embedding risk management in the day-to-day operations, comparing performance

against targets, monitoring achievement;

•the second line of defense has an oversight and compliance monitoring role, and consists

of functions such as Compliance, Risk Management and Data Privacy. These functions are

primarily involved in monitoring laws, regulations and emerging risks, and providing support

and advice to management in ensuring compliance thereof. They monitor and facilitate the

implementation of effective risk and compliance management practices, and assist the risk

owners in reporting adequate risk-related information. In the consideration of their

monitoring role, they recommend new controls or risk mitigating measures to be embedded in

current processes and practices; and

•the third line of defense, Internal Audit, is in charge of providing independent assurance

on the effectiveness of the internal controls and risk management, including on how the ﬁrst

two lines discharge their duties.

The Group is committed to preventing and deterring signiﬁcant risks, such as, but not limited to:

•potential conﬂicts of interest;

•related party transactions which may not be transparent or at an arm's length;

•conﬁdentiality and observance of professional secrecy;

•incomplete or misleading ﬁnancial reporting or communications;

•non-compliance with ﬁscal regulations within a complex tax environment;

•use of privileged information and insider trading;

•money-laundering and the ﬁnancing of terrorism;

•non-adequate adherence to anti-corruption and anti- fraud rules; and

•inefficient delegation of authority required to keep the right balance between ﬂexibility, speed

and span of control.

The internal control system was developed based on the COSO (Committee of Sponsoring

Organisations of the Treadway Commission) components:

104

A risk-based approach, the proportionality principle and segregation of duties are considered when

developing all the policies and procedures at Group level, covering:

•efficiency, effectiveness, economy of operations;

•safeguarding of assets;

•reliability of ﬁnancial reports; and

•compliance with laws and regulations.

The Group implemented a comprehensive Procurement Policy and a supplier due diligence process, in

order to ensure that responsible purchasing is conducted and that procurement decisions are in the

best interest of the Company. Responsible purchasing is ensured at Group level through:

•implementation of sound policies, promoting objectivity and transparency throughout the

procurement processes and monitoring of compliance thereto;

•implementation of aligned requirements and controls in property management contracts to

ensure that the same principles are applied by outsourced property managers;

•design of a detailed supplier risk assessment and due diligence when onboarding suppliers

and periodical revisions afterwards; and

•win-win partnerships with some Group's suppliers, based on sustainable business practices,

where the Group and its suppliers may thrive and grow.

The Group rolled out a Leasing Policy, to ensure that tenant relationships are managed with

professionalism and at high standards across the Group, and that internal controls are implemented,

fostering transparency and enabling the achievement of the Company's ﬁnancial objectives. A risk

assessment and due diligence process is applied when onboarding new tenants, and periodical

revisions are performed thereafter.

The Board is responsible for the governance and ongoing oversight of internal controls, including

information and technology. The Board conﬁrms that processes exist ensuring timely, relevant,

accurate and accessible reporting, communication and data storage. To this end, the Board ensures

that the Group's IT processes and systems are integrated with the overall business strategy and

objectives, monitoring that:

•processes, people and information technology are integrated seamlessly across the Group;

105

•hard and soft infrastructure supports the achievement of the Group's strategy;

•proper arrangements are implemented for business continuity and disaster recovery;

•proper security measures have been implemented to ensure that conﬁdential data is securely

safeguarded and easily accessible, while complying with the relevant cybersecurity, data

protection or other applicable laws and regulations; and

•proper investments in information technology are made with a view to enable the above.

The Board has delegated the responsibility for IT and security to the CEO through the Operational

Mandate and the CEO has further cascaded these to the Chief Digital Officer. Where IT processes are

outsourced to third-party service providers, these are governed by service level agreements, with

compliance monitored by management.

Appropriate IT security and business continuity management policies have been developed and

implemented across the Group. NEPI Rockcastle takes cybersecurity risks seriously and has continued

to implement extensive measures to ensure these will not result in a material data breach, leakage or

loss of key information. The Group continued in 2021 its cybersecurity programme, focused on

awareness, prevention and security by design. The Group implemented and communicated a clear

escalation mechanism where any suspected attack can be reported and analysed. The Group was the

target of cybersecurity attacks during the year, while none of which had serious consequences due to

the safeguards implemented. None of these attacks led to either a signiﬁcant leakage, loss of personal

data and business secrets, or to unavailability of technology and business interruptions.

With a focus to enhance internal controls, increase efficiency, transparency and traceability, and to

operate in a paperless environment (to the extent possible and within current legal constraints in

various jurisdictions where the Group operates), the Group has been working on digitalisation and

process automation tools across various areas and processes, as a medium-term strategic priority.

The Group implemented a General Compliance Policy aiming to guide compliance by: (i) setting a

clear compliance framework; (ii) promoting consistent, rigorous and comprehensive practices

throughout the Group; and (iii) stimulating a culture of compliance, including ethics and integrity.

The Compliance function covers the following responsibilities for the entire Group:

•advisory: counsels all management levels and personnel on compliance with laws, rules and

standards, including keeping them informed on legislative developments and emerging

exposure;

•guidance and education: assists senior management in educating staff on compliance issues

and acts as a contact point for compliance queries;

•identiﬁcation, measurement and assessment of compliance risks: documents and evaluates

the compliance risks associated with business activities, including the development of new

business practices and new partnerships; and

•monitoring, testing and reporting: periodically assesses compliance of processes and practices

and monitors risks associated with various jurisdictions and emerging legislation.

The Board appointed a dedicated Group Risk and Compliance Officer and monitored the compliance

management system structured around three pillars: (i) build awareness and enable prevention; (ii)

deploy sufficient detection and investigation mechanisms; and (iii) implement appropriate response,

mitigation and consequence management actions.

The Group Risk and Compliance Officer has the following responsibilities:

•assist the Board of Directors, Risk and Compliance Committee and management in fulﬁlling

their respective risk and compliance oversight responsibilities;

•set ongoing enterprise risk and compliance management practices suitable for the Group's

needs;

•build and maintain relationships with those responsible for managing risks throughout the

Group;

•oversee enterprise risk management ownership within the respective lines of accountability;

106

•report on incidents and severe risks to the CEO and Risk and Compliance Committee;

•propose, based on the relevant input from management, changes to the Group's risk appetite;

•develop and periodically review the compliance and risk management framework,

methodology and operational processes at Group level, seeking to prevent Group exposure to

excessive risks;

•set the annual Compliance Programme and report periodically to the Risk and Compliance

Committee, on the risk and compliance management status;

•advise regarding the impact of legal and regulatory changes, as well the best practices and

legislative trends;

•ensure deployment of training and awareness programmes for Group personnel, on a risk-

based approach, aiming to develop the risk management culture; and

•run periodical compliance checks seeking to ensure that the implemented processes are

aligned to the internal and legal framework, as well as that the appropriate controls are in

place in order to prevent compliance risk to materialise.

NEPI Rockcastle implemented privacy policies and procedures across the Group, based on a zero

tolerance to major information loss or leakage, and these are deployed and monitored by an

experienced Data Protection Officer. The Group's approach to privacy includes:

•embedding privacy-by-design principle in core processes;

•embedding data privacy clauses in supplier and customer contracts;

•providing clear and relevant information to all data subjects regarding their rights and the

coordination of processing;

•making sure that data is processed only for the purpose it has been collected;

•following the data minimisation principle, as well as the applicable data retention periods;

and

•properly protecting personal data from loss or unauthorised access.

No signiﬁcant data breach resulting in a major leakage, loss or unavailability of personal data occurred

in 2021.

The Group's policies and procedures are available to all employees in a shared location. Training and

awareness programmes were organised on various compliance-related topics.

Operational compliance is monitored for all companies in the Group, in all jurisdictions and reported

to the Risk and Compliance Committee on a quarterly basis. The Group would disclose in the Annual

Report if it were to incur material or repeated regulatory penalties, sanctions or ﬁnes for breaches of,

or non-compliance with, statutory obligations. At the date of this report, there were no material

regulatory penalties, sanctions or ﬁnes for breach or non-compliance with statutory obligations

imposed on Group companies or any of its Directors or officers. The key compliance risks the Group is

facing and the mitigating measures and controls implemented are included in the Risk Management –

Key Risk Areas section of this Annual Report, pages 120-127.

EXTERNAL AUDIT

PwC's 2021 appointment was proposed by the Audit Committee, approved by the Board, and endorsed

by the shareholders at the Annual General Meeting, with 100% of the total number of present votes.

The external auditor's scope of work includes:

•the audit of the annual consolidated and standalone ﬁnancial statements of NEPI Rockcastle

plc, prepared in accordance with IFRS; and

•the audit of the ﬁnancial statements of selected NEPI Rockcastle's subsidiaries, prepared in

accordance with local accounting principles.

The fees incurred in relation to PwC, for audit and non-audit services, are disclosed in the notes to the

ﬁnancial statements.

107

PWC was appointed in 2018, following a tender where top audit ﬁrms (Big 4) were invited and

evaluated based on their knowledge, experience, capacity to carry out multinational audit and

compliance engagements with strict reporting deadlines.

The Group's audit rotation policy is to organise tenders for audit services regularly, to ensure auditors'

independence, as well as verify that audit fees are in line with the market. In 2021, given major

projects at Company level, such as the Company’s redomicile, the CEO and CFO succession planning,

the Board decided to postpone the retendering.

The Audit Committee and the external auditor have communicated on all matters required by

International Standard on Auditing No. 260 (Revised) 'Communication of audit matters with those in

charge with governance'. In addition, the external auditor has communicated that in respect of JSE

Listings Requirements Paragraph 22.15(h):

•the audit ﬁrm has met all the criteria stipulated in the requirements, including that the audit

regulator has completed a ﬁrm-wide independent quality control inspection of the audit ﬁrm

and on the designated individual auditor during its previous inspection cycle;

•the auditors have provided to the Audit Committee the required inspection decision letters,

ﬁndings report and the proposed remedial action to address the ﬁndings at audit ﬁrm and

individual auditor levels, and have conﬁrmed that there have been no legal or disciplinary

proceedings brought against either of the two within the past 7 years; and

•the audit ﬁrm and the individual auditor understand their roles and have the competence,

expertise, experience and skills required to discharge their speciﬁc audit and ﬁnancial

reporting responsibilities.

In accordance with best practice and the principle of direct, independent communication between the

Audit Committee and the external auditor, the Audit Committee was provided with an independent

report including signiﬁcant auditing matters and auditor's observations relating to the internal control

environment of the Group and management's response. The Audit Committee reviewed the report and

discussed directly with the external auditor the ﬁndings, and both have conﬁrmed that all matters

have been satisfactorily addressed by management. The external auditors also held private meetings

with the Audit Committee, without any member of the management team present and had

unrestricted access to communicate privately to the Audit Committee any issue they may consider

necessary.

The external auditor conﬁrmed their independence to the Audit Committee in respect of: relationships

between PwC and the Group; relationships and investments of individuals employed by PwC in the

Group; employment of PwC staff by the Group; business relationships; other services provided by

PwC to the Group; and fees. The external auditor also conﬁrmed there has been no contingent fees, no

services granted by PwC to Directors and/or senior management of the Group and no gifts or

hospitality. The auditor has additionally conﬁrmed compliance of the ﬁrm and individual audit

partners with all internal PwC independence requirements and rotation policies, as well as relevant

regulatory and professional requirements, including the Ethical Standard issued by the Financial

Reporting Council, and have affirmed that their integrity, objectivity and independence have not been

compromised.

The Committee is satisﬁed with the information received based on which it concluded that

PricewaterhouseCoopers LLC, the signing external audit firm and Mr Nicholas Mark Halsall, the audit

partner in charge, are independent of the Company and of the Group.

INTERNAL AUDIT

The Group has an insourced Internal Audit function. The activity of Internal Audit, its mandate,

responsibilities and access are regulated through the Internal Audit Charter, endorsed by the Audit

Committee and approved by the Board. In accordance with its Audit Charter, Internal Audit reports

functionally to the Audit Committee.

108

Internal Audit carries out independent risk-based audits, under the guidance of the Audit Committee.

The Audit Committee therefore:

•deﬁnes the mandate of Internal Audit through the Audit Charter and ensures no unjustiﬁed

restrictions or limitations exist;

•reviews the performance and effectiveness of the Internal Audit function and its capacity to

carry out the annual audit plan; and

•guarantees the independence of the Internal Audit function, through the direct reporting line

and direct unrestricted access.

Internal Audit is centralised at Group level and has unrestricted access to Company's resources,

information and people, to effectively discharge its responsibilities, with no restrictions placed upon

the scope of work.

Internal Audit reviews aim to assess the effectiveness of the Group's governance and internal controls,

and if they are properly designed to ensure safeguarding of assets, efficiency, economy and

effectiveness of operations, adherence to applicable laws and regulations, reliability of ﬁnancial and

operational reporting.

During 2021, based on the scope of work performed, Internal Audit concluded that the system of

internal controls has further matured. In line with Audit’s recommendations, management priorities

in 2022 will be to further standardise and align internal procedures, digitalise processes and automate

controls, increase efficiency and effectiveness of internal controls and optimise operations.

109

RISK OVERVIEW

In the context of increasing volatility, complexity and ambiguity of the political, environmental and

economic context, organisations need to enhance their approach to managing risk. The Group

recognises the importance of enterprise risk management and considers risk in both the strategy-

setting process and in driving and controlling performance. The Group further acknowledges that risk

management is an increasingly important business driver.

As part of the second line of defence functions, under the three lines of defence approach, the Risk

Management function supports the strengthening of the internal control system and is primarily

charged with the oversight of the risk management framework and processes. Risk management

function encourages and assists the risk owners in reporting adequate risk related information,

ensures monitoring of emerging risks and recommends new controls or mitigating measures to be

embedded, to facilitate the implementation of effective risk management by operational management.

The Group developed a comprehensive framework for the management of risks, to increase overall

awareness among its personnel and to enable the management functions responsible for managing the

risks to better identify, assess and control risks within their areas, as to:

•align and integrate risk management with strategy and business objectives setting;

•create a culture of risk management and periodically increase awareness;

•ensure that all the current and future material risk exposures are identified, assessed,

quantified, appropriately managed;

•enable compliance with relevant laws and regulations, wherever applicable, through the

adoption of best practices;

•enable financial stability and sustainable business growth;

•foster an educated approach towards risks and provide a Group-level risk assessment

methodology and tools; and

•integrate the best practice principles set forth under COSO framework and ISO 31000.

RISK MANAGEMENT STRATEGY AND RISK GOVERNANCE

In order to ensure an efficient implementation of risk management principles and to increase the

overall risk- aware culture, the Group focuses its efforts on:

110

In implementing an efficient and sound risk management practice, information is key, therefore the

Group ensures that it is shared and escalated within the Group, in a transparent manner. To support

this, management provides the Risk and Compliance Officer, the Risk and Compliance Committee and

Board of Directors with an appropriate level of risk relevant information, to assess whether current

enterprise risk management practices are appropriate, so that to facilitate the exercise of their risk

oversight role.

Ensuring the Group’s Board of Directors provides oversight of risk management, as well as alignment

and embedding of risk management in strategy and objectives setting are of paramount importance

for the Group’s risk management. Risks are identified and mapped to one or more of the strategic

goals, such mapping being revisited annually, once the strategy for the next year has been set, in order

to ensure better assessment of risks, as well as early impact assessments.

The responsibility for managing risk is shared between management and the Board of Directors

assisted by the Risk and Compliance Committee. The Committee was established to support the Board

in exercising its oversight role over enterprise risk and compliance management processes, in order to

ensure the Group has implemented an effective approach that will enhance its ability to achieve

strategic and business objectives.

The risk management oversight role of the Board of Directors and of the Risk and Compliance

Committee is enhanced by the directors’ independence and mix of skills, expertise and business

knowledge. This role includes scrutinising management’s decisions when necessary, presenting

alternative views, offering sound judgement, challenging organisational biases, and acting in the face

of wrongdoing. In fulfilling its role of providing risk oversight, the Board challenges management

without assuming the operational role of management.

The detailed responsibilities and duties of the Board of Directors and the Risk and Compliance

Committee are defined in their respective charters and the Group’s Corporate Governance

Framework, and are presented in the Corporate Governance section of this Annual Report.

A Risk and Compliance Officer, reporting to the Risk and Compliance Committee, is mandated by the

Board of Directors with overseeing compliance and enterprise risk management as a second line of

accountability. The Risk and Compliance Officer’s responsibilities are set forth in its mandate granted

by the Board of Directors.

111

The Board of Directors shall ensure that risk management policies and procedures designed and

implemented by the Risk and Compliance Officer with the endorsement of the Risk and Compliance

Committee are (i) consistent with the Group’s strategy and risk appetite and (ii) relying on an

enterprise-wide culture that supports appropriate risk awareness, behaviours and judgments.

The Board of Directors will also provide oversight over implementation of the General Compliance

Policy, the Code of Ethics, the Whistleblowing Policy and the overall risk and compliance

management system, based on regular reports provided by management, the Risk and Compliance

Officer and Internal Audit.

Management embeds risk management practices into the day-to-day operations and ensures that

these practices are applied consistently, seeking to (i) build a risk-aware culture, (ii) agree risk

management performance targets, (iii) ensure implementation of risk management

recommendations, (iv) identify and report incidents, changed circumstances or emerging risks. Also,

management is entitled to decide whether to proceed with mitigation strategies and implement

contingency actions, within the Risk Appetite approved by the Board of Directors, while the Board of

Directors directly and through the Risk and Compliance Committee shall exercise overall risk

management oversight.

Risk and Compliance Partners have been assigned per each area of expertise within the Group,

for the purpose of supporting the Risk and Compliance Officer in its efforts of identifying and

addressing risk triggers. The Risk and Compliance Partners act like risk culture ambassadors

throughout the Group, being the front office for risk triggers identification. They share their

knowledge and expertise, supporting the Risk and Compliance Officer in assessing impact and

probability of risk triggers, as well as in recommending appropriate mitigation measures to address

such risk triggers.

Each employee individually has responsibilities in dealing with risk management: (i) to understand

and implement the risk management processes, (ii) to report inefficient, unnecessary or unworkable

risk management measures,

•to report loss events and near-miss incidents and

•to co-operate with management on incidents investigation.

As the Group operates in multiple jurisdictions and has a complex structure comprising a holding and

financing entity, operational subsidiaries and management company subsidiaries, the Risk and

Compliance Officer, in consultation with both management and the Risk and Compliance Committee

has defined a structure of roles and responsibilities at Group’s management level, so that to ensure an

effective framework for managing risks for each entity and local jurisdictions it operates in.

In consideration of its power to challenge management on the risk management system and based on

the reports it receives directly and/or through the Risk and Compliance Committee, the Board of

112

Directors may decide to request independent assurance on the effectiveness of risk management

processes.

RISK APPETITE

NEPI Rockcastle closely monitors significant risks with a potential impact on the strategic goals,

assessed in accordance with its risk evaluation methodology. The Group considers in its periodical

assessments, risk triggers like fluctuations in the Group’s financial results, changes in political, social,

legal, regulatory or economic conditions, inflation, interest rates, fluctuation in exchange rates,

deflation, the Group’s ability to successfully implement business strategies, future investments and

acquisitions, competition.

The Group has developed and approved a set of criteria defining its risk appetite in respect of the

critical activities undertaken in the process of creating, preserving and realising value. Such critical

activities, processes and topics include: asset management, leasing, investments, tax structure

management, treasury operations, tenants relationship, data privacy, human resources, Know Your

Partner process.

The Group has set the following financing related targets to ensure risks are managed properly:

▪a weighted average debt maturity of at least three years at any given moment in time;

▪at least 70% of the property portfolio should be kept unencumbered; and

▪LTV ratio below 35% (max 40% in the short-term).

The Group has zero tolerance towards risks related to:

▪health and safety (e.g., risks related to structural integrity of the properties, fire security,

serious pollution);

▪fraud and corruption;

▪doing business with clients/partners not carrying out legal and legitimate activities or

rejecting transparency;

▪money laundering and terrorism financing;

▪serious violation of the Code of Ethics by its employees, collaborators or Directors;

▪damage to its reputation materially affecting its ability to attract funding, personnel or

113

its relations with business partners;

▪non-compliance with material regulatory requirements (e.g. competition, data privacy);

▪exposing the Group and its employees, collaborators or Directors to any criminal liability;

▪incompliance with financial reporting standards; and

▪any practices presenting a risk of market abuse as defined by the rules and regulations of

the markets where the Groups’ shares are trading.

When determining the risk appetite for a particular risk that does not fall into the zero tolerance

category, the capacity of the Group to absorb the risk in the pursuit of its strategy and business

objectives shall be considered, as well as the Group’s tolerance. The tolerance represents the

acceptable variation in performance in relation to the targets, as they are defined by the Group

strategy and further on cascaded based on specific performance indicators per area of activity and per

individuals. Exceptions to risk appetite are extremely rare and always follow the escalation process,

while risk undertaking is transparently embedded in the decision-making and the counterparty is

always assigned with risk and closely monitored.

The Group's policy is to cooperate only with clients/ partners who carry out legal and legitimate

activities and maintain business transparency. The Know Your Client/Partner Process ('KYC'/'KYP')

focuses on the assessment of the identity of clients/partners, as well as of their potential involvement

in acts of corruption, fraud, terrorism financing, money laundering. Group’s risk assessment

methodology is supported by a risk- based approach, which involves the use of evidence- based

decision-making. The end-to-end Know Your Customer/Partner Process has been automated, based

on the eligibility criteria and risk matrix as defined in the Group Know Your Client/Partner Procedure.

RISK MANAGEMENT PROCESS AND RESPONSIBILITIES

Probability and impact of each risk against the cost of mitigation, as well as the Group’s risk appetite

shall be considered when assessing a risk, before implementing adequate mitigation measures. For

significant risks, a contingency plan and/or a series of activities that should take place prior to, or

when the event occurs, shall be designed. Both mitigation and contingency plans support proper

monitoring of risk treatment progress, as well as evaluation of residual risk.

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Risk awareness requires that all employees are conscious of what constitutes a threat and are sensitive

to specific events or factors that could potentially impact the Group positively or negatively, thus

enabling risk identification. Management identifies and documents known risks in a Risk Register,

while risk factors or events are raised to the attention of the Risk and Compliance Officer, the Risk and

Compliance Committee and Board of Directors, where the case.

In the process of identifying, assessing, responding to and reporting on risks, the Group uses

dedicated tools:

115

Personnel is aware of what constitutes a threat and are sensitive to specific events or factors that could

potentially impact the Group positively or negatively. Risk identification consists of determining

which threats are likely to affect the Group, therefore risks are documented and monitored by the

means of the Risk Register, as well as reported on a quarterly basis to the Risk and Compliance

Committee.

Group staff is trained to report incidents of malfunction, suspicious activities, threats, or weaknesses

potentially affecting health, safety, information security, physical security, information systems

continuity, privacy, or other relevant areas. If a crisis occurs, crisis management teams will respond

according to the Incident and Crisis Management Policy, following key principles such as:

▪place the highest priority on people safety: employees, clients, visitors, partners,

emergency responders and community members, as best practices proved that personnel

are more likely to co-operate willingly with the extra demands placed on them in a

disruptive incident, if their welfare needs are met;

▪ensure the integrity and safety of property goods and tenants’ products for sale;

▪protect assets and ensure the continuity of business processes;

▪maintain a strong brand reputation;

▪make decisions and take actions that are consistent to the Group’s core values;

▪comply with all applicable national and international laws, rules and regulations;

▪make public disclosures that are full, fair, accurate, timely and understandable regarding

the impact of the crisis on Group’s facilities, associates, customers, operations and

communities; and

▪consider all stakeholders and share relevant information therewith, in a timely manner.

Executive management is responsible for the design and implementation of effective crisis

management strategy, plans, processes and organisation. The Group sets up a Crisis Management

Team (‘CMT’), to manage major events and those declared as crisis. The composition of the CMT and

response to a crisis, depends on the scope and nature of the crisis and its (potential) impact. The CMT

is authorised to mobilize all internal and external resources that it deems necessary to manage a crisis.

External resources are, but not limited to, law firms, technicians, consultants, public relations

companies, third-party logistics, employee assistance providers etc. The CMT is accountable for the

Group’s response to a crisis and for addressing the concerns of its staff and key stakeholders, e.g.,

Group’s leadership, investors, key customers and suppliers and government officials.

RISK MANAGEMENT IN 2021

KEY ACTIVITIES PERFORMED IN 2021 TO ENHANCE RISK MANAGEMENT

During 2021, the Group undertook an internal review of its enterprise risk management, as a

periodical exercise and amended its risk management framework, in line with Group efforts to ensure

one- fits-all approach when it comes to risks assessment and mitigation, focusing on the following:

•automation of existing processes and tools used in risk management area;

•testing of business continuity arrangements and reviewing the incident and crisis

management framework;

•training an awareness program for all staff, as well as particularly for Risk and

Compliance Partners;

•definition of specific controls and segregation of duties rules to be embedded in business

processes;

•implementation of a Group level end-to- end Know Your Client/Partner Process and

monitoring mechanism; and

•increase efficiency of the partnership between Risk and Compliance Officer and Risk and

Compliance Partners for the purpose to optimise risk triggers collection and proper

mitigation.

116

The Group business impact assessment methodology developed between 2019-2020 has been

improved in 2021 on the annual testing of the business continuity arrangements. The analysis

covered all processes and subprocess in the Group, interdependencies between areas and

departments, resources, people, assets and suppliers’ availability, critical systems and flows. Processes

and subprocesses are aligned to top risks, while hypothetical disruptions in critical processes are

assessed based on a risk matrix, designed to consider the potential financial impact, as well as the

impact on partners, operations, legal/regulatory obligations and reputation exposure of the Group.

ACTIONS TAKEN TO MONITOR THE EFFECTIVENESS OF RISK MANAGEMENT

Under the coordination of the Risk and Compliance Officer, the Group implemented a group-wide

fraud and criminal corporate liability risk assessment exercise. The assessment is performed and

updated at least annually, based on considering relevant fraud risk scenarios and a risk-based

approach, where probability and impact are assessed both as gross and net values, i.e., before and

after implementation of mitigation measures.

Following such assessment, the Company derives the priorities for the following year in terms of key

risk areas and expected mitigation effort. General measures, such as increased awareness and

training, policy development and periodical update, revision of employees’ job descriptions are

derived and prioritised.

The risk triggers prioritised for 2021 were:

In addition to ad-hoc meetings that are held whenever needed to consider special matters, for the

purpose to enhance the effectiveness of the risk management process, the Risk and Compliance

Committee changed in 2020 its convening occurrence from twice a year to quarterly. Any incidents

and matters which are relevant in determining the level of the effectiveness of the Group’s risk

management are raised by management, through the Risk and Compliance Officer, to the Risk and

Compliance Committee. Ultimately, the Internal Audit function, as the third line of defence in the

internal controls system, assesses and investigates the effectiveness of the risk management carried

out by the first two lines of defence, i.e., compliance and risk management and business management.

Any significant incidents, misalignments between the decision, actions and activities of the Group and

the Group’s Risk Appetite or ineffective processes or controls have been addressed through

appropriate measures, such as revisions of existing or implementation of additional policies or

procedures.

Training and awareness programs have been organised for new joiners and all staff during 2021,

supporting implementation of the new policies and procedures, reminding of Compliance and Risk

Management essentials, aiming to raise risk awareness and developing a proactive risk culture among

Group personnel.

117

Special compliance and risk awareness workshops have been organised for senior management and

Directors, aiming to encourage the tone-form-the-top and enable speak-up culture among Group

personnel. Awareness campaigns on ethics and anti-corruption practices have been organised to cover

also Group partners, clients and suppliers.

For the purpose to ensure transparent communication as an efficient risk management process,

periodical alignment workshops continued in 2021 between functions responsible for second

line of defence (Risk and Compliance) and third line of defence (Internal Audit), targeting an aligned

Group-wide approach in preventing risk exposure and increased efficiency of overall risk management

practices. Also, in order to consider strategy and business goals in setting and adjusting the risk

management system, as well as to enhance tone-from-the-top as regards risk culture, periodical

working sessions comprising the Risk and Compliance Officer, the CEO, the CFO, Internal Audit

Director and Group Legal Counsel continued. These covered projects and initiatives, processes

optimisation, potential risk costs and mitigation factors, especially in the context of the changing

social-economic environment requiring fast strategic reorientation and an adaptable risk management

approach.

The Business Continuity Plan has been successfully tested in 2021, followed by the regular

awareness training dedicated to Group personnel. Awareness and training, tone from the top

promoting a risk culture, timely communication, remain key success factors for an efficient business

continuity system management.

The Group framework has been extended to address new potential risk triggers and concerns. In this

context, some new Group level regulations have been approved and implemented in 2021, while

others have been versioned, such as:

•Declaration of Interests Policy (rules, templates and a process to support potential conflict of

interests handling for all staff and directors, while the collected information are to be used in

the conflict of interests’ assessment periodical exercise, as well as for the directors’ annual

independence assessment exercises, following corporate governance rules in this respect);

•Group Investment Procedure (new controls have been embedded in the development

process);

•Cash Guidelines (a standard approach in cash handling across the Group, a minimum set of

internal controls to ensure cash is properly safeguarded, handled and reflected in local

records);

•Know Your Client/Partner Procedure (updated to reflect the new automated process,

covering compliance risk advice and financial risk advice, as well as the monitoring process);

•Corporate Travel Procedure (new controls have been applied in the handling of business

cards for Group staff); and

•Lost and Found Procedure (a unitary approach to handle the multitude of situations

commercial centres are facing daily and that might expose the Group to financial and

reputational loss).

For the purpose of addressing inadequate/insufficient controls, segregation of duties at Group-level

and additional internal controls have been defined and mapped in the system currently build. Risk

management, compliance and internal audit, are involved in Group optimisation and digitalisation

projects so that they may recommend needed controls to be embedded. Furthermore, the compliance

function is a validator of all policies and procedures, and ensures coordination of the internal

methodological process, so that to be able to recommend needed controls and raise potential concerns

to the approver, in a timely manner.

Management assessed the risks of material misstatements of the financial statements due to fraud, by

continuous evaluation of the design and relevant aspects of the system of internal controls, as well as

among others the code of conduct, whistleblowing procedure and incident registration. Mitigation of

the risk of material financial statements misrepresentation is achieved by the following:

•Implementation of a financial closing calendar, as well as relevant internal controls,

routines, checks and balances in the closing process;

118

•Ensuring availability of an appropriately sized and experienced finance and reporting

team;

•Budget and forecast versus actual monthly reconciliation by finance teams and quarterly

review by the Audit Committee;

•Review by the Audit Committee of significant management estimates and accounting

policies;

•Launched the implementation of a single integrated, secure and performant IT

architecture for ERP, Budget and Forecasting, Leasing, Procure- to-Pay, Master Data

Management and Group Financial and Operational Reporting, delivering breakthrough

digital capability for end-to-end business management; this would greatly enhance

automation, require less human input, hence less potential for fraud risk exposure; and

•Periodic internal and external auditors’ review.

PLANNED AREAS OF FUTURE FOCUS

On an annual basis, the Risk and Compliance Officer runs a risk assessment process, to determine the

focus areas for the following year and whether there is a need to update the Group internal regulatory

framework.

Following the Group-wide fraud and criminal corporate liability risk assessment exercise applied in

2021, the Group decided to concentrate in 2022, on the following key areas of interest: cybersecurity,

fraud and unethical practices mitigation, core processes group-wide uniformisation, segregated

responsibilities and adequate controls, anti-money laundering and counter–terrorism financing,

sponsorships and donations.

Embedding risk management in strategy and business objectives setting as well as in the execution

process, is key to a successful and effective enterprise risk management, so this goal remains a top

priority for the Group. As such, the automation of all core processes, accommodating internal

controls, as well as segregated roles and action rules will be a priority in 2022.

Another focus topic for 2022 will be the recently launched Data Governance Project aiming to improve

the overall data management, i.e., data ownership responsibilities, storage and archiving rules,

adequate labelling and access controls embedded in business processes, monitoring and continuous

data governance improvement. Such implementation, requiring significant financial and human

resources efforts, aims to prevent risk exposure of the Group entities to financial and reputational

loss, as well as to protect the assets of the Group and of its partners.

Information technology and cybersecurity have undergone material mitigation in 2021, managing to

address efficiently and significantly most of the relevant concerns and vulnerabilities. Proper controls

and validations have been embedded in the business process so that to enable centralised decision

making in digital area for IT software and hardware projects, create a dedicated legal partner for IT-

related contractual arrangements and enable extended risk assessment of outsourced services as well

as used software and systems. This area will remain a focus in 2022, given the associated risk

exposure to financial and reputational losses triggered by potential incidents, data breaches, impact

on Group confidential information, individuals data.

Increasing risk awareness and encouraging a more proactive instead of reactive risk culture among

Group personnel will remain of utmost importance and will be included on the agenda of the Risk and

Compliance Officer, the Risk and Compliance Committee and the management team for the next

years, as a critical success factor in achieving Group’s strategy and business objectives.

One area of attention in terms of risks and opportunities remains online commerce, with evolution

closely monitored by the Group, especially considering the recent pandemic, which created the

opportunity for some market players to rethink their business model. The Group is aiming to enhance

customer experience through an omnichannel approach, enabling tenants’ sales via loyalty programs

and acting as an enabler for their online sales. Potential risk triggers associated to a new business

119

approach have been and will continue to be extensively weighted against commercial opportunities

and returns.

Training and awareness programs remain also a focus point for 2022. Onboarding and annual

campaigns are organised for all staff and directors. Periodical awareness campaigns will continue to

be dedicated to staff and third-party partners (suppliers and tenants), encouraging them to speak up

and express their legitimate concerns regarding the way Group personnel performs its duties and

approaches partners.

KEY RISK AREAS

Unexpected evolution in the political, economic, financial, currency, regulatory, geopolitical, social or

health environments of the jurisdictions the Group operates in, may have an impact on Group’s

valuation of assets, financial results, distribution policy, extension initiatives and/or investment/

divestment activities.

Key strategic directions decided by the Group are considered for periodical assessment, ensuring

identified risks are aligned to moving business objectives, while adequately and efficiently addressing

potential negative impact on Group’s activities or correctly weighing the potential opportunity for the

Group.

Key strategic directions

The Group expresses its openness in disclosing relevant information and events that would

significantly challenge its risk management framework and/or the set key mitigation actions, while

reasonably preserving information sensitivity and observing confidentiality principle.

The key risk areas listed include the most relevant risk triggers the Group encounters, associated

business impact and mitigating actions, as well as anticipated trends. This is not an exhaustive risk

factors inventory, but rather the ones that are considered the most relevant to the Group’s ecosystem.

Additional risk factors have not been reflected, despite being monitored by the Group, as their

occurrence is not considered likely or their impact significant.

120

Strategic cluster

Strategic risks arise mainly from the fundamental decisions that executive management makes in implementing

business strategy, while keeping up with the dynamic of the political, economic and social environment.

Essentially, strategic risks lead to the Group not being able to achieve its business plan and core corporate

targets or may even endanger the going concern of the Group.

The Group may not always be able to execute its investments and divestments policy at the most opportune

time, due to unforeseen fluctuations in the real estate or financial and capital markets. Adverse market

movements could also affect the value of the Group’s portfolio, its financial position, liquidity, operating income

and future prospects.

Limited new

capital

Limitations on new

capital injection,

shortage of financing

or re-financing at

acceptable cost,

adverse changes in

macroeconomic

conditions or the

Group's performance

may lead to rating

downgrade and/or

unavailability of

capital, inability to

fund property

investments or

development program,

increased cost of

finance.

Cash flow management is performed on a daily

basis and forecasts for the next year are updated

several times a year.

Spread of sources and maturity of facilities,

committed but undrawn facilities maintained,

continuing and extensive capital market and bank

relationship management by the CFO and CEO.

Shareholders

Financing

partners

Employees

Changing retail

consumers’

behaviour,

including rapid

growth in online

retail with a

negative impact

on traditional

brick and mortar

retail

The recent pandemic is

still expected to impact

this trend.

Potential impact on

tenants’ sales and the

financial good standing

of those with limited

online/multichannel

capabilities might

affect rental income.

Penetration of e-commerce relative to population

in the Group’s region has accelerated during the

pandemic but remained on average lower in CEE

as compared to the Western European ('WE')

markets or the US, with an offline market growth

projection remaining positive and above WE/ US

levels

The Company continues to invest in developing its

shopping centers as entertainment hubs and

preferred shopping destinations and defined a

customer-centric omnichannel strategy to

maximise the potential of our most loyal shoppers,

enable online sales for our tenants and continue

to host in our stores digital players looking for a

physical interaction with their customers.

Shareholders

Tenants

Risk description

Strategic

goal

impacted

Business impact

Key mitigating actions

Stakeholders

impacted

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Reputational risk

Reputation is key to

the Group, as a

reputation crisis may

have a rolling effect on

other top risks, such as

the ability of the

Company to raise

capital, the volatility of

its share price, the

trust of the investors,

the Company’s rating

and consequently its

cost of debt. As regards

evolution, there was

initially a decreased

impact due to

mitigation measures in

place and overall

environment (only

notable negative

evolution being the

general sentiment

towards the retail

sector).

Unfortunately, as a

result of Covid-19

pandemic starting mid-

March 2020 the

reputation risk has

increased due to

depreciation of the

economic environment

and uncertainty in

respect of the evolution

of Covid-19 pandemic

and its impact on

physical retail.

The Company has assigned roles in managing

reputational crisis.

Strengthening internal PR team - an internal PR

manager has joined the team together with

another PR senior person.

An operational crisis communication procedure

with clear responsibilities matrix and

recommended actionable steps have been defined.

Reputable external support is engaged for

operational and corporate PR, while stakeholders’

relationship management is conducted proactively

by senior management (investor roadshow,

presentations etc.).

Shareholders

Tenants

Suppliers

Employees

Local

authorities

Financing

partners

Finance Cluster

The Group constantly monitors its exposure to interest rate volatility, liquidity, foreign exchange rates, equity

markets, and sets applicable management policies. The Group pays close attention to managing the inherent

financial risks of its activity and the financial instruments it uses.

Also, the Group is subject to various taxes in the countries in which it operates. In some jurisdictions, there is an

increasing burden from compliance and regulatory requirements, as well as a certain degree of unpredictability,

which can lead to lower performance.

Investors

demand decrease

Decrease in demand

by investors for real

estate, impacting the

NAV and putting

pressure on bank

covenants

Adapting the Group investment strategy to the

Covid-19 context – maximum prudence towards

new investment. Having a portfolio of prime

properties and maintaining strong compliance

with financial covenants and performing active

asset management is expected to mitigate the

severity of the impact on the Group.

Shareholders

Financing

partners

Liquidity risk

The impact of Covid-19

on the Group’s rental

income creates the risk

that

the Group will not be

able to meet its

financial obligations as

they fall due. The risk

depends highly on the

duration and evolution

of the Covid-19

pandemic, authorities

and

market regulators’

response as well as

subsequent recovery.

In addition to its usual sound financial

management approach, in the context of the

Covid-19 pandemic, NEPI Rockcastle is

committed to maintaining its conservative gearing

level and robust liquidity.

NEPI Rockcastle has undertaken various

measures focused on achieving the most suitable

allocation of capital, including:

•reducing non-critical operating

expenses;

•deferring non-committed development

projects and non- essential capital

expenditure;

•utilising any relevant facilities provided

by national authorities to assist

companies in the current context; and

•drawing on and extending revolving

credit facilities.

The Group assures its stakeholders and partners

that it estimates strict compliance with all debt-

related obligations, without any need to obtain

deferrals or waivers for any of its unsecured or

secured debt.

Shareholders

Tenants

Suppliers

Employees

Local

authorities

Financing

partners

Risk description

Strategic

goal

impacted

Business impact

Key mitigating actions

Stakeholders

impacted

122

Stock markets

volatility

The Covid-19

pandemic had a rapid

impact on stock

markets. Due to

uncertainty caused by

the evolution of

Covid-19 and its

impact, the future of

retail sector markets

remains reserved. This

is an external risk,

largely not under the

control of the Group,

however it can

influence the share

price.

Continuous assessment of exposures, assessment

of liquidity and any other appropriate risk

measures together with independent supervision

by the Risk and Compliance Committee. The

Group is maintaining close contact with investors

and bond holders.

The Tax and Treasury Risk Partner will ensure

monitoring, market research and raise potential

risk triggers to the Executive Committee, while the

decision on mitigation measures stays with the

Executive Committee and the Board of Directors.

Shareholders

Financing

partners

Employees

Operational Cluster

Property development and management activities entail typical risks, such as insufficient building maintenance

leading to a degradation of portfolio, health and safety risks, business continuity not properly managed, budgets

overrun, improper tenant relationship management, overreliance on a single third party.Property development

and management activities entail typical risks, such as insufficient building maintenance leading to a

degradation of portfolio, health and safety risks, business continuity not properly managed, budgets overrun,

improper tenant relationship management, overreliance on a single third party.

Information

security/

cybersecurity risk

Internal organisation:

risk of consumer data

loss via a cyber-attack,

risk of data privacy

legislation non-

compliance due to

scattered systems,

increasing number of

security threats and

active attacks from

various sources (e.g.,

phishing, malware,

zero- day attack).

Commercial centers -

third party risk

Centralised decision making in Digital area for IT

software and hardware projects, dedicated legal

partner for IT related contractual arrangements,

PMI methodology consistently applied for projects

and start of ITIL introduction, redesign of entire

NEPI Rockcastle Enterprise Architecture.

Started Consumer Data Platform project to

centralise consumer data storage and

management, including historical data.

Pentests applied to existing and new platforms/

systems/apps based on a predefined risk matrix

considering the type and volume of personal and

confidential data processed.

Mandatory training programs and phishing

simulations.

Shareholders

Tenants

Employees

Information

security/

cybersecurity risk

(continued)

Tools and measures to reduce the likelihood of a

successful attack on NEPI Rockcastle

infrastructure and speed of recovery in case of

incidents:

•proactive monitoring tool (Azure Sentinel)

to identify and respond to cyber-security

incidents;

◦"Disaster Recovery Plan" extended to

include diverse failure scenarios and

successfully tested;

◦VPN infrastructure redesigned to support

remote work from home access and

multifactor authentication when accessing

Company resources;

◦3rd party vendors access to the Company

environment is secured, audited and

recorded;

◦Single Sign-On and Azure Provisioning

(access to all applications and apps is

managed in one place); and

◦Microsoft Secure Score has improved

from 52% to above 88%.

Upgrade and Secure Shopping Mall

Network infrastructure new project:

Upgrade and Secure Shopping Mall Network

infrastructure new project:

changing/redesigning the entire network

infrastructure for the whole portfolio, a new Wi-Fi

system with additional benefits for consumers,

analytics, and potentially tenants, securing

technical equipment and enrolling in VPN,

securing vendor/ service provider access to NEPI

Rockcastle systems, standardisation of network

equipment and centralised management, updates

and antivirus

Risk description

Strategic

goal

impacted

Business impact

Key mitigating actions

Stakeholders

impacted

123

Risk of tenants’

default

Closing of non-

essential shops (i.e., all

shops except

hypermarket and

pharmacies, and in

some countries

cleaning stores) during

Covid-19 lockdown

measures as well as

expected decreased

footfall following

reopening and higher

operating expenses due

to prevention and

sanitation measures

has and is further

anticipated to impact

materially our tenants’

operations and their

financial standing.

Tenants with weak

online presence/

multichannel

capabilities are most

vulnerable. Tenants’

default would lead to

bad debts, high

vacancy, depreciation

of rental income and

portfolio value and in

the end a reduction in

distributable earnings.

The Group granted support to tenants for both the

lockdown periods and afterward, following the

reopening of shopping centers. Various measures

were considered for the preparation and

implementation of a strategy in this respect

(which includes criteria based on which tenants

are rated and managed accordingly). In some

jurisdictions, the governments decided in the past

(and might reiterate if lockdowns are imposed

again) significant discounts for lease rents for

tenants in need.

Detailed creditworthiness reviews are performed

before signing lease agreements with the tenants.

All tenants are required to provide cash deposits

or bank letters of guarantee, covering rent and

operating costs, based on exposure.

The Group maintains close tenant relationships

through its internal leasing team, and tenants’

performance is monitored regularly by the asset

management team. Various indicators such as

tenants turnovers and occupancy cost/

affordability are assessed monthly, and measures

are implemented on a need basis.

Shareholders

Tenants

Risk description

Strategic

goal

impacted

Business impact

Key mitigating actions

Stakeholders

impacted

124

Risk of tenants’

default

(continued)

In the context of the

pandemic, litigation

with tenants over rent

reductions and reliefs

might trigger:

•alteration of the

relationship with

tenants – decision

to reduce business

in our locations or

to relocate;

•credit risk –

tenants fail to meet

their contractual

obligations –

impact on

cashflows and

liquidity;

•additional

subsequent

regulatory risk (as

tenants may file

various complaints

with various

authorities);

•credit risk –

tenants fail to meet

their contractual

obligations –

impact on

cashflows and

liquidity;

•additional

subsequent

regulatory risk (as

tenants may file

various complaints

with various

authorities);

•financial impact –

unpaid rents,

litigation related

costs,

administrative

penalties or fines

imposed by

authorities;

•operational risk –

high vacancy, bad

debts; and negative

media and

reputational risk

credit risk –

tenants fail to meet

their contractual

obligations –

impact on

cashflows and

liquidity;

Increased number of

Covid-19 cases is

expected to decrease

number of visitors

(affecting tenants’ sales

volumes) and cause

insufficient personnel

for main suppliers.

Where the collection is insourced, the Group has

an experienced cash collection team that follows

standardised procedures. Where property

management services are outsourced, the property

managers' fees are depending on the collected

receivables.

Risk description

Strategic

goal

impacted

Business impact

Key mitigating actions

Stakeholders

impacted

125

Pandemic/

epidemic

episodes might

impact activity in

commercial

centers and/or

cause business

interruptions.

Visitors number

might decrease,

impacting

tenants’ sales

volume

Pandemic/epidemic

episodes might impact

activity in commercial

centers and/or cause

business interruptions.

Visitors number might

decrease, impacting

tenants’ sales volume.

Operational costs

increase and problems

in logistics are

triggered by

pandemics.

Evolution and

continuing impact of

Covid-19 remains

uncertain.

Tenants might be

forced to reduce or

even close their

business in the Group's

locations or move

partially/ totally to

online.

Authorities might

decide temporary

closure of malls.

Suppliers of critical

services might suffer

activity disruption, lack

of materials and/or

human resources, thus

being unable to honour

partially/ fully their

contractual obligations.

The Group focuses on business continuity

planning and periodically reviews the business

impact analysis. Such exercises are aimed at

identifying critical processes, both internal and

external, dependencies, mitigation measures, to

ensure business continuity and prompt activity

recovery.

Adequate crisis management covers efficient

internal and external communication strategy,

relationship with authorities and legislators,

suppliers and tenants’ relationship management.

Hygienic measures and information campaigns

are ensured in the Group's physical locations, to

prevent spread of infectious disease.

Shareholders

Tenants

Suppliers

Employees

Local

authorities

Legal, Regulatory and Compliance Cluster

As an owner and manager of real estate assets, the Group must comply with various laws and regulations, in all

countries where it operates. Areas such as corporate law, health and safety, environment, building construction

and urban planning, commercial licensing, leases and commercial laws, personal data protection are highly

regulated across the Group’s portfolio.

Risk description

Strategic

goal

impacted

Business impact

Key mitigating actions

Stakeholders

impacted

126

Non-compliance

with laws,

regulations and

non-adherence to

good governance

practices

Investing in

international

markets

increases

operational,

regulatory and

other related

risks. The Group

operates across

numerous

jurisdictions and

is therefore

subject to a

complex

compliance

environment, as

well as diverse

governmental

and regulatory

changes.

Non-compliance with

regulatory

requirements could

lead to fines, penalties,

censures, and

reputational damage.

The Group engages experienced and

reputable in-house and external legal and

specialised advisors.

Management continuously monitors

compliance with legal requirements.

Appropriate operational compliance

management is ensured through continuous

monitoring of permits and authorisations

required by law, covering all properties,

operations and jurisdictions.

The Company conducts a centralised

quarterly review of the operational

compliance status at Group level.

Appropriate policies and procedures set the

tone from the top for ethical culture within

the Group.

Know Your Customer/Partner Policies and

procedures aim to mitigate the money

laundry/terrorism financing and prevent

corruption.

Non-compliance with EU General Data

Protection Regulation, within complex

jurisdictions and local specificities.

Non-compliance with regulatory

requirements could lead to fines, penalties,

censures, and reputational damage.

A Group Risk and Compliance Officer, as

well as Risk and Compliance Partners have

been assigned, while the Compliance risk

management status is reported regularly to

the Risk and Compliance Committee.

Shareholders

Financing

partners

Employees

Tenants

Suppliers

Local

authorities

Non-compliance

with EU General

Data Protection

Regulation,

within complex

jurisdictions and

local specificities

Non-compliance with

regulatory

requirements could

lead to fines, penalties,

censures, and

reputational damage.

The Group has set up a structure and has

employed an experienced Data Privacy Officer

(‘DPO’) to coordinate data privacy compliance.

The Group implemented Data Privacy policies and

procedures, as well as periodical training and

awareness campaigns dedicated to all staff.

Responsibilities for data privacy have been

assigned in each jurisdiction.

Relevant processes have been scrutinised and as a

result the Group implemented a set of measures

across all relevant processes to ensure compliance,

as well as to early identify and address

vulnerabilities.

Contractual arrangements in relation to

outsourcing providers acting as data processors

comply with legal requirements and best

practices.

Platforms and software are assessed to be privacy

by-design, pentests are applied to critical systems/

platforms, based on a predefined risk matrix

considering the type and volume of personal data

processed.

A data governance project was launched, meant to

also cover privacy related risks.

Tenants

Shareholders

Employees

Local

authorities

Risk description

Strategic

goal

impacted

Business impact

Key mitigating actions

Stakeholders

impacted

The Group has not faced any unexpected or unusual material risks and did not undertake any material

risk outside its risk appetite and tolerance levels.

127

Remuneration review

1. Key principles of remuneration

The Remuneration Report aims to provide insight into the Group's remuneration strategy and policy

for Directors and staff. The report has been approved by the Remuneration Committee, that ensures

that NEPI Rockcastle's remuneration and incentive policies, practices and performance indicators are

aligned with the Board's vision, the Group's values and overall business objectives. The Group's

remuneration policies and implementation are of strategic importance to the human capital, as they

serve to align the objectives and targets of the business with the objectives and strategic priorities of

individual Directors and staff. The remuneration and incentive policies are designed to motivate

Directors and employees to pursue the Group's growth and success.

The Group's philosophy is that remuneration reflects the health of our business, is aspirational for our

staff and is the result of both personal and business outcomes. Hence, remuneration is critical in

driving the achievement of results and in attracting, engaging and retaining the best professionals. It

is a joint commitment of the Remuneration Committee and the Groups' management that

remuneration strategy:

•supports (by being fully integrated with) the corporate and people strategy;

•is clear, flexible, transparent and fair and its implementation is a priority for management;

and

•is market competitive and provides a healthy balance between pressure on performance and

motivation.

The Remuneration Policy is aimed at creating a performance-driven corporate culture, strong enough

to compete in a rapidly developing market – one that is characterised by high turnover, low

unemployment, expertise scarcity and increased mobility towards Western Europe or inter-

continental. Considering all these factors, the remuneration proposition has been designed to

motivate the delivery of strong results, positive performance and the achievement of strategic

objectives, while also serving as a powerful tool for the retention of valuable, high-achieving and

skilled professionals.

Considering the Group's leading market position in CEE, it has become increasingly important that its

team of professionals remains motivated and incentivised over the long-term.

The Group's Remuneration Policy and implementation serves as a differentiator in our market and

industry.

The key remuneration principles set out by the Group remain unchanged from the previous year, as

they position the Group's policy competitively in the market and serve the business strategy:

Performance-driven pay – remuneration is driven by the employee's role and performance, as

well as the Group's performance.

NEPI Rockcastle has implemented a clear process of setting measurable goals, both short- and long-

term. This methodology was upgraded during 2021 with Objectives and Key Results ('OKR'), to ensure

greater focus on those important business elements and results that are directly connected to business

performance and shareholders’ return. The objective setting process is structured along two important

pillars, which are aimed to ensure that business targets and adherence to values and professional

conduct are drivers of strong performance. Hence, each employee and Director have pre-set annual

objectives structured as follows:

•Business objectives: Key Performance Indicators ('KPI's) and strategic priorities;

128

•Key Results – a breakdown of what are the essential results expected to be delivered in order

to ensure achievement of the objective; these are measured progressively throughout the year,

with an expectation of at least one ‘check-in’ mid-year to ensure proper monitoring; and

•Professional behaviour, management skills, adherence to the Group's values and expected

management competencies.

Competitive pay – the Group is committed to offering competitive packages to its employees and

Executive Directors and is constantly observing the relevant market benchmarks. The Company aims

to ensure that its remuneration components are aligned to the market and positioned at least at the

market median, and approaching the market maximum for strong performers.

Total annual pay – remuneration is defined as a total annual package and consists of three main

components:

•fixed pay;

•variable pay: short- and long-term incentives, which can be delivered in both cash and share

awards, as per the Group's incentive plan approved by shareholders in 2017; and

•individual and collective benefits.

Variable pay as a differentiator – the Group's Remuneration Policy emphasises variable pay

structures as enhancers of differentiated total pay, in line with performance, seniority and complexity

of the role, pre- set objectives and expected impact on the business, measured in terms of results

delivered and managerial capabilities to develop, lead and motivate people.

Fair pay – when setting pay levels and packages, the Group aims to achieve internal equality (similar

pay for similar roles, levels of complexity and experience) and external fairness (pay determined

considering the market levels and dynamics).

Annual pay review process – remuneration reviews are held annually, in connection with

performance reviews, to ensure the remuneration process is benefiting the business and is based on

the performance review process. The Group's objective is that the annual review process considers the

business and individual results achieved and the market circumstances and benchmarks, as external

factors. Connecting the annual pay review to performance reviews enhances a process that is well

adapted to internal and external factors, business driven and objective.

2. Internal and external factors influencing remuneration related decisions

The Remuneration Committee and executive management are committed to continually monitoring

internal and external factors that might influence the context in which the Group operates, and may

result in a need to re-assess and adapt the policy so that it remains relevant and achieves set

objectives.

Wider external factors – materially influenced by the Covid-19 during 2021

The Group operates in competitive markets which are influenced by challenging and diverse factors.

Elements related to the Remuneration Policy are workforce dynamics, skill set availability, working

arrangements and routines and remuneration specificity across multiple geographies.

Prior to 2020 and 2021, CEE was increasingly affected by the migration of skilled professionals

to Western Europe or other more developed regions. While at the beginning of the pandemic in 2020

this trend appeared to have diminished, during 2021, as the market started being more dynamic in

workforce movements, the trend reappeared. This trend is also increasing because of the accelerating

move towards hybrid or remote working adopted by large, international companies that employ

129

significant numbers of people, and whose labour market has extended significantly with the

introduction of such practices.

From a human capital point of view, the CEE market faced an increased mobility of workforce, as

companies and important players have adapted to the new ways of working hybrid or remote and

redesigned value propositions for potential hires. This led to an increased turnover across most

industries, especially commercial real estate, mainly due to the perceived challenges faced by these

industries and limited visibility over how offline retail and traditional shopping centres would

navigate the pandemic. NEPI Rockcastle has also experienced an increased voluntary turnover of up

to 11.2%, and more pressures and difficulties in its hiring processes. The Group was able to

successfully manage such challenges by adapting its value proposition and increasing transparency

over its operations and strategic medium- and long-term priorities.

The main elements that continued to affect the workforce in CEE during 2021 are similar to the ones

affecting 2020, and are presented in more detail below:

•Legislation related to organising work and employees' safety continued to change in line with

pandemic waves, with an impact on managing teams and operations, business travels and

interactions;

•To enforce social distancing and prevent the spread of Covid-19, local authorities in all

jurisdictions regulated the organisation of work in line with Covid-19 statistics;

•In all jurisdictions where the Group operates, special working conditions continued to be

enforced or recommended by authorities, allowing employees to support their children while

childcare and education institutions were closed (further reducing the available workforce);

•Although during 2021, as people got used to the restrictions, new ways of working and new

healthcare standards, the level of immediate anxiety and stress seemed to be reduced, the

market subsequently faced a new challenge, returning teams to office working and

acclimatising them to increased physical proximity and interaction (the Group acknowledged

these developments and worked closely with team leaders, organised meetings and Return

from Hybrid workshops to facilitate employees’ transition); and

•Mobility of workforce increased mainly based on the new possibilities of remote working and

hybrid arrangements.

The fiscal environment did not lead to any significant remuneration related changes during 2021.

Significant changes in employment legislation and income tax have been announced and will be

enforced as of January 2022 in Poland. The changes in taxation will impact the net amounts received

by employees and freelancers. This will lead to a chain reaction regarding levels of gross income and

organisation of work. Signs have already been seen as of January and February 2022, and the Group

will assess during the salary review of 2022 how to address employment and resource challenges,

should it be the case.

Across CEE, special fiscal or employment benefits related to Covid-19 support schemes continued to

be allocated to companies or directly to employees – to support the sustainability of businesses

throughout the pandemic. These included, but were not limited to: state support for employees in

childcare (due to home-schooling or closure of childcare institutions), partially-paid unemployment,

furlough, simplified access to medical leave, extended deadlines for employees-related reporting, and

remote and teleworking regulations.

Levels of pay showed a tendency to increase across industries and experience levels in CEE. The

highest variances were seen in technology industry, digitalisation, project management, logistics,

retail and FMCG. Consulting and reward expert firms in the market have investigated the market to

provide as accurate trends as possible of such changes; however, during 2021, the levels of pay varied

widely in a very unpredictable way. This has led to difficult recruitment processes, and may, going

forward, lead to internal fairness challenges in levels of pay. The Group is currently analysing the

130

impact of such changes and, where needed, will apply market adjustments in order to respect its

philosophy and principles of pay.

Inflation - the annual average inflation for 2021 for EU27 was 2.9%. However, inflation increased

significantly throughout the second half of the year to 5.3% as of 31 December 2021.

Inflation rates in the CEE countries where NEPI Rockcastle owns assets and teams has also increased

significantly:

•annual average between 2.7% - 5.2%; and

•as of 31 December 2021 between 5.1% and 10.7%.

Inflation forecasts announced for 2022 for the NEPI Rockcastle’s countries of operation are in similar

ranges, with some jurisdictions announcing a double-digit inflation.

Foreign exchange rates between EUR and local currencies varied substantially in some of the Group’s

countries of operations – Poland, Hungary and Romania. Stepping into 2022, this trend continues

and as of January and February, significant variances were noticed (Poland experienced a

depreciation of PLN to EUR of more than 10% during February 2022).

Internal priorities and factors related to workforce

The people related priorities of the Human Resources ('HR') function and the management team were

to ensure that the Group's employees remain safe, they are offered work conditions that support

health preservation and prevent infections. All legislative requirements across the Group's

jurisdictions were enforced, including restrictions in mobility, strict rules relating to social distancing,

planning of hybrid work and labour documentation.

Intensive efforts were made to maintain engagement, motivation and interaction amongst teams at

optimal levels – through a set of actions taken in:

•focusing the efforts on acquiring the needed competencies to support key organisational

projects – digitalisation, project management, consumer – centric marketing;

•further growing the strength of the core management team, through both recruiting key

members of management and through developing and rolling-out a Leadership Development

Programme at Group level;

•developing new skills such as learning to manage remote teams, conduct negotiations in

difficult market conditions, or increase productivity and focus in remote or hybrid working

environments. Special attention was given to developing project management skills,

marketing and digital, social media and consumer-centricity approach, management and

analysis of data keeping staff informed more regularly in remote discussions with

management and through a dedicated internal communication platform launched in 2020;

•preserving all working positions, with no restructuring or layoffs in any teams or jurisdictions;

all pay, benefits and rights were entirely respected in the legal timeframes, which ensured an

increased level of trust of our staff in the sustainability and stability of our business long-

term;

•all legal requirements were implemented; and

•additional medical support and informative sessions were available to internal teams to

manage their health care and proper prevention during 2021, and we continue to do all this in

2022.

The Remuneration Committee response to internal and external factors

Although the above external factors affected the environment and the Group’s business directly, NEPI

Rockcastle managed to mitigate the impact on its results. Overall, all business results and KPIs have

131

improved in 2021 versus the prior year, especially in the areas of operational management, financing

and liquidity.

The results delivered by NEPI Rockcastle led management to take specific and contextualised

decisions in relation to remuneration. Jointly, the Remuneration Committee and the Group's

management team have appreciated that achievement of the 2021 performance was the result of

intensive efforts, hardship, strategic decision and immense pressure to minimise the impact of

Covid-19 market dynamics on the Group’s operations.

Adjustments and updates have been intensively discussed during 2021 within the Remuneration

Committee, in the context of all the relevant changes in the market and in the structure of

management team. The process of succession for the CEO and CFO positions has been a great source

of insights into how the Group can better align its practices to the relevant market in both WE and

CEE and in the wider international context, including South African environment.

The commitment of the Remuneration Committee is to review and implement specific changes during

2022. Some of these anticipated optimisations of remuneration will address:

•long-term incentivisation structures, vesting, tailoring in line with the complexity of roles and

business results; and

•scaling the performance in a more adaptive manner, to reflect crisis conditions – such as

Covid-19 pandemic, geo-political crisis as a result of the Russia - Ukraine war, scarcity of top

management talent to replicate and lead operations in CEE in commercial real estate.

Changes to remuneration during 2021

Executive and staff remuneration

The majority of the changes made during 2019 remained in place and applied in 2021 including:

•sliding scales and specific ranges for KPIs achievement on Executive Directors' pay;

•sliding scales align in a more direct manner performance delivered to reward, while ensuring

that shareholders' return is preserved; and

•more differentiation of significant KPIs weighted to reflect different roles and areas of

responsibility for Executive Directors.

One of the changes agreed by Remuneration Committee this year was to discontinue the assessment of

results by geographies. This was driven by the increased efforts of aligning the leadership, the

processes and projects at Group level, which implied a Group-approach and impact of our executives

over the Group’s results, not only over specific regions.

Details on the outcome of the described policy relevant to 2021 results and performance reviewed are

described in Implementation Report.

Non-Executive Directors Remuneration

The non-Executive Directors remuneration has been updated in line with the market benchmarks as

of 1 January 2020. Although the process of determining the new levels of pay for non-Executive

Directors had been finalised during 2019-2020, the Board agreed to postpone any implementation

during 2020 (considering the challenges of the business) and to apply them starting 2021.

Engagement with stakeholders and implementing feedback

A key priority for the Remuneration Committee and executive management is to remain open to

shareholders' feedback and understand their expectations or concerns in relation to the Group's

132

policies and practices. The Board is committed to providing feedback and ensuring that the Group

maintains transparency in this process.

During the 2021 Annual General Meeting, the Remuneration Policy obtained a 66.09% vote of support

and the Implementation Report received a 67.51% vote of support. Although these votes are non-

binding, the Directors are committed to continuing to seek and respond to direct feedback on the

Remuneration Policy.

2019

2020

2021

Remuneration policy

81%

66%

Implementation report

85%

67%

68%

Executive and non-Executive Directors meet investors and discuss economic context, market factors

and challenges, the Group's achievements, results, strategic priorities, as well as remuneration related

aspects. Such direct consultation is acknowledged, and while not all stakeholders can be engaged (due

to their large number), Directors personally meet major shareholders and request feedback.

Additionally, all shareholders have been publicly invited to provide their feedback as per the

announcements issued on 18 August 2021 and 1 October 2021. Moreover, as a consideration of the

2021 feedback and increased interaction with the Board, the Chairman of the Board (representing the

Board and the Remuneration Committee) has engaged in a remuneration road-show in February

2022, alongside the results presentation in South Africa, to:

•discuss directly with shareholders;

•present the principles of the remuneration framework;

•bring clarity over any questions or concerns; and

•listen the feedback of the investors.

The Remuneration Committee is also actively engaging with the external advisors and reward

consultants to gather intelligence on:

the market overall (the Chairman or the Remuneration Committee participates in dedicated

Executive/Board Reward workshops and cross-industry meetings)

the Group’s business (NEPI Rockcastle is analysing the reports issued by external advisors about the

Group’s remuneration regularly and plan optimisations).

Main areas of feedback received from those shareholders that have decided to engage with the Group

on the matter as well as items pointed out by Institutional Shareholder Services (ISS) Proxy Analysis

& Benchmark Policy Voting Recommendations are presented below:

Feedback theme

NEPI Rockcastle response to feedback

Transparency and disclosure

Shareholders expressed expectations to understand in

more detail the mechanisms for determining the variable

awards, including the maximum levels of pay for both STIP

and LTIP.

Specifically for the Total Shareholder Return ('TSR')

measure used for LTIP determination, an expectation of

presenting the peers list was raised.

The 2021 annual implementation of Remuneration Report

includes, as response to shareholders’ feedback, the

required level of transparency:

•award determination mechanism and details

•maximum levels of pay for STIP and LTIP (where

applicable)

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LTIP vesting conditions

ISS report recommended aligning vesting conditions to

market practices of three years vesting

Vesting of shares for Executive Directors is under review

and a change from five years to three - four years vesting

period, plus a condition on withholding shares for an

additional of one - two years (malus) is being considered.

This whould help align with the Dutch code requirements

of ensuring a minimum of five years of total vesting plus

restrictions over shares awarded as part of executive

remuneration.

Market benchmark

Levels of pay to be benchmarked to the relevant market

During 2022, as the market is expected to stabilise, NEPI

Rockcastle will run a benchmark analysis against the WE

and CEE market and South African and international

markets.

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Remuneration Committee priorities

During 2021, the Remuneration Committee's priorities were set around:

•strengthening the management team in the area of operations by hiring and onboarding the

COO as well as ensuring the succession for CEO and CFO;

135

•supporting the management team throughout the continued crisis, while maintaining and

monitoring adherence to the agreed remuneration principles;

•assessing the reward implementation in the challenging context of intense work pressure and

efforts to mitigate market conditions, while results of the business were affected;

•engaging with the shareholders to better understand their feedback and optimise the existing

Remuneration Policy; and

•further driving changes to the Remuneration Policy, as initiated in the previous year.

The Remuneration Committee has decided and advised the HR Director and the CEO that during

2022 a thorough market benchmark will be executed for Board level positions, top management and

wider teams across the Group’s jurisdictions. The results will be further analysed and any required

implementation of measures will be executed in the coming financial year.

The Remuneration Committee's objectives, processes and plans remain aligned to the business and

aim to address the internal and external influencing factors, the needs and expectations of

stakeholders, including employees. These are outlined below:

Remuneration

Committee's

priorities

Approach

2021 process

1. Group's Remuneration related priorities

Ensure remuneration

motivates people for

performance while

managing the

increased business

pressures of 2021

The Group reviews both

variable and fixed

remuneration on an

annual basis. Performance

of the business and

individual professionals is

being assessed.

Variable pay is linked to

KPIs and overall annual

individual performance,

while the fixed pay is

linked to the complexity of

the role.

The Group's performance is connected to individual and

Group's performance. In the context of the intense challenges

that business faced during 2021, reduced budgets, in line with

business results, have been set at business function level.

Allocation of bonuses at team and asset level was agreed based

on meritocracy, hardship, complexity of projects and strategic

decisions that were managed within a specific business

function. Emphasis is placed on determining performance

fairly, as this links into variable pay.

Decisions upon specific level of bonuses is taken at top

management level (i.e., Directors of business functions), while

every team leader is encouraged to assess performance and

make relevant recommendations to reflect the contribution of

individual team members. Variable remuneration for Executive

Directors has been maintained fully in line with the

Remuneration Policy, KPIs and computation algorithm.

Executive Director's KPIs have not been adjusted for the impact

of Covid-19: the structure and target KPIs have been

maintained at their level, pre-set before the commencement of

Covid-19 pandemic.

Ensure Group's

remuneration is

aligned to the relevant

market and provides

internal fairness

The Group frequently

consults international

independent remuneration

experts to ensure a proper

understanding of the

benchmarks and

determine actions to be

implemented during the

annual remuneration

review processes.

For specific roles, department, countries and pay levels, reward

reports and market data were inquired.

The decision was to use external benchmarks on the Polish

market and on those industries where the fluctuation of salaries

according to the market was higher, such as technology, project

management, digital, marketing, reporting and finance.

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Ensure transparency

of Group's remuneration

policy, pay structures, pay

levels, objectives and link

between pay and business

performance

The principles and details

of Group's remuneration

policies, including any

changes made or

anticipated are publicly

presented in the Annual

Report.

Meetings with

management teams are

held annually within the

remuneration and

performance review

process to outline, explain

and clarify aspects of the

Group's remuneration

review decisions and

rationale.

The 2021 Annual Report presents all details of remuneration for

both Executive and non-Executive Directors, as well as

principles of remuneration across the staff.

Allocation of reduced staff cost budgets was done at business

function level, allowing the top management team to take a

wider responsibility over managing the process of reward

review.

Individual discussions with team leaders were held by the HR

Director for budget allocation, as well as for the start of the

performance management process, to discuss principles of

remuneration, reward review and link to performance of teams

and individuals.

2. Alignment of ethics of pay

Ensure alignment of all

staff remuneration

principles and pay

structures across all

countries in which the

Group operates

The same remuneration

review process is

conducted at Group level

and in all countries where

NEPI Rockcastle is

present.

The HR Director ensures

the roll out of the process

is aligned and the same

principles are applied

across all countries.

The Remuneration

Committee is informed of

and annually approves the

performance and reward

review approach.

The HR function is a centralised function which ensures HR

services across the Group. Determination of specific

remuneration at the level of a team is done upon consultation

with HR reward specialist who provides, for each position

within the Company, an analysis of the job level, benchmarking

against specific functions and geographies and makes

recommendations in respect of appropriate pay levels.

This process ensures that same principles of pay are

consistently applied across all grades, functions and countries.

Ensure remuneration is

determined without

discrimination

The HR Director, as

mandated by the executive

management and

Remuneration Committee

ensures through detailed

reviews of the reward

processes that pay levels

are set free from any

discriminating

considerations: gender,

age, race, religion or other.

Fixed remuneration is determined based on role,

responsibilities, level of competence and experience, while

variable remuneration is determined based on performance,

impact and contribution. There is no consideration given in the

hiring or reward review process to any other element that could

lead to discrimination, such as gender, age, race, religion or

other.

The Remuneration Committee is also reviewing the principles,

mechanisms and implementation of reward review, to ensure

that only role and performance elements are considered in

reward determining decisions.

The HR department monitors relative pay of staff to ensure

fairness and ethical pay principles are observed.

3. Shareholders' engagement and Corporate Governance

137

Ensure shareholders'

feedback is observed and

discussed

Regular meetings are held with shareholders upon presentation of financial results, where

questions received and addressed by Executive and non-Executive Directors cover the entire

range of topics, including remuneration.

The Remuneration Committee maintains contact with shareholders and discusses feedback

put forward to the Board upon voting at the AGM. All shareholders have been publicly

invited to provide their feedback as per the announcements issues on 18 August 2021 and 1

October 2021.

The Remuneration Committee Chairman has engaged in detailed discussions and

consultations on remuneration related matters with major shareholders during February

2022.

Comply with King IV

requirements and other

relevant corporate

governance frameworks

The Board is actively promoting and encouraging management to continuously improve

Corporate Governance and its alignment to relevant corporate governance frameworks.

4. Key decisions in 2021

Area

2021 changes

Staff remuneration

Fixed pay

Fixed pay across the Group was maintained at similar levels to 2020, and

changes have been made to staff pay only based on changes in roles or

where significant gaps versus market existed (0.8%).

The reward review of 2021 has been finalised and the decision made was

that, considering the market circumstances affecting the business, for

2022 salaries will be adjusted on a discretionary basis to align to market

levels and conditions as presented in section 2 (Internal and external

factors influencing remuneration related decisions), internal fairness and

ensure adequate level of motivation, engagement and retention in the

current market circumstances.

Salary and bonus pool

Staff cost budgets have been set at the level of business function to allow

for more flexibility and accountability over remuneration related

decisions.

The HR reward function and CEO supervise the consistent application of

remuneration principles across the business. Variable pay decisions are

calibrated at Group level with the CEO and HR Director, ensuring

consistent application of reward principles.

Executive Directors' Remuneration

Fixed pay

No changes were made during 2021 to the fixed pay of the Executive

Directors.

Variable pay – Short-Term Incentive ('STI')

KPI structure, composition and weighting align the impact over business

and are aimed to reward and reflect specificity of the role:

•differentiate between roles – different KPIs for different roles;

and

•different weighting for same KPIs for different roles.

Specific adjustments have been made to the weights of KPIs at the

beginning of 2021, to accommodate for an increasing Board discretion of

25%; such adjustments were aimed at allowing the Remuneration

Committee to reflect the market circumstances in the overall assessment

of STIP awards.

138

The Remuneration Committee will continue to carefully monitor the stability of the business, political

and geographical environment (especially in the current context of the Russia – Ukraine war and

related impact on the global economy, as well as specific industry trends, market dynamics and

stakeholders' expectations - to ensure that NEPI Rockcastle adopts best practices in remuneration,

aligned to good corporate governance.

Specifically, NEPI Rockcastle will:

•benchmark executive pay against relevant markets every two years; exceptions were made

during 2021, as the markets were highly unstable due to Covid–19 that affected workforce

dynamics, movements, work arrangements and pay practices. During 2022, the Group will

encourage management to use benchmark data for employees' remuneration decisions for

each annual review;

139

•monitor the alignment of the Remuneration Policy with King IV principles, as well as the

Dutch and UK codes' best practice;

•ensure that performance measures are defined in a manner that supports the delivery of

added value for stakeholders;

•engage with stakeholders in a transparent manner; and

•consulting the shareholders on important remuneration optimisations expected during 2022

in the context of the market changes and overall workforce dynamic.

5. Non-Binding Advisory Vote on Remuneration Policy and Implementation Report

In line with King IV and the JSE Listings Requirements, shareholders will have the opportunity to

vote on the Group's Remuneration Policy and the Remuneration Implementation Report. NEPI

Rockcastle invites the shareholders to engage with executive management and the Remuneration

Committee prior to the 2021 Annual General Meeting on any concerns that the Remuneration Policy

and Implementation Report could raise, or any clarification needed for a better understanding of the

remuneration practices. Directors remain committed to engaging with shareholders in order to

address all legitimate and reasonable objections and concerns.

The Remuneration Committee has carefully considered the implementation of the Remuneration

Policy during the year and believes it has achieved the stated objectives.

The Committee is confident that the remuneration policy remains aligned with the strategy of the

business to support value return to shareholders and other stakeholders.

Andre van der Veer

Remuneration Committee Chairman

Remuneration Policy

The core of NEPI Rockcastle's remuneration strategy and policy is the focus on the value created

within and through its teams, which results from:

•the achievement and results delivered by each team member, individually and collectively;

140

•how the Group develops top professionals, helps them acquire new skills and encourages

innovation; and

•the teams' stability ensured by motivating and retaining key professionals.

To support this strategy, the policy is designed based on the following key principles:

•performance driven pay;

•competitive pay;

•total annual package;

•variable pay;

•fair pay; and

•annual pay review.

To evaluate the effectiveness and ensure sustainability of both the strategy and principles, the Group

is observing specific fundamentals of implementation, that are detailed below:

Clarity – the Groups' Remuneration Policy, frameworks and mechanics are transparent and clear;

they allow for effective engagement with shareholders and human capital. Since 2018, the Group

increased transparency, improved disclosures and clarity on remuneration, and will continue going

forward.

Simplicity – the pillars of the Group's remuneration structure are straightforward and clear – fixed

pay, benefits, variable pay on short- and long-term. Determination of variable pay is always linked to

individual performance (further to the annual performance review process) and Groups' performance

(made public, with shareholders engaging in detailed discussions on performance achieved and

impact on the overall business growth and continuity).

Risk – the Remuneration Policy and processes structured around implementation of the policy are

set so that any risk of excessive or underpay is identified and acted upon. The key controls in

identifying and addressing such risks are:

•Remuneration Policy (on review or hiring) is being validated by HR and a remuneration

specialist, considering internal equity and market data;

•all variable pay determination is linked to performance review. As a process, remuneration

review is done only upon completion of performance review process to avoid misalignment

between awarded pay and delivered performance;

•results of performance management are calibrated at Group level, so as to maintain

consistency in the way performance is measured and benchmarked for similar roles, impact

and seniority;

•reward reviews and awards of variable pay are done once a year, and the process's principles

and outcomes are presented and discussed within Remuneration Committee, with HR

Director and CEO;

•KPIs and strategic objectives pre-set at individual level (for both staff and Executive

Directors) are aligned to business KPIs and derived from the strategic direction;

•KPIs and strategic objectives are sufficiently wide (and ensure there is a combination of

aspects that one needs to maintain focus on). The Group's embedded target is that

performance on one area is not achieved by compromising on other areas or on ethical aspects

of the business; and

•performance reviews of employees comprise a component of 360 degrees feedback, focused

on behaviours, values and ethics. Any possible unethical behaviour would be signaled and

acted upon before awarding any component of variable pay.

Predictability – the Group has developed the Remuneration Policy and implementation

mechanisms so that total awards for human capital to be predictable – by market moves, by internal

decisions on pay, and, most importantly, by the link to Group's and individual

performance and role (as determining pay in the Group's policy is linked to market, role and

responsibilities and performance).

141

Sliding scales and performance incentive zones are defined for the core KPIs of Executive Directors,

enabling minimum and maximum variable payouts to be predicted.

Proportionality – the Remuneration Policy and principles are focused on linking individual awards,

the delivery of strategy and the long-term performance of the Company.

There are specific elements in the Group's policy which ensure poor performance is not rewarded –

bonus pools will be activated at specific achievement rates and upon consideration and approval of the

Group's management and Remuneration Committee. In addition, the basic rules of the policy state

that performance partially meeting expectations and below expectations is not rewarded, and

consequence management is enforced.

Alignment to culture – When developing the remuneration philosophy and policies, the Group

focused on how its four core values reflect the way people behave and drive performance. The Group

values linked to the remuneration philosophy are set out below:

Philosophy

The Group's Remuneration Policy was designed to deliver fair, market-related compensation for all

employees, whilst ensuring differentiated reward packages as appropriate, in line with each employee's

role, competence, performance and behaviour. The variable pay component ensures that excellence and

innovation are rewarded. Compensation is anchored at the market median, but is structured to exceed

market levels where performance in creating value for stakeholders is achieved.

Principles

Pay for

performance

Total annual

package approach

Annual

remuneration

reviews

Competitive and

fair pay

Differentiated

variable pay

Details

Remuneration is

driven by the

employees' role

and performance

review, and the

overall

performance of the

Group.

Clear, measurable

goals are set for the

Group, teams and

individual

employees.

Remuneration is

defined as a total

annual package,

consisting of fixed

pay, variable pay

(which can be

delivered in cash

and shares), and

individual and

collective benefits.

Remuneration

reviews are held

annually, with the

purpose of

assessing

performance for

the past year and

defining

remuneration

packages

(performance

bonuses, new levels

of fixed pay and

benefits).

The Group is

committed to

paying fixed

salaries at market

level (compared to

companies of

similar size and

complexity), and

variable

components above

market level for

high- performing

employees.

Annual inflation

and foreign

exchange rate

reviews ensure

salary levels

remain

competitive.

The Group has a

differentiated

variable pay

method, based on

role, seniority and

performance levels.

Company

Values

Excellence

Integrity

Excellence

Innovation

Development

Innovation

Development

Communication

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Remuneration DESIGN

Pillar

Description

Purpose and link to strategy

Fixed pay

All staff

Guaranteed and fixed pay, determined by the role

and responsibilities, experience, competence,

qualifications and expertise.

The median of the relevant market is used as a

reference point for determining the level of fixed

pay.

Adjustments can be made for specific

circumstances, achievements and responsibilities.

Reviewed annually to ensure internal and external

equity, correlation to role and responsibilities

(especially in case of role change or competence/

qualifications uplift).

The Group aims to remain the dominant

commercial real estate investor and operator

in CEE. Hence, its teams should comprise top

professionals: qualified, experienced,

competent and motivated.

The Group's target is to attract, motivate and

reward specific skillsets needed, especially

considering a competitive labour market with

high scarcity of property and commercial real

– estate skills and qualifications.

Short-term

incentive plan

('STIP')

All staff paid in

cash

Variable pay delivered for achievements against

short–term objectives set in advance.

Variable pay relates to employees' role. The more

senior an employee is, the more he can impact the

Group's results; hence the higher proportion of

variable pay in his annual package.

Under-delivering against objectives leads to no

variable pay.

Categories of seniority used for staff STIP are: non-

managerial, middle management

and subject matter experts, and senior

management.

STIP total variable pay is subject to business targets

and budgets.

NEPI Rockcastle aims to remain among the

best performing retail real estate companies

in CEE and continue to deliver best results

against challenging targets. Variable pay is

designed to incentivise individual

contribution to business results. The stronger

the performance, the higher the variable pay.

Long-term

incentive plan

('LTIP')

Executive

Directors and

selected

members of staff

Shares awards

Annual awards made to participants based on

Group's achievements of three-year trailing KPIs

(internal and external).

Quantum of allocation is determined as a

percentage of annual fixed pay.

Vesting period of five years for Executive Directors

and three years for staff.

Awards are typically settled in shares.

NEPI Rockcastle aims to drive achievement of

ambitious strategic priorities and keep senior

management and Executive Directors focused

on long- term value creation.

The Group's long-term interests should be

aligned with those of senior management and

Executive Directors.

A medium to long-term retention of key

professionals is essential to the business.

Benefits

All staff

Medical services based on subscription or medical

insurance, the cost of which is partially or fully

covered by the Group.

Access to sports facilities – cost of subscription

partially covered by the Group.

Other well-being benefits.

Happy, healthy and motivated employees are

more efficient and deliver better results.

Ensuring stable teams is essential, and the

Group can play an important part in

educating lifestyle-related habits.

Each element of remuneration is described in more detail below.

Fixed pay

The strategy is to position the fixed pay at market median and for specific, critical roles, above the

median up to the 75th percentile. These specific roles are set by assessing scarcity of the market,

turnover trends and uniqueness of roles.

Based on market circumstances, in order to best determine the appropriate level of fixed

remuneration, the Group benchmarks salaries of employees against the relevant markets.

143

Remuneration is reviewed annually with the aim to validate internal and external equity, as well as to

determine any changes needed. As the Group focuses on being more competitive in annual pay

through variable pay, increases in salaries are considered only in case of:

•change of role and responsibilities (e.g., promotions);

•external equity: significant gaps compared to relevant market benchmarks; and

•internal equity: similar pay for similar roles in similar geographies.

Increases in salaries are subject to meeting the budgets and must be aligned with the overall

performance of the Group.

Variable pay – STIP

STIP for employees is determined as a proportion of the annual fixed pay, and it can vary depending

on certain elements:

•Company's performance;

•The role, which determines the target bonus rate (e.g., non-managerial, middle

management/subject matter experts, senior management); and

•Individual performance rating – obtained by each employee within the annual

performance evaluation process (on a scale of 1 to 5).

The annual employees' STIP is determined by applying a multiplier, factor of performance and role

level, to the annual fixed salary.

STIP for Executive Directors is determined based on a clear measurable algorithm that leads to a

coefficient to be applied to the annual fixed pay. The measures comprised by the algorithm are aligned

to the business KPIs, and structured by categories of performance:

•financial performance;

•operational performance;

•debt risk management; and

•qualitative factors.

Structure of specific KPIs within the above categories, and weights of KPIs in the total scheme is

adjusted and different to reflect the specific roles of the executives.

The objectives are set for the 12 months financial period under review, and the achievement rate is

calculated considering the specific weights agreed for each individual measure.

Variable pay – LTIP

LTIP awards to staff and Executive Directors are made based on the terms of the NEPI Rockcastle's

Incentive Plan. Eligible employees and Executive Directors receive an award of restricted shares which

vest equally over three years for staff and five years for Executive Directors. For employees, the

quantum of allocation is determined based on the employee's fixed pay and STIP.

The LTIP allocation of 2021 for staff will be finalised in March - April 2022, upon completion of the

performance review for 2021.

Executive Directors' LTIP is based on achievement of internal KPIs, as well as benchmarking against

peers.

The internal measure is the three-year compound annual growth rate (based on NEPI's history

pre-merger and NEPI Rockcastle subsequently) of distributable earnings per share relative to an

inflation-linked benchmark and the yield on cost for the Executive Director. The result, as a

percentage, is multiplied with an internal hurdle factor.

The external measure is determined as total shareholder return compared to peers, with the

respective KPI being considered:

144

•fully met if the Group performed in the top quartile;

•50% of the full achievement if the Group performed in the second quartile; and

•not met if the Group performed in the bottom two quartiles.

The resulting factors are multiplied with internally determined multiplier coefficients and annual

fixed salary.

LTIP determination for Executive Directors' performance of 2021 has been calculated and approved

by Remuneration Committee and will be settled through share awards without attached loans.

Termination of employment

Managing risks related to pay and termination of employment is a priority for Remuneration

Committee, CEO and HR Director.

The following considerations apply in the event of termination of employment:

Incentive

Fault terminations-resignation,

early retirement, dismissal

No-fault terminations – dismissal,

retrenchment, retirement,

restructuring, disability, death

Fixed pay

Paid over the notice period.

Notice period for staff does not exceed six

months in any of the jurisdictions.

Termination notice for Executive Directors is

three months.

Termination notice for non-Executive Directors

is not set specifically in the appointment letter

– however, according to the Constitutive Act, a

third of the NEDs resign and are put forward

for re-election every year.

Paid over the notice period and ceased at the

date of the termination of the contract.

Notice period for staff does not exceed six

months in any of the jurisdictions.

Termination notice for Executive Directors is

three months.

Termination notice for NEDs is not set

specifically in the appointment letter, however,

according to the Constitutive Act, a third of the

NEDs resign and are put forward for re-election

every year.

Benefits

Benefits are discontinued when employment

ceases. Applicable benefits may continue to be

provided during the notice period, but will not

be paid on a lump sum basis.

Benefits are discontinued when collabouration

ceases.

Applicable benefits may continue to be

provided during the notice period but will not

be paid on a lump sum basis.

Short-term

Incentive

Entitlement to incentive will lapse. No

payments will be made.

Although entitlement to further incentives will

lapse, the Board's (for Executive Directors) or

management's (for staff) assessment of the

situation may lead to full or partial payment of

the incentive.

Long-term

incentives

All unvested awards shall be forfeited in their

entirety and will lapse immediately on the date

of termination. Exceptions are at Board's

discretion.

All unvested awards shall be forfeited in their

entirety and will lapse immediately on the date

of termination. Exceptions are at Board's

discretion.

All Executive Directors have appointment agreements which entitle them to participation in the

Group's incentive plan.

Non-Executive Directors' fees

The Group's non-Executive Directors are paid based on their role. Increases in NED pay are proposed

by the Board, based on relevant market benchmarks, and approved at the AGM. The Company

engaged an external reward consultant (Korn Ferry) to conduct an independent market benchmark

for NED salaries in December 2019. A proposal to amend the NED remuneration was discussed

during 2020. Considering the business environment and results, the Remuneration Committee agreed

145

to postpone the decision until 2021. In 2021 the changes approved by the Remuneration Committee

have entered into force on 18 August and applied effective of 1 January 2021.

The changes include:

•upgrades of the levels of pay for membership and chair roles;

•elimination of the additional daily fee for any meetings or activities outside of the announced

Board calendar;

•pay related only to role – member, chairman (Board or specific committees); and

•travel, accommodation and logistics costs incurred by NEDs in relation to performance of

their duties are to remain covered or reimbursed by the Group.

Non-binding advisory vote

The Remuneration Policy is subject to an advisory vote by shareholders at the 2022 AGM.

Implementation Report

Executive Directors' remuneration

In 2021 the variable pay components (STIP and LTIP) were determined based on performance criteria

and overall business results and were approved by Remuneration Committee on 8 March 2022.

1. 2021 STIP award determination

Assessment of the STIP KPI's resulted in an overall achievement rate of 95%.

Target

Weight

Achieved

Performance measures

STIP

min

tgt

max

Result

Executive

Director

Executive

Director**

Financial performance

25%

Growth in distributable earnings per share*

<0%

25%

Operational performance

50%

NOI organic growth*

10%

12%

13%

20%

40%

Increase in retail trading densities over CPI

2.7%

10%

Maximum accepted vacancies*

10%

Maximum tenant arrears written of

0.2%

10%

Discretion of the Board**

25%

%Total achievement

100%

95%

Annual fixed salary (€ thousand)

300

TOTAL 2021 STIP to be settled

during 2022 (€ thousand)

225 (cash)

60 (free

shares)

*For specific KPIs, sliding scales and metrics were set for minimum/target/maximum level of achievement. **

Discretion of the Board split as follows: • 20% STIP awarded in cash • 5% STIP awarded in free shares (€60 thousand)

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2021 STIP

2021

Rüdiger Dany*

200

Marek Noetzel

settled in cash: 225

settled in free shares: 60

* The quantum of STIP allocation for the COO who joined the Company in July 2021 was agreed at sign-on and awarded in

March 2022 for the respective period in 2021.

2. 2021 LTIP award determination

Assessment of LTIP-related KPIs resulted in an overall achievement of 25% (applied to the annual

fixed pay):

•25% external measure: TSR comparison

•0% internal measure: three-years CAGR in distribution per share

External measure: TSR determination

On the TSR comparison, the Group ranked in the second quartile compared to selected peers (selected

and aproved by the Remuneration Committee).

Selected Peers list

TSR 2021

Atrium

53.4%

Immofinanz

37.7%

Growthpoint

31.8%

S Immo

31.4%

Carmila

26.6%

Mercialys

23.5%

NEPI Rockcastle

19.4%

Klepierre

18.4%

CA Immo

16.2%

EPP

12.2%

URW

-4.6%

Citycon

-5.3%

Globalworth

-13.6%

Deutsche Euroshop

-20.5%

Min

-20.5%

Third Quartile Marker

-0.38%

Second Quartile Marker

18.87%

First Quartile Marker

30.16%

Max

53.4%

Internal measure: CAGR in distribution per share determination

The internal measure is the three-year compound annual growth rate (based on NEPI's history pre-

merger and NEPI Rockcastle subsequently) of distributable earnings per share relative to an inflation-

linked benchmark. The result, as a percentage, is multiplied with an internal hurdle factor that is 20.

Determination formula results in 0% award: [3yrs CAGR in distribution per share -

(Inflation+1pp)] * internal factor

•3yrs CAGR in distribution per share (as of 2021): below 0 (negative)*

•Inflation: 5.3%+ 1% = 6.3%

•Internal hurdle factor is 20

* The distribution per share growths in 2020 and 2021 were both negative (-31.8% in 2020 and -10.4% in 2021).

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€ thousand

All amounts in number of shares

All amounts in € thousand

Rüdiger Dany

137,945*

800*

Marek Noetzel

12,932

* The quantum of allocation of shares to the COO was agreed at sign-on as an extraordinary one-off award of

137,945 shares (the equivalent of €800 thousand) to be implemented in March-April 2022.

3. Min and Max variable pay opportunity

Min and Max STIP

opportunity (0-170% of annual

fixed pay)

Min and Max LTIP opportunity

(0-270% of annual fixed pay)

The minimum STIP award is zero if

overall cumulative achievement of KPIs

is below 75%

The maximum STIP award can be up to

170% should all KPIs be achieved at

max as per the sliding scales and the

Board discretion granted

The minimum LTIP allocation is zero if:

•three-years CAGR in distribution per share is negative or lower than

inflation + 1pp

•the Group falls in 3rd of 4th Quartille in TSR comparison to peers.

The maximum LTIP allocation could be up to 270% (internal limit set, as

theoretically the determination algorithm can lead to unlimited % should the

three-years CAGR in distribution per share be very high) of annual fixed pay,

driven by high three-years CAGR in distribution per share and the Group

being ranked in the 1st Quartille in TSR comparison to peers.

Considering the negative growth in distribution in 2020 (-31.8%) and

respectively 2021 (-10.4%), plus the increase in inflation in the same period,

the three-years CAGR in distribution per share is expected to remain negative

over the short- and medium-term and hence lead to an LTIP oportunity of up

to 50% of annual fix pay, derived exclusively from the Group TSR positioning

versus peers.

Executive Director's shareholding

Executive Directors or entities in which they have an indirect beneficial interest held the following

numbers of NEPI Rockcastle shares at 31 December 2021:

Names

Number of shares unvested or

subject to a share scheme loan

Shares subject to

selling restrictions

Freehold

Total

Alex Morar*

299,587

1,113,608

1,413,195

Mirela Covasa*

214,053

345,578

559,631

Marek Noetzel

182,353

71,241

253,594

*As a result of the exit arrangements signed with the former CEO and CFO during 2021, the Company

transferred to them 299,587 shares and 214,053 shares respectively, representing the total number of

unvested shares as at exit date from the previous 2017 – 2021 awards. The shares have an associated

selling restriction correlated with the initial vesting of each tranche. The Group accounted for the

related expense associated with this transfer in the 2021 financial statements.

Single figure remuneration

The total remuneration and detail for Executive Directors for 2021 and 2020 is reflected in the table

below. This disclosure is aligned to the King IV recommended total single figure disclosures of

remuneration.

148

All amounts in € thousand

Executive

Directors

Year

Base salary

STIP

LTIP - no of shares

LTIP

Total single figure of

remuneration*

Alex Morar

2021

600

2020

600

29,896

150

810

2019

580

690

185,634

1,371

2,641

2018

480

344

111,701

873

1,698

Mirela Covasa

2021

400

2020

400

19,264

100

540

2019

395

475

123,756

914

1,784

2018

370

266

89,310

698

1,334

Marek Noetzel

2021**

300

225

12,932

600

2020

300

14,448

405

2019

293

313

49,286

364

970

2018

247

169

42,736

334

769

Rudiger Dany

2021**

400

200

137,945

800

1,400

* All figures represent total cost to Company and any taxes and social contributions due either by the Group or the

Directors are included in the respective amounts.

** The share price for the LTIP of 2021 is €5.7994 and has been determined as 90-days VWAP from 8 March 2022 (date of

the approval by the Remuneration Committee).

149

Non-Executive Directors' fees

Non-Executive Directors' remuneration for 2021 have changed effective 1 January 2021, based on

external international market benchmark analysis. Changes have been approved by Remuneration

Committee and the Board and approved at AGM. The level of remuneration is presented below:

150

All amounts in €

(1) Robert Emslie retired effective 18 August 2021.

(2) George Aase became Chairman of the Board of Directors effective 18 August 2021.

(3) Andreas Klingen becomes Lead Independent effective 1 January 2021

(4) Ana Maria Mihaescu and Jonathan Lurie became Indipendent non-Executive Directors effective 18 August 2021.

Comparison of 2021 fees versus 2020 fees

The change in non-Executive remuneration fees was driven by considering:

•No changes and review had been made since 2017;

•The market (European, South African and International) benchmark report undertaken by

the Group with international top tier consulting firm in 2019 positioned the remuneration

level below the median of the market; and

•As per the market benchmark the aditional fees for Board meetings and other activities were

not considered a best practice - hence all aditional fees have been removed from the

remuneration structure. The new framework of remuneration was build only on membership/

chairman level.

Actual

Member/

Chairman

Annual

remuneration

Annual

remuneration

approved on 18

August 2021*

Board of Directors

Member

35,000

48,000

Board of Directors

Chairman

70,000

72,000

Audit Committee

Member

10,000

11,000

Audit Committee

Chairman

16,000

18,000

Risk and Compliance Committee

Member

7,000

9,000

Risk and Compliance Committee

Chairman

10,000

15,000

Investment Committee

Member

10,000

11,000

Investment Committee

Chairman

16,000

18,000

Remuneration Committee

Member

6,500

8,000

Remuneration Committee

Chairman

10,000

12,000

Nomination Committee

Member

5,000

7,000

Nomination Committee

Chairman

8,000

11,000

151

Sustainability Committee

Member

4,000

7,000

Sustainability Committee

Chairman

5,000

11,000

*applicable as of 1 January 2021

152

Sustainability report

Statement from the CEO

Whilst 2021 was still a challenging year for the world and the real estate industry made no exception,

the Group found its way through the pandemic, managing to preserve the value of its portfolio, and at

the same time supporting the business, environment and communities connected to its assets.

The Company is a firm supporter of the idea that real estate (and retail more specifically) should

contribute to a better environment and community, as well as provide the necessary set-up for healthy

social interaction. Emerging threats, such as climate change, are actively managed by NEPI

Rockcastle, while opportunities, such as ensuring all locations are accessible by public transportation

and electric vehicle friendly, or differentiating our portfolio based on green and healthy assets, are

seized.

The Group is committed to continuous improvement based on a vision of long-term sustainability

structured on four key pillars:

1.Responsibly together for sustainable resource management

2.Sustainability through green and healthy buildings

3.Community engagement

4.People and business integrity

Sustainability remained a top priority for the organisation during 2021, with the Board of Directors

steering the sustainability efforts, and the executive management team actively managing them on a

regular basis.

The progress achieved over the last years enabled the Group to establish a strong Green Finance

Framework in 2020 aimed at enlarging the investor base and accessing green labelled funding.

Subsequently, the Company (through one of its subsidiaries) issued two tranches of green bonds (one

in 2020 and one in early 2022), concluded a green loan in 2021, and linked all existing revolving

credit facilities to its ESG performance.

Sustainability entails a forward-looking view, for example, launching initiatives such as on-site energy

production and making buildings part of the green spaces within the urban areas in which they are

located. Of course, enabling the community to make use of these facilities, not only for shopping, but

also for socialising, education and health care, is the way the Group brings its contribution to the

society wellbeing.

153

We value the achievements accomplished by NEPI Rockcastle and remain confident that our focus on

sustainable operations is aligned with the long-term interest of all stakeholders, while creating new

opportunities.

Executive Summary

The Group’s commitment to sustainability is illustrated in its high share of BREEAM certified

buildings, in the increased use of energy from certified renewable sources across the Group, with year-

on-year remarkable progress and in the continuation of energy efficiency initiatives. Based on

concerted efforts, the Group managed to decrease in 2021 its carbon footprint by 24%, in line with its

overarching targeting of net zero emissions from operations.

EPRA Sustainability Best Practices Recommendations (sBPR) - Indicators

Organisational boundaries

NEPI Rockcastle’s environmental data reporting covers 56 income producing properties, comprising

of 52 retail properties, 2 office buildings and 2 industrial properties. The Group reports environmental

data on the properties over which it has control, while joint ventures are not covered. For more

details, please see Property Schedule (page 281).

154

Control is understood as the legal capacity to monitor and make decisions on supply chain

management, utilities consumption and facilities management. This excludes any area of the

properties over which the tenant has full control in terms of contracting, monitoring consumption and

payment, however, the Group is making efforts to collect also data for tenant – fully controlled areas,

for a broader perspective on its environmental impacts.

Coverage

The Group includes in this report, for each environmental aspects, data related to all the properties

within its control, as described in organisational boundaries.

The Group has made a concerted effort to collect information on utilities and waste consumption at its

properties, including for tenant fully controlled areas. Some tenant-controlled areas are still left out,

due to insufficient data quality or information. The Group plans to continue to increase the coverage

of the information reported, thus demonstrating commitment to sustainability, environmental and

energy performance, both on the portfolio and corporate level. In the meantime, for calculation of

intensity factors, those areas fully controlled by tenants, where the Group was not yet able to have

reliable data, were excluded both from consumption and from the gross floor area (GFA).

Estimations

NEPI Rockcastle managed to collect data for tenants fully controlled areas, however in some cases,

this data is incomplete. In these casses, the Group assumed that energy consumed comes from non-

renewable energy.

Third-Party Assurance

NEPI Rockcastle has not sought out third-party assurance for this report.

Boundaries

NEPI Rockcastle reports on the properties over which it has operational control, on a whole building

basis.

The reported data does not cover the Group’s corporate offices, as these were not considered to have a

material impact.

Normalisation

NEPI Rockcastle has normalised its data by using floor area and number of visitors as denominators.

This means that, for example, energy intensity is calculated per m2 and per 1.000 visitors. The

properties sold in 2020 and 2021 (Romanian Office portfolio and two retail Serbian properties) were

excluded from the intensity calculation.

Segmentation

Data on environmental and energy performance has been broken down based on property type, as

well as the nine different countries where NEPI Rockcastle operates.

Narrative on performance

Explanatory details on past performance and planned initiatives are included in the respective

sections of this Sustainability report.

Location EPRA sustainability performance

EPRA Sustainability Performance can be found in the Factbook attached to this report. The EPRA

index (to be found in Framework Alignment section) gives detailed information on the location of

each reported item.

Reporting period

The reporting period covered by this report is 1 January 2021 – 31 December 2021. Comparative data

on a gross basis and a like-for-like basis for the two most recent years is included for each type of

utility.

155

Materiality

The sustainability strategy has been determined based on the materiality analysis performed following

interactions with key stakeholders. Key issues are presented in this report, in the introduction section,

and then addressed in each respective chapter.

Sustainable Financing

In 2020, NEPI Rockcastle implemented a Green Finance Framework, prepared in accordance with the

International Capital Markets Association Green Bond Principles 2018 and Loan Market Association

Green Loan Principles 2020. The proceeds from the bond issuance and/or loans concluded under the

Green Finance Framework are allocated to finance and/or refinance existing and/or future projects

which would improve the environmental performance of the Group’s portfolio.

According to the Green Finance Framework, the evaluation and selection process observes the criteria

detailed in the table below:

Eligible

category

Eligible criteria

Environmental benefits

Green buildings

Acquisition, construction or refurbishment of buildings which meet

recognised standards for best practices in energy and resource

efficiency and low-GHG emissions, such as:

•BREEAM (Very Good and above);

•LEED (Gold and above); and

•EDGE.

Energy savings

GHG emissions decrease

Water savings

Energy efficiency

•Renovation or refurbishment of existing buildings not

included under the “green building” category, delivering a (1)

minimum 30% reduction in carbon emissions intensity or (2)

two letter grade improvements according to local Energy

Performance Certiﬁcate, against the baseline performance of

the building, before the renovation; and

•Individual measures on buildings reducing energy use and/

or carbon emissions - installation of solar photovoltaic

systems.

Energy savings

GHG emissions decrease

€1 billion green bonds have been issued under the Green Finance Framework (€500 million as of

December 2021, and another €500 million in January 2022). Moreover, a green loan agreement was

concluded with the IFC, undertaking that all proceeds will be allocated as per the Green Finance

Framework. The latest Green Bond Report can be found at https://nepirockcastle.com/wp-content/

uploads/2021/07/Green-Bond-Report.pdf.

Separately from the Green Finance Framework, but in line with the Company’s policy for sustainable

business, all available revolving credit facilities are linked to the sustainability rating provided by

Sustainalytics.

156

LANDSCAPE

PORTFOLIO

The full description of NEPI Rockcastle portfolio is included in the Factbook and also detailed in the

Annual Report on page 281.

The Sustainability Committee, comprising Executive and non-Executive Directors of the Board of

Directors, actively oversees the development and implementation of durable, long-lasting policies, and

monitors the progress made by the Company. The Committee informs the Board on the progress

made and ensures that NEPI Rockcastle is a responsible corporate citizen, and that the long-term

strategy enables growth in a sustainable and responsible manner, considering the risks and

opportunities associated with all environmental, social and governance matters, including climate

change.

With growing concerns over a wide range of ESG topics, the landscape in which NEPI Rockcastle

operates is continuously developing. Market trends and regulations support the real estate sector in

contributing to the United Nations Sustainable Development Goals (UN SDGs). The UN SDGs that the

Group’s initiatives are contributing to, are listed in the Framework Alignment chapter of this report.

Risks and opportunities

Managing risks and capitalising on opportunities makes NEPI Rockcastle a healthy and sustainable

business. As companies are operating amid a climate crisis, and with a growing concern over ESG

matters, the traditional financial risk management approach and the concept of financial value needs

to be enhanced with relevant environment, social and governance aspects. The Annual Report and

Financial Statements underline the Company’s sound risk management approach, and management’s

commitment to delivering the sustainability strategy. The sustainability strategy execution and

progress are monitored at the highest level of executive management, i.e., by the CFO, as the

Executive Director part of Sustainability Committee, and by the CEO.

This section highlights ESG concerns, related risks, and how these reshape the industry.

ESG risks include those matters related to climate change impact, environmental impact, health and

safety, human rights, fair workforce management, compliance with good business practices, laws and

regulations. Climate change and environmental risks can be physical, both acute and chronic, as well

as transitional, caused by evolving policies, technologies and behavioural changes. The climate change

potential impact on the Group’s assets will depend on specifics such as the asset’s location, exposure,

magnitude of the change. Depending on these, some of which being unforeseeable matters, the impact

of the change will be different on each asset. The Group believes that when ESG risks are monitored

and managed well, the Company can safeguard financial performance and practice resilience. The

table below includes an overview of the risks and opportunities monitored and addressed by NEPI

Rockcastle within an ESG context.

157

Social and Governance risks and opportunities are addressed in detail in the Corporate Governance

and Risk Management sections of the Annual Report, while the social risks are also analysed in pillars

three and four of the Group’s sustainability strategy. A detailed description of the environmental risks

and opportunities in the Group’s context is further described herein.

Climate change: With increasing greenhouse gases discharge into the atmosphere, the climate

changes. This causes climate shocks and stressors that buildings have to withstand. If a building

cannot cope with these changes, such as maintaining a comfortable indoor temperature or in case of

damage to the building, the value of the asset may decrease. Developers and owners of assets can

differentiate by offering resilient properties. Climate change also raises the transitional risks, i.e.,

those measures that the Company needs to take and those investments it needs to do, to cope with

climate change and emerging regulatory updates. Climate change risks are further developed and

analysed in a dedicated section in this report, in line with Task Force on Climate Related Financial

Disclosure ('TCFD') recommendations.

Resource use and depletion: The real estate sector traditionally demands significant natural

resources. Amongst other things, the scarcity of resources, and the growth of population/market

pressures/local conditions, may increase prices. By developing properties that require fewer raw

materials and more renewable resources, a competitive advantage can be obtained.

Air pollution: The burning of fossil fuels and the use of harmful substances in an irresponsible

manner causes air pollution. This has a negative effect on the health of people and the planet.

Ensuring air pollution is kept to a manageable level limits the negative impact on all stakeholders and

improves a company’s reputation.

158

Waste pollution: The improper disposal of waste affects the health and wellbeing of the community

and the environment.

Inefficient circular economy: Reusing and recycling lowers the demand for raw materials,

reduces embodied carbon and may even generate cost benefits. Implementation of a circular approach

may, in the long-term, decrease carbon emissions and address climate change.

Loss of biodiversity: The ecosystem relies on rich biodiversity. Poor biodiversity in the community

makes the environment less habitable. Ensuring assets do not cause a loss of biodiversity or even

enrich it, creates a healthier community and improved reputation.

Deforestation: Rich vegetation is essential to create biodiversity and sequester carbon out of the

atmosphere. Reforesting areas/protecting existing flora has multiple local and global benefits.

Natural disasters due to climate change: Climate change and scarcity of land pushes the sector

into areas where nature can damage the integrity of an asset. Monitoring the value at risk is essential

for investors, and managing it well can differentiate them from others.

Incompliance with environmental legislation: With growing environmental concerns, laws and

regulations are put in place to address this issue. Insufficient monitoring or failing to prepare in due

time may lead to significant non-compliance, fines and penalties.

While some of the risks above have a higher potential impact on the Group’s assets and operations (for

example, climate change, especially from the transitional risk point of view, the resources scarcity

within raising markets volatility, waste management and circularity), there are other risks which are

rated as low in the Company’s context and locations it operates (for example, loss of biodiversity and

natural disasters).

The environmental, social and governance topics all play a role in how NEPI Rockcastle operates. This

sustainability report communicates management’s approach for several key topics. Environmental

topics are mainly addressed in the section ‘Pillar one – Responsibly together for sustainable resource

management’. Pillar two – Sustainability through green and healthy buildings’ addresses both

environmental and social topics, as well as how these are interlinked. More specific social issues are

159

addressed further on in Pillar three – ‘Community engagement’. Pillar four – ‘People and business

integrity’ describes the key governance areas and workforce management approach.

BEST PRACTICE APPROACH

An essential instrument for NEPI Rockcastle, to ensure it remains a front runner in the market, is to

align and use leading ESG frameworks and adopt best practices. The table below shows:

•best practices implemented by the Company, with a further commitment to continue

developing, until full implementation; and

•organisations with which the Company has established relations or common goals for

sustainable operations.

Framework name

How it adds value to NEPI Rockcastle

Recommendations, disclosure best practices

Global Reporting Initiative

(GRI)

Provides guidance on how to communicate impacts on issues such as climate

change, human rights and corruption. It is the most widely adopted standard on

ESG reporting and helps NEPI Rockcastle to provide its stakeholders with a

sustainability report that communicates relevant topics to them.

The 2021 Annual Report is prepared in accordance with the GRI Standards:

Comprehensive.

EPRA Sustainability Best

Practices Recommendations

Guidelines

EPRA has established Best Practice Recommendation Guidelines ('EPRA BPR'),

which focus on the key measures of most relevance to investors. These

recommendations aim to give financial statements of public real estate

companies more clarity, more transparency and comparability across European

peers. The SBPRs provide a consistent way of measuring sustainability

performance. Through their European focus and alignment to frameworks such

as the GRI and TCFD, they support the Group speak a common language.

Carbon Risk Real Estate

Monitor (CRREM)

CRREM gives clear science-based decarbonisation and energy reduction

pathways for each country and asset class. It helps NEPI Rockcastle set targets

for each asset and Paris-align with the 1.5-degree scenario. The Group strives to

adhere to the pathways and increase the percentage of Paris-aligned buildings.

NEPI Rockcastle adopted CRREM in 2021 to track portfolio performance with

this widely adopted tool.

EU taxonomy

This EU classification system gives a clear definition of what is sustainable real

estate. With the goal to comply with these requirements, the Group can develop

and manage properties that responsible investors can invest in. The percentage of

EU taxonomy compliant assets should increase each year, to ultimately allow the

complete portfolio being financed based on green financial instruments, such as

green bonds.

Task Force on Climate

Related Financial Disclosure

(TCFD)

NEPI Rockcastle has covered several of the TCFD recommended disclosures. The

table can be found in “Framework Alignment” under TCFD. Further initiatives

meant to improve the disclosure based on the TCFD recommendations, are

currently prioritised by the Company.

Assessments

Sustainalytics

In July 2021, Sustainalytics, a leading independent global provider of ESG and

corporate governance research and ratings, reaffirmed NEPI Rockcastle’s ESG

Risk rating as “Low Risk”. The Company’s ESG Risk Rating improved to 11.4/100

from 12.5/100 at the end of 2021. The rating positions NEPI Rockcastle among

the top ten rated companies in its sub-industry, Real Estate Management

Companies.

Global Real Estate

Sustainability Benchmark

(GRESB)

GRESB’s main objective is to challenge real estate companies to achieve their

highest environmental and social performance. NEPI Rockcastle participates

annually in the GRESB assessment.

Carbon disclosure project

(CDP)

CDP runs the global disclosure system for investors, companies, cities, states and

regions to manage their environmental impacts.

Partnerships and adherences

160

European Bank for

Reconstruction and

Development (EBRD)

The EBRD invests in private sector projects related to property and adjacent

markets. Through its involvement in property and related markets, the EBRD

aims to redress the fundamental undersupply of modern, high-quality, energy

efficient commercial, logistics and residential real estate. One of the main

investment criteria for EBRD is the compliance and consistency of the projects

with the EBRD’s overall investment policy. Moreover, as an issuer of financial

instruments in which EBRD is investing, NEPI Rockcastle undertakes to comply

with ESG criteria as required by the EBRD standards.

International Finance

Corporation (IFC)

IFC supports investments and projects in the real estate sector and provides

advisory services regarding employment, consumer spending and tax revenues.

One of the main investment criteria for IFC is the compliance and consistency of

the projects with the IFC investment policy and its environmental and safety

standards.

United Nations Sustainable

Development Goals (UN

SDGs)

The Sustainable Development Goals (SDGs) were established by the United

Nations in 2015 as the new global sustainable development agenda for 2030.

These goals are achieved effectively when all countries, as well as the public and

private sector, are striving towards the same objectives. NEPI Rockcastle uses the

SDGs as a foundation and reference for their more specific ESG approach. The

Group also actively urges its peers to adopt the SDGs.

US Green Building Council

NEPI Rockcastle initiated the procedures for adhering to the criteria required to

be a member of the USGBC in 2020. The procedures were finalised in early

January 2021, the Company will continue this partnership through 2022 as well.

USGBC is one of the representative non-profit organisations that support the

development of prosperous, healthy and resilient communities throughout the

transformation of the built environment. The main objective of USGBC is to

transform the way buildings and communities are designed, built, and operated,

enabling a socially responsible, healthy, and prosperous environment that

improves the quality of life.

Within the USGBC, NEPI Rockcastle, through its Gold Member status,

consolidates its leading position in the real estate retail industry by transforming

properties in the field of sustainable construction development, thus reducing the

impact on the environment.

European Council of

Shopping Places (ECSP)

The European Council of Shopping Places is the European retail association that

provides a unified voice for an industry that designs, creates, finances, develops

and manages places anchored in the retail area.

Measurabl

Measurabl is one of the world’s widely adopted ESG data management platforms

for commercial real estate. The platform provides advanced features such as

automated utility data collection, building and portfolio performance

benchmarking and advanced reporting functionalities. The platform is used by

NEPI Rockcastle to track environmental data.

Safe Asset Group and Bureau

Veritas

Safe Asset Group and Bureau Veritas are independent companies that accredit

the safety of shopping centres. They have certified shopping centres as compliant

with Covid-19 prevention rules, which means they are safe to visit and that

proper measures have been implemented to ensure such safety.

Indexes

FTSE4GOOD

Created by the global index provider FTSE Russell, the FTSE4Good Index Series

is designed to measure the performance of companies demonstrating strong ESG

practices. In the indicative index weight data prepared as of 2021, NEPI

Rockcastle was reflected as a constituent, demonstrating strong ESG

commitment.

(Source: Bloomberg Index Constituents, 28.02.2022)

COVID-19

The Covid-19 pandemic impacted significantly the retail sector, the Company’s main asset class, and it

tested the resilience of companies operating in this sector. An important objective of this annual

sustainability report is to show the continued improvement of NEPI Rockcastle’s ESG performance.

Due to the disruption and business interruption caused by the pandemic, it may sometimes be

difficult to evaluate the ESG performance on a like-for-like basis. This section is meant to give the

reader insights into the evolution of restrictions in the Group’s portfolio across time, to help explain

why a trend in resource efficiency might be challenging to detect for 2020 and 2021.

161

The table below shows the restrictions on the retail sector for each country in the Group’s portfolio.

The measures in each country were slightly different, but in general, the restrictions status can be

grouped in four different levels:

•Fully operational: all shops were open, but it should be noted that post-outbreak, the number

of visitors were lower compared to pre-outbreak even though there were no restrictions (or

restrictions referred to access based on a green certificate, in certain countries);

•Limited restrictions, where a maximum number of visitors were allowed in establishments

and/or social distancing reduced the capacity of certain businesses;

•Entertainment and restaurants closed, except for takeout and, in some cases terraces; and

•All non-essential shops closed: mainly supermarkets and pharmacies remained open.

STRATEGY

The sustainability strategy relevance depends on properly understanding the landscape in which the

Group operates and the material issues within this landscape. Maintaining a permanent and open

dialogue with the stakeholders is essential to refine and update the understanding of these material

issues, therefore various types of interactions are in place.

NEPI Rockcastle’s key stakeholders include employees, shareholders, contractors, tenants, visitors,

communities, financing partners, analysts, investors, financial institutions, regulatory and control

authorities, local authorities, mass media, non-governmental organisations. Communication with

stakeholders is based on integrity, objectivity, and transparency. Please refer to the Corporate

Governance section for more information on how the Company governs this process. The continuous

stakeholder engagement and the updated materiality analysis form the basis of the Group’s ESG

priorities.

The Group has clustered its material issues into four pillars, thereby giving focus and direction to

specific ESG issues where it can contribute most effectively.

162

Pillar one –

Responsibly

together for

sustainable resource

management

Pillar two -

Sustainability through

green and healthy

buildings

Pillar three -

Community

engagement

Pillar four - People and

business integrity

Environmental aspects

Environmental and Social

aspects

Social aspects

Governance aspects

Focusses on responsible

procurement and

efficient use of

resources, reducing the

negative impact on the

environment and

climate

Aims to make every asset in

the portfolio green and

healthy through recognised

building certifications

which address both

environmental and social

aspects

Having assets in the hearts

of many cities, the Group

has a significant impact on

the well-being of the

communities

Only with good governance

and business ethics, can

sustainability be addressed

successfully

Most importantly, the Group recognizes that it cannot address all issues at the same time, therefore it

has prioritised and presented below the key items (medium and high importance) which will be in

focus in the short- and medium-term.

163

Pillar ONE – Responsibly Together for Sustainable resource management

2021 KEY PERFORMANCE INDICATORS

Total electricity: 476,163 MWh

Gas: 93,004 MWh

District heating: 58,342 MWh

Share of renewable electricity: 66%

Scope 1+2: -34%

Scope 3: -17%

Water: 1,542,718m3

Waste: 23,152 MT

Recycled: 39%

Objectives and targets

The development and operation of buildings require a considerable use of resources, potentially

having a high impact on the environment. The Group developed the environmental policy and the

sustainable procurement policy, to address the Group’s material issues in this respect.

The Group established ambitious targets, in line with the UN SDGs, which it monitors and revises

regularly, in order to assess progress and realign ambition level. While being a supporter of all the

seventeen UN SDGs, the below reflects how the goals and targets are aligned with the most relevant

ones.

Goals

Targets

UN SDGs

Year

KPIs

Reduce primary energy

consumption, greenhouse gas

emissions, potable water demand,

non-recycled waste generation,

and pollution

Increase energy efficiency by 20%

12, 13

2024

% MWh LFL

% energy intensity LFL

Assets to produce renewable

energy for own consumption

7, 13

2030

on-site renewable production

capacity

Reach a waste recycling rate of

60% from operations

2025

waste recycled/total % of recycled

waste per m2

% of recycled waste per visitor

Achieve zero waste to landfill

from operations

2025

waste to landfill

Decrease potable water

consumption by 15%

2024

% water consumption LFL

% water intensity LFL

Reduce emissions from

operations by 70%

2030

operations carbon footprint

Reduce embodied emissions from

new constructions by 30%

2030

construction carbon footprint

The Company established 2019 as baseline year for assessing the progress on the above targets. This

was chosen as a representative year, before the Covid-19 pandemic impact tweaked some of the

figures.

In 2021, the Group:

•scoped in and defined more precisely some targets, i.e., to cover either operations or

development processes. As there are different material issues and a different approach in

operating versus in developing a property, different targets need to be set up and different

types of measures need to be implemented.

•revised the timeline and the ambition level for the targets maturing in 2022. Due to the

Covid-19 pandemic and temporary reduction in operations (including restrictions on the

operations of certain types of businesses), as well as decrease of the footfall in some periods,

the Company cannot reliably separate the effects of these, from the resource consumption

reduction based on the efficiency measures implemented. In this context, the Group decided

to move the targets set for 2022 to 2024 or 2025, while at the same time revising the ambition

level, in line with the sustainability strategy and industry.

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•revised the ambition level for the long-term targets maturing in 2030, in line with best-in-

class peers, while still reflecting the Group’s context, markets, capabilities and portfolio. The

long-term targets have been defined in 2020 to reflect the commitment to address climate

change risks and opportunities. Starting 2021 NEPI Rockcastle is also implementing a regular

process of reassessment versus markets and internal progress, to ensure the targets remain

relevant, achievable and sufficiently ambitious.

Management Approach

Initiatives

Sustainable resource management

With the clear vision of improving the long-term sustainability of its operations, the Group continued

to invest in the sustainable development of its portfolio, in clean and sustainable technologies,

adopted policies that address environmental and social challenges, and engaged in more proactive

stakeholder discussions.

To achieve the targets set in Pillar one, NEPI Rockcastle continued to strive for excellence in its

operations and promoted the initiatives launched in 2018 and 2019, while adding more to the list.

Implementation of the Environmental Policy and the Sustainable Procurement Policy

Initiated in 2019, based on best practices review and various consultations with relevant stakeholders,

the Environmental Policy and Sustainable Procurement Policy were defined at Group level. The

Environmental Policy deﬁnes the Group’s commitment to achieve effective environmental

management, ensuring adequate risk management, cost savings, innovation, proﬁt, and social

responsibility. The Group encourages its personnel and the rest of the stakeholders to embrace the

4Rs principle:

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The Sustainable Procurement Policy was designed to ensure that the Group can positively inﬂuence its

upstream value chain and that major suppliers implement aligned sustainable principles in their line

of business.

The Group values the following principles of sustainable procurement, with a target of full

implementation by 2022:

•choosing products and services with a lower environmental impact;

•making sure that procurement is approached in an ethical manner;

•reasonably reviewing that major suppliers are aware of and comply with key sustainability

principles, in order to understand the impact of their products on environment and

communities;

•implementing new strategies to avoid unnecessary consumption and proactively managing

demand; and

•encouraging innovation in sustainable products and services.

Energy

Electricity and Gas consumption

NEPI Rockcastle’s largest environmental impact in 2021 derived from the energy consumption in its

buildings, therefore, one of the highest priorities is to increase energy efficiency in its operational

properties.

Close monitoring of energy consumption, enables the following:

•assess progress versus targets and long-term sustainability strategy;

•build awareness on consumption and trends; and

•constant benchmarking and target assessment.

During 2021, the Group continued to implement the planned measures envisaged to reduce energy

consumption. In anticipation of the measures implemented by national authorities within the

pandemic context, the Group implemented new technologies to intelligently modulate electricity

consumption, depending on the outside temperature and footfall, respectively.

The Group launched in 2021, in its Polish portfolio, the cogeneration initiative, meant to optimise

resource consumption and decrease the carbon footprint in operation. Cogeneration, also known as

combined heat and power, is a highly efficient process that generates electricity and heat

simultaneously. By utilising the exhaust energy from gas turbines, steam can be generated in a heat

exchanger which can then be used in several applications, all with no additional fuel consumption.

Using gas as fuel to simultaneously generate heat and electricity within a single unit, is more efficient

and cost-effective than traditional power production. The pilot is under implementation in Platan

Shopping Centre and is expected to have a positive impact on the property’s carbon footprint.

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Reduction of energy consumption

Rationalising consumption of resources and increasing energy efficiency are key objectives in the

Group’s strategy. The Group continued to increase the energy efficiency in its portfolio, reduce

consumption and, in addition, work towards building on-site renewable electricity production

capabilities. The Group increased and will continue to increase the use of energy from renewable

sources. Endorsed by the Board of Directors, in 2020 the Group decided to accelerate its target that

50% from its energy comes from renewable sources. Therefore, starting August 2020, the Group’s

aggregate energy consumption included 50% consumption from renewable sources, as confirmed by

the energy origin certificates. Based on this approach, the initial target has already been met in 2020

and 2021. The Group will continue to increase the use of energy from renewable sources, in line with

its carbon neutrality objectives.

For energy consumption/reduction, renewable energy and energy intensity figures, please refer to the

Factbook.

Water and effluents

Interactions with water as a shared resource

NEPI Rockcastle properties are connected to the public water and sewage networks. The main water

consumers in the Group’s properties are the food processors and its visitors.

Prevention of water waste, careful monitoring of consumption, leak detection and signalling, are the

main measures integrated into the properties.

By continuing the implementation of the measures proposed in previous years, as well as

implementing additional actions, the Company gets closer to meeting its proposed targets. The

following continued to be deployed:

•performing studies to check if underground water can be used instead of the conventional

system, for specific operations;

•collect rainwater and use it for irrigations, equipment cooling and other activities;

•installation of diffusers on water taps to reduce the flow;

•fitting toilet areas with water shutoff systems;

•eliminating leakage from the fire systems and HVAC, and installing leak prevention and

monitoring systems, with BMS alert sensors;

•implementing a proactive maintenance and revision schedule for the equipment; and

•performing regular water analysis to determine the risk of Legionella contamination and

ensure water quality, as well as the integrity of water distribution systems.

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Despite the Covid-19 context, the Group continued to implement technologies to intelligently conserve

water and optimise water consumption (being able to react in a timely manner to measures

implemented by national authorities, such as closing of non-essential stores and distancing

measures).

The Group is extracting water from the underground supplies in a limited number of locations, and

uses it predominantly for technical areas and equipment (i.e., cleaning, cooling towers).

Management of water discharge impact

Complementary to water consumption management, another aspect addressed by NEPI Rockcastle is

the management of the impact of water discharge.

NEPI Rockcastle’s activities are non-industrial and therefore the volume of water consumed may be

considered equal to the volume of water discharged, with a negligible difference for rainwater.

The main wastewater sources identified in the Group properties are:

•domestic wastewater from sanitary areas, offices, and showers;

•tenants’ technological wastewater from food processing areas;

•rainwater from the roofs; and

•rainwater from the vehicles parking/roads platforms.

Rigorous implementation of the Environmental Policy at Group level includes regular maintenance

programs, use of efficient equipment and strict internal procedures, to ensure that the properties are

permanently in compliance with water quality regulations:

•hydrocarbon/oil separators installed in parking areas;

•grease separators for all properties and individual grease separators for food processing

tenants;

•specific maintenance programme for the sewage system;

•separate sewage system for wastewater and rainwater; and

•water treatment plants for those properties where the used water is discharged into a natural

stream of water.

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Water bodies affected by water discharge and/or runoff

The Group’s water discharge process is not considered a high-risk pollution factor, with all properties

following the relevant laws and regulations. Due to a few cities’ technical restrictions on takeover

capacity, some NEPI Rockcastle properties are not connected to the city’s public sewage system and

discharge used waters into a natural stream of water. Strictly on and around these sites, biogenesis

does not include any plant or animal species protected by the current regulations. Even so, in these

locations the wastewater I discharged after being treated in wastewater plants, under the supervision

of environmental authorities. The Group takes responsibility for and minimises as much as possible

the effects of its activities, by constantly monitoring the water quality both before reaching the plant

and after treatment, before discharge.

For water consumption/reduction/extraction figures, please refer to the Factbook.

Waste Management

NEPI Rockcastle’s objective is to reduce the volume of waste that goes to landfill, to maximise

recycling, and enable reuse. The waste generated is managed by authorised operators in accordance

with local laws, while the Group provides space and appropriate facilities for sorting and depositing

the waste prepared for recycling.

Zero waste

The Group has defined its zero-waste strategy, and is applying strict selective collection procedures,

creating efficient flows to increase the share of recyclable waste, modernising waste sorting areas and

implementing a system of transformation of organic waste from food courts into compost. Moreover,

to promote environmentally responsible behaviours and patterns and educate tenants and visitors,

concerted campaigns have been implemented. The Group continuously engages with tenants and

business partners to encourage them to join in this initiative, build awareness and boost support.

Good outcomes for the numerous campaigns, initiatives and actions implemented over the last year

give NEPI Rockcastle the chance to build informed communities, engage multiple stakeholders, and

contribute to addressing environmental and climate issues.

To support the Group’s goal of becoming “zero waste to landfill by 2025”, at the end of 2020, the

Board of Directors approved the investment in “in-vessel composting equipment”, designed to convert

biodegradable waste into composted waste and properties in Romania and Bulgaria have already

started to use the equipment (41% of the portfolio by GLA is currently covered by such equipment).

The ‘Nature of thank you’ campaign supporting the waste management efforts, received the GOLD

Award for Best Practices in Community Involvement (Environment Category, Waste Management), a

distinction offered by the Community Index publication. Also, the 2021 Real Estate Special Award for

the Zero Waste to Landfill & Carbon Neutrality Project of the Year was awarded to the NEPI

Rockcastle Group.

For waste collection/reduction/recycling figures, please refer to the Factbook.

Environmental Compliance

The Group meets its environmental obligations and monitors compliance with applicable laws and

standards. All properties abide by the environmental laws and norms of the countries where they

operate, while compliance is monitored and endorsed by the environmental protection authorities.

NEPI Rockcastle’s partners are encouraged to send their feedback, including communications that

highlight non-compliance with environmental laws or regulations or environmental risks. During

2021, the Group has not been involved in material issues concerning environmental non-compliance.

Carbon Footprint and Climate Change

Financial, and other risks and opportunities due to climate change

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NEPI Rockcastle is aware that climate change will impact both its own operations as well as those of

its value chain partners.

Developing an action plan on climate change is a key step in addressing the challenges involved. In

line with the TCFD, the Group’s strategy is based on adopting climate-resilient activities and on

reducing the carbon emissions resulting from its operations. The Group monitors and is aware of the

climate risks and opportunities it faces and develops conscious measures to mitigate such risks, adapt

to new challenges and retain its resilience. The Group will implement necessary measures to mitigate

risks that may result in significant pollution or have a notable negative effects on protected flora or

fauna.

The Group assessed and regularly monitors climate change risks, both the physical and the

transitional ones. The climate change risks assessment is complementary to the Group-wide risk

management processes, as described in the Risk Management section of this report.

NEPI Rockcastle aims to contribute to a more sustainable environment, by reducing the carbon (CO2)

footprint of its buildings, both during construction and in operation. In 2021, the Group decreased its

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CO2 footprint by 24% compared to 2020, mainly due to the increase of renewable energy across its

portfolio.

In the scale of global emissions by economic sector, the Group's activity is generating direct emissions

mainly through energy consumption (electricity and gas) for light, heating, cooling, waste disposal and

indirect emissions from the energy consumed by tenants and transportation means used by visitors.

The Group used the methodology and calculation factors provided in Measurabl platform, and

allocates in Scope 1 gas consumption, in Scope 2 energy consumption in common areas and in Scope

3, the energy consumed by tenants. Scope 3 is currently limited, as indirect emissions in the supply

chain or those generated by transportation are not estimated.

NEPI Rockcastle mainly discharges gas emissions generated by the HVAC equipment at its properties.

Such emissions are kept under control and verified according to the law, while no incompliance with

maximum legal emissions has been reported. The Group performs regular maintenance and technical

verifications of its equipment, and it is committed to investing in new technologies that minimise

negative impacts on the environment.

For emissions figures, please refer to the Factbook.

Progress and achievements

Status of energy efficiency initiatives

The replacement of the traditional lighting sources with LED luminaires started in 2018 and

continued to progress on an annual basis. As of 31 December 2021, LED lighting is fully implemented

in 69% of the portfolio (by GLA), and partially implemented in different stages of implementation in

12% of the portfolio. Occupational lighting management and instant presence lighting management

have also been deployed. The Group is further prioritising implementation of LED lighting in its

portfolio by the end of 2023.

Renewable energy and mobility

At Group level, the partnership between Enel X and NEPI Rockcastle Romania involved the

installation of eleven JuicePump stations and fourteen other JuicePole stations, each of them allowing

the simultaneous recharging of two electric vehicles. These cover a corridor of about 1,000 kilometres

on the main roads in Romania, connecting the south, centre and west of the country.

In 2021, Tesla opened the first Supercharger station in Bucharest, in Promenada Mall. Tesla

Supercharger and Destination chargers were also implemented in other locations across the portfolio,

in Romania, Bulgaria, Poland, and the network will continue to be extended also in 2022. The first

Tesla pop-up store in Romania was opened in Promenada Mall Bucharest, where those interested

could learn more about electric cars and Tesla's mission to accelerate the world's transition to a

sustainable energy.

Green leases

The Group is working towards developing a series of green clauses to be discussed together with key

tenants. Some core environmental related clauses are already covered in the current lease agreements,

while for others the Group is preparing discussions with its tenants, to identify the common ground

regarding sustainability endeavours. These will cover:

•permission to access tenant utility data, including transparency on energy, water, and waste;

•operational parameters and energy performance targets which tenants should adhere to (for

example HVAC set point/landlord override, occupancy sensors, auxiliary HVAC hours, no use

of volatile organic compounds, installation of LEDs);

•common participation of the landlord and tenant in the activities required for obtaining and/

or maintaining the green building certification (for example recycling, green areas

maintenance, pest management);

•common effort to promote use of public means of transportation or green transportation

instead of personal vehicles (for visitors and employees).

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CRREM

CRREM is a tool used to monitor the status of NEPI Rockcastle’s standing portfolio with regards to

science-based alignment with the Paris ambitions and risks arising from carbon emissions. The tool

exposes which assets are in good shape and which need efficiency and decarbonisation interventions

to avoid stranding. The results of the internal assessment reflect that in 2021, the portfolio was 69.8%

compliant with the 1.5°C target for decarbonisation and energy efficiency pathways. The Group notes

that this is a theoretical approach, that does not factor-in the planned measures for energy efficiency

and carbon footprint reduction, however it is a good tool for analysis and prioritisation.

On an asset-level, the stranding diagrams below reflect, only for exemplification purposes, three

different assets, to show how certain assets need decarbonisation measures in the medium to long-

term, whereas others need action sooner, to comply with the decarbonisation pathway. This analysis is

meant to enable the Group to better identify and prioritise its measures for the decarbonisation

pathway.

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Pillar two - Sustainability through green and healthy buildings

Objectives and targets

Achieving sustainability through green and healthy buildings requires both short- and long-term

thinking and goal setting, in line with UN SDGs 3, 9, 11, 12, 13, 15. NEPI Rockcastle has identified the

following objectives within this pillar:

•continue the Covid-19 safe certifications throughout 2021, and onward;

•continue BREEAM In-Use buildings certification, with a minimum of “Very Good” and above;

•implement a Biodiversity Action Plan for all properties in operation by 2023, and for all

properties under development by 2025; and

•develop a Biodiversity Strategy by 2025.

Management Approach

Covid-19 vertification

NEPI Rockcastle continued its collabouration with The SAFE Asset Group and Bureau Veritas,

independent organisations that verify and confirm the safety of shopping centres. Both use clear

standards to verify compliance with Covid-19 prevention rules. The Group decided to continue this

certification, to ensure the safety of tenants and shoppers alike, and show that they are welcomed into

a safe and controlled space.

BREEAM Certification

The Group is constantly striving to improve the quality of its buildings, invest in sustainable

construction both from a structural and operational point of view, and increase the number of

assessed and certified properties. NEPI Rockcastle uses BREEAM methodology to assess, rate and

certify the sustainability of its buildings. BREEAM evaluates multiple areas including energy and

water use, health and wellbeing, pollution, transport, materials, waste, ecology, and management

processes.

For certifications figures please refer to the Factbook.

Biodiversity and ecology

NEPI Rockcastle aims to have a unitary approach towards the conservation and improvement of

biodiversity and minimising its negative impact.

Despite the urban character of its buildings, the Group sees opportunities for its properties to play a

role in improving both flora and fauna in their areas. The Group’s buildings may become hubs for

biodiversity in the communities where they are located. An example of this is the bee-friendly

shopping centres, part of the Save the Bees, Together campaign. In 2021, Karolinka Shopping Centre

(Poland) joined the three already bee-friendly shopping centres, Galeria Tomaszow, Galeria Wołomin

and Focus Mall Piotrkow Trybunalski, by inaugurating the fourth apiary. This apiary consists of

eighteen beehives which are home to 900,000 bees. This initiative will become a part of the

Biodiversity Strategy.

In its pest control, NEPI Rockcastle has started integrated monitoring, as well as using non-toxic

preventive measures. These are used to proactively manage and minimise pest issues, in line with

local legislation and ecological assessments.

The Group requires its suppliers to use cleaning products compliant with local legislation in each

jurisdiction.

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Initiatives

Covid-19 related

The most pressing issue regarding health and safety in 2021 continued to be the ongoing Covid-19

crisis. To safely manage its impact, the Group prepared and implemented the following:

•close access control performed to comply with local authorities' requirements regarding the

maximum allowed capacity;

•temperature check devices were installed at main access points in all shopping centres;

•where technically possible, shopping centres used natural ventilation, following World Health

Organisation recommendations;

•all shops were veriﬁed in terms of cleaning and disinfecting procedures;

•staff inside the shopping centres wear masks at all times;

•in accordance with local authorities’ safety norms and procedures, staff’s state of health was

regularly checked;

•sanitising dispensers were installed in key areas;

•handles and other frequently touched surfaces were covered with nano septic foil or

disinfected more frequently;

•dedicated waste bins for used gloves and masks were installed at exit points;

•distancing stickers were installed in relevant areas; and

•Covid-19 safety signalling, aiming to increase visitors’ awareness of risks and safety measures,

were displayed in visible areas.

In addition to the Covid-19 related measures, NEPI Rockcastle has implemented proﬁcient health and

safety measures across all the properties:

•safety audits performed regularly and supervised by specialised independent companies,

ensuring that NEPI Rockcastle's properties are safe shopping destinations;

•emergency procedures tested in real-life simulations (evacuation drills performed regularly, at

least annually);

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•good-quality materials with low emissions of volatile organic compounds and low content of

harmful substances are used. Product safety data sheets are considered for a large range of

products: ﬁnishing materials, paints, adhesives, ﬂoor coverings, carpets and other largely

utilised products; and

•clean air is constantly available in the Group's buildings. Ventilation ducts are checked

regularly and ﬁlters are replaced at least twice a year, while the risk of Legionella disease is

evaluated by undertaking regular tests.

Progress and achievements

Safe shopping

78% of shopping centres by GLA have renewed in 2021 their Covid-19 safety certificate.

For Covid-19 safety certifications information, please refer to the Factbook.

BREEAM, biodiversity, ecology

BREEAM certiﬁcation progressed more slowly due to Covid-19 pandemic and travel restrictions. As of

31 December 2021, 71% of the eligible portfolio by GLA is BREEAM certiﬁed (72% by market value),

obtaining Very Good and Excellent scores. 26% of the properties are under registration proceedings

and the percentage is expected to lower during 2022. The rest of 3% are industrial and strip centers,

not prioritised for certification.

For details regarding the BREEAM certification status, please refer to the Factbook.

The Group assesses the impact of its activities on the environment and the associated risks through

ecology reports. These reports will also support with outlining the Group Biodiversity Strategy to be

developed by 2025. Environmental due diligence procedures upon property acquisition are integrated

at Group level.

The Group ensures the consistent compliance of operational procedures with applicable legislation,

and continuous monitoring of landscape change, habitat, and property ecosystems requirements. The

Group also commissions (as part of BREEAM or separately), ecological studies, habitat status reports,

Legionella risk reports, lighting, air quality certification and sound stress reports. In 2021, the Polish

properties Galeria Wołomin, Galeria Tomaszow, Platan Shopping Centre, Bonarka City Center, Alfa

Centrum Bialystok, Pogoria Shopping Centre, Focus Mall Piotrkow Trybunalski have invested in

nanotechnology for air filtration for their HVAC units, increasing the filtration level of inlet fresh and

recovered air and effectively helping to protect against smog. The Air Quality Certificate received by

these properties is a confirmation that they are using this new filtration technology correctly.

Pillar three - Community engagement

Objectives and Targets

In 2021, the Group continued to focus on mitigating Covid-19 health and safety issues, therefore the

programmes implemented across the shopping venues aimed to ensure a safe environment for

customers, employees, and partners. The Group also continued to strategically invest in scalable social

and health projects, across its network.

As a next priority, the Group plans to conduct social and environmental impact studies, focusing on

measuring the value generated for society and communities by various sustainability initiatives. Social

Return on Investment ('SROI') represents a framework for measuring and accounting the effect of the

CSR initiatives.

The targets set out in this pillar are in line with UN SDGs 3, 4, 8.

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Management Approach

Resilience, strength and impact, are notions that shaped societies during the last years. Resilience is

not just about an individual’s ability to overcome adversity, it is also about supporting others and the

organisations which help them. That is why NEPI Rockcastle is committed to participating in building

strong, resilient communities.

As the leading investor and developer of commercial real estate in the CEE, NEPI Rockcastle has the

power to lead change and the way to a healthier, more sustainable, and better future, for both its

clients and local communities. Creating strategic long-term partnerships with local and global

organisations has been a key factor in identifying community needs and shared priorities, and to

manage a coordinated effort towards achieving impactful outcomes.

Key non-profit partners in 2021

Through the #ResponsiblyTogether platform, which houses the Group's social responsibility

projects, the Group continued to roll out a wide range of projects targeting three major sustainability

directions, in line with its community engagement strategy: community health, education,

environment.

Despite the worldwide Covid-19 challenges that continued throughout 2021, the Group adapted its

approach to the new context and continued previous years' work, with a clear vision to empower

people to become part of the solution and build a healthier, sustainable future.

The Group CSR engagement strategy relies on:

•promoting health and safety initiatives in the communities, participating to increased

wellbeing;

•promoting awareness on critical environmental issues;

•educating the younger members of the communities and helping them to build a better future.

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Initiatives

Under the Group CSR engagement strategy umbrella, the shopping centres have implemented

numerous local initiatives in order to connect with the local community. This chapter is an overview of

these initiatives.

Health and Social

Covid-19 health-supporting projects

In 2021, most of the Group’s efforts and initiatives continued to focus on managing the Covid-19

pandemic and supporting vaccination initiatives, by creating vaccination points inside shopping

centres.

Non-Covid-19 health-supporting projects

The Group maintained its long-term commitment to address a wide range of health needs relevant to

the communities. In collabouration with local and global partners, the Group continued to promote

health and social issues, aiming to raise awareness about rare diseases and reduce the effects of health

issues and social inequality.

Promenada Sibiu (Romania) joined the fundraising efforts of the SUS INIMA Association, to

support people affected by cancer in Sibiu area.

Paradise Center (Bulgaria) carried out a campaign to raise awareness on the prevention and fight

against breast cancer, preserving the reproductive health and improving the quality of life for women

after cancer treatment.

To mark World Diabetes Day, Serdika Center (Bulgaria) hosted a campaign aimed to raise public

awareness on diabetes, a disease which is increasing in Bulgaria, as well as around the world. Medical

students conducted diabetes screening, measuring visitors’ blood sugar levels and blood pressure,

informing people about the risk factors, as well as their current health status based on the test results.

Forum Liberec Shopping Centre (Czech Republic) has initiated an awareness campaign to

emphasise the importance of testing to prevent colon cancer.

With a mission to educate women on the importance of regular examinations, Bonarka City Center

(Poland) organised in October (the month dedicated in Poland to cancer fighting), the Go Healthy

Girl campaign for the third year in a row. The event included educational workshops focused on

cultivating the prevention mentality, talking about the importance of regular examinations, available

methods to prevent diseases and offered free check-ups.

Similarly, to raise awareness about cancer and prophylaxis, the Pink October information campaign

was organised in Mammut Shopping Centre (Hungary) while the Movember initiative was

organised in Aupark Zilina (Slovakia).

Blood donation campaigns remained a pressing issue, due to a considerable decrease in the number of

donors and available blood during the health crisis. Initiatives continued in 2021 across the

Company's portfolio, in cooperation with local Red Cross organisations, resulting in 550 litres of blood

collected.

The Group is also involved in promoting a healthy lifestyle by supporting community sports

programmes, including:

•Children's Sport Games by Arena Centar and Retail Park (Croatia), where over 100

children played football, basketball, trekking, table tennis and dodgeball;

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•Korzo Shopping Centrum (Slovakia) sponsored two of the most relevant sport clubs in

Prievidza, contributing to the acquisition of sports equipment, shoes and personal hygiene

items, to support the youth teams and promote the popularity of sports among children.

Support for less privileged people, diversity, equal opportunities

All shopping centres in Romania, in partnership with World Vision, supported the Bread and

Tomorrow, we take children to school campaign, where donations were made for food, clothing

and school supplies. In the spirit of Christmas and New Year holidays, Promenada Novi Sad

(Serbia), together with Lyons International and Red Cross Novi Sad, organised the Good Heart

Market to help underprivileged families with groceries.

During the back-to-school season, Shopping City Sibiu (Romania), together with SOS Children's

Villages, launched the "Dress them in good deeds" campaign, where visitors could purchase and

donate children's clothing.

Women’s Rights issues were also in focus in 2021 with more female empowerment movements

gaining ground. On Denim Day, the international symbol of protest to blaming victims of sexual

harassment, Arena Centar and Retail Park (Croatia) took the opportunity to raise awareness in

the local media about violence against women. The centre celebrated International Women’s Day with

an exhibition that focused on those women who have undeservedly remained anonymous throughout

history.

Paradise Center (Bulgaria) was the main supporter of Jamba HUB, the first adapted learning and

career space in Eastern Europe accessible to people with functional disabilities. On the International

Day of Persons with Disabilities and International Human Rights Day, table tennis players of Serbia

Paralympic team organised public classes in Promenada Novi Sad (Serbia).

Environment

Integrating creativity and art into environmental initiatives proved to be a successful tool to raise

awareness about climate change and the impact of human activity on the environment.

To celebrate the UNs’ World Environment Day, Shopping City Timisoara (Romania), together

with ZIDART - Street Art Festival, and the Polytechnic University of Timisoara

inaugurated, in July 2021, the first 100 square metres of mural art, made entirely of Airlite paint

which contributes to improving air quality, equivalent to a hundred square metres of planted forest.

In order to draw attention to the need for a responsible and friendly behaviour towards nature and the

Black Sea, City Park (Romania), in partnership with the Constanta ReStart Association and

Zoom Beach, initiated the #Thankyou your Beach! campaign, collecting 3 tons of waste from

the Black Sea beaches, with the help of 200 local volunteers.

To mark Danube Day, Shopping City Galati (Romania) invited an artist to create two unique

contemporary works of art, made from recycled plastic, to highlight the negative impact of waste on

the Danube and on the peoples' quality of life.

Paradise Center (Bulgaria) initiated the Green Christmas campaign and collected more than 3

tons of old textiles for recycling.

Aura Centrum and Galeria Warminska (Poland) collected 45,000 litres of plastic bottle

caps and all funds went to supporting local charity organisations.

The successful Don't Be Plastic educational campaign initiated by shopping centres in Hungary

and Poland, aimed at raising attention to the dangers of using plastic packaging, continued in 2021,

with tips on how to reduce plastic in day-to-day activities.

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Under the #ResponsiblyTogether platform, NEPI Rockcastle has moved closer to the second stage

of its recycling campaign, The Nature of Thank You. The campaign targets selective collection and

management of waste at source, in an effort to reduce plastic and food waste.

At the core of the campaign rests the firm belief that everyone must act in order to make a positive

impact, individually, as a group and as a community. It has been the Group’s mission to inspire and

educate on the real impacts this change of mindset can have on nature and wellbeing. The campaign’s

communication strategy was always focused on giving nature a voice and explaining the less obvious

connections between reducing waste or plastic and a healthy planet.

Whether helping clients and tenants to transition to new recycling rules inside the shopping centres,

shaping international strategies for waste management, or creating events and opportunities to act

responsibly in nature, the Group was committed to maximising its positive impact and to increasing

society awareness.

Education

As the pandemic continued in 2021, education faced multiple challenges with schools' closings and

digital learning becoming the norm for some students.

In partnership with NGOs, NEPI Rockcastle supported several initiatives to enable a properly

functioning educational system by creating community hubs for parents and children, supporting

them in managing digital threats such as cyberbullying, excessive use of the Internet, misinformation.

This approach is meant to support younger generations grow into educated, ethical, responsible adults

and professionals. Educational needs were researched and prioritised with the support of local private

and institutional partners, such as the Red Cross, UNICEF, World Vision, Save the Children.

As the pandemic continued to affect mobility and social interactions, commercial centres in the NEPI

Rockcastle network succeeded in continuing their mission to be community hubs for parents and

children, providing them with access to educational activities, along with a safe shopping experience.

Support initiatives for the educational system are a strong focus across all nine countries where the

Group operates, ranging from assistance to schools, teachers and children in less privileged areas, to

programmes for gifted children.

Support initiatives for the educational system

NEPI Rockcastle, together with World Vision, started EMPTY CLASSROOM, a campaign

organised in ten shopping centres in Romania aiming to collect new books and school supplies for

challenged communities. Twenty-four schools received donations in books and furniture needed to

equip school libraries, trying to help approximately 7,700 students discover the joy of reading.

In 2021, NEPI Rockcastle supported the National Program for the Transformation of

Education in Romania by donating €75,000 for schools in Galati and Buzau, through Edu

Networks (program managed by Asociatia pentru Valori in Educatie). Sixteen schools received

support and training to achieve the level of digitalisation set by modern European Commission

standards, and twenty-eight school principals were trained to become better managers and leaders.

Ploiesti Shopping City (Romania) organised the seventh edition of the RECYCLE A STORY

programme, donating fully equipped tablets to disadvantaged children.

Community hubs for parents and children, educational initiatives for the community

Within the series of digital conferences Responsible Parents in the Digital Age, Promenada

Mall together with Save the Children Romania, organised webinars and free workshops

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presenting, from different angles, recommendations on children's online behaviour and tips for

parents, to manage cyberbullying, excessive internet use and misinformation.

City Park, Promenada Mall and Shopping City Sibiu (Romania) organised the

improvisational show Safe Digital Explorers, an event dedicated to children and parents, on topics

related to online safety.

Promenada Mall, Shopping City Galati, Shopping City Timisoara and City Park

(Romania), together with Scoala de Valori and BCR Erste Bank, organised The Money

School, covering financial education workshops for children and adults.

Shopping City Ramnicu Valcea (Romania) organised a meeting with a top robotics team, the

Bionic Royals, involving interactions with humanoid robots, educational digital skills workshops for

children and robot movie characters shows.

Arena Centar and Retail Park (Croatia) organised STEM programming workshops (five

workshops in five schools in the neighbourhood), an activity created for young visitors, aimed

at enabling the development of critical thinking and creative problem solving through play and fun.

Progress and achievements

Satisfaction surveys represent a significant tool for understanding material issues and for developing

the relationship with local communities. Shopping centres have a designated info desk, dealing with

visitors’ inquiries, their requests for information and their formal notices or complaints.

In 2021, NEPI Rockcastle carried out an occupier satisfaction survey in selected eighteen centres in

seven countries. The main objective was to determine the overall satisfaction of the occupants of NEPI

Rockcastle properties, in line with BREEAM in Use Occupant Survey Satisfaction methodology. The

average score was 3.95 on a 1 to 5 scale.

The survey was designed to cover:

•environmental and security conditions;

•internal fit-out, design, amenities;

•common facilities, cleanliness, air quality, thermal comfort; and

•management and personnel services.

Based on the data collected, the average results of each property from each country were further

analysed by the asset management teams.

Pillar four - People and business integrity

Integrity and ethical conduct

NEPI Rockcastle maintains the highest ethical standards and complies with applicable laws and

regulations in all jurisdictions. The Group's continued success depends on employing highly qualified

people and establishing a working environment free from discrimination, harassment, intimidation,

or coercion based on race, religion, gender, age, nationality, or disability.

The Group is committed to ensuring ethical behaviour throughout its business practices, based on

trust, sound morality, confidentiality, reliability, and sustainability. The Company reinforces and

reminds its employees on an annual basis the core values which are embedded in all its processes:

Integrity, Excellence, Teamwork and Communication, Innovation, and Learning. As the Group places

paramount importance on ethical behaviour, a specific 360 feedback component, aligned with these

values, is embedded in the performance evaluation process. These core values are constantly

reinforced by the Group's Executive Directors, translated into practice based on the 'Tone from the

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Top' principle and embedded in various trainings, workshops, awareness campaigns, throughout the

year.

The Group continued its sustainability strategy roll out in 2021 and prioritised its focus on its people

and their integrity.

Strategic initiatives

Objective/Commitment

KPIs

Term

Medium

Long

People and

business integrity

Ensure compliance with

regulations, policies and

procedures

Timely monitoring, reporting and

remediation

Consequence management

Permanent

Collabourate with responsible

and sustainable partners

(clients and suppliers)

Supplier risk assessment

performed for any new supplier

and revised periodically

Know Your Customer due

diligence performed for new

customers and revised

periodically

Permanent

Ethical relationship with

authorities and government

representatives

Reports through whistleblowing

channel, if any, timely addressed

No financial support to any

political party/political exposed

person

No gifts/benefits/other form of

payment to public officials/

political exposed persons

Permanent

During 2021, the Group further developed and built awareness on the following, as part of its

commitment to the highest ethical standards:

•Code of Ethical Conduct

•Whistleblowing Policy

•Compliance Policy

•Declaration of Interests Policy

Awareness campaigns covering all employees, key collabourators, tenants, and suppliers were

organised. Through these campaigns, the Company continued to prioritise raising awareness on

conflicts of interest as well as other ethical and compliance-related matters. When employees consider

that a conflict of interest (potential or actual) may exist, they need to notify the Risk and Compliance

Officer, who will offer advice. Undisclosed, materialised conflict of interest may trigger consequences.

The campaigns participation rate was 100%, both at Board of Directors and staff level.

Policies are available to all employees in every country and entity that is consolidated in the Group's

financial statements or otherwise controlled by the Group. These are posted on the Company's unified

engagement and communication platform, while key aspects such as the Code of Ethical Conduct, the

Whistleblowing Policy and the Compliance Statement are available to all stakeholders on the Group

corporate website.

The Code of Ethical Conduct defines expected principles and behaviour covering the following key

areas:

•equal employment and non-discrimination;

•environmental compliance;

•health, safety and labour conditions;

•prohibition of any type of harassment;

•narcotics and alcohol;

•conflicts of interest;

•gifts, entertainment and corruption practices;

•lobbying and political involvement;

•fraud;

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•antitrust and competition;

•communications, records, claims, statements and certifications;

•confidentiality principles;

•preserving privacy; and

•sponsorships and donations.

The Code of Ethical Conduct has strong and clear provisions regulating the following key matters:

•fraud, bribery and corruption: such behaviour is illegal in all jurisdictions and strongly

rejected by the Group,

•whether performed in the name of the business or for the benefit of an employee. The

Company regularly conducts a formal fraud risk assessment, to monitor the risks and derive

measures to be prioritised;

•gifts and events: the Code sets the maximum value of gifts that may be offered or received, as

well as conditions for participation in various events organised by tenants or suppliers.

Reminders and advice are sent by the Risk and Compliance Officer, in order to raise

awareness and prevent misconduct;

•acceptable behaviour towards public officials, i.e., under no circumstance can gifts, facilitation

payments or money be offered or promised;

•acceptable behaviour in terms of other ethical and compliance requirements (i.e., competition

and anti-trust, health and safety, use of narcotics and alcohol). Promoting a non-

discriminatory environment and encouraging diversity of mindsets and opinions continued to

be on the Group's agenda in 2021. No discrimination incidents were claimed or investigated in

2021. If such incidents were to occur, based on a zero- tolerance policy, the Group would take

the necessary measures, including consequence management, to deter such behaviour; and

•the Group's approach towards lobbying, political involvement, sponsorships and donations.

To complement the Code of Ethical Conduct provisions on the conflict of interest, the Group

implemented the Declaration of Interests Policy. Besides the conflict of interest arising from a

business situation, the policy covers the declaration of various interests and other directorships or

advisory positions the Directors of the Company may hold. Directors must disclose all financial,

economic and other interests, such as:

•direct or indirect participations in the Group;

•direct or indirect participations in companies that own more than 5% in the Group;

•any interest held in a fund or collective investment scheme where that person has direct

control over the investment decisions of that fund or investment;

•participation in companies acting in the same line of business or industry;

•any other direct/indirect material interest related to the Group's business and operations; and

•other directorship positions and advisory engagements relevant to the Group’s business and

context.

The Group shall NOT support through sponsorships or donations those entities which, by or through

their activities:

•conflict with the Group's values or targets and/or negatively impact the environment, health

or safety;

•promote or interfere in any way with specific industries, such as tobacco and alcohol;

•promote directly or indirectly violence or terrorism;

•are involved, directly or indirectly, or cooperate with partners who are directly or indirectly

involved in money laundering, corruption or other unethical practices; and

•are involved in, or support, political parties/campaigns/projects. While the Group recognises

its role in a society which may include sponsorships and donations as part of its responsible

corporate citizenship approach, it will never support any political parties (no payments,

donations, sponsorships or other in-kind benefits may be offered in such context).

For transparency reasons, a Compliance Statement has been published on the Group's corporate

website, summarising the main principles and rules defined in the Group's Compliance Framework

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(for example commitment to ethics, long-term win-win relationships, zero-tolerance against bribery

and corruption, open communication, high standards of confidentiality and privacy preserving).

The Risk and Compliance Officer and the Compliance function provide constant advice and are

available for clarifications and recommendations to ensure ethical and lawful behaviour. Questions,

grievances, potential risks or uncertainties may be directed through dedicated communication

channels. The Group uses these channels to promote transparency and raise employees' awareness, as

well as provide advice and support when needed. The requests for advice are treated confidentially

and answered in a timely manner.

The Group has an open-door policy and supports a speak-up culture, thus employees are encouraged

to share their concerns, suggestions or complaints with their line manager, Risk and Compliance,

Internal Audit. In order to promote full transparency, as well as to provide a mechanism to report

concerns, NEPI Rockcastle has implemented the Whistleblowing Policy, providing several convenient

reporting channels, while guaranteeing non-retaliation against the whistleblower and confidentiality.

The reporting channels available to both employees and any external party, allowing anonymous

reporting, are the following:

•online portal available 24/7 on the Group's corporate website; and

•24/7 hotline reachable from all countries relevant to the Group.

Both channels are monitored by an independent third- party service provider and each report is

documented and submitted to the Chairman of the Board, Chair of the Audit Committee, Internal

Audit Director, CFO and CEO.

The Company encourages the potential whistleblowers to disclose their identity by enforcing its non-

retaliation policy and guaranteeing confidentiality wherever reasonably possible. Even though

disclosing the whistleblowers' identity supports the efficiency and effectiveness of the investigation

process, by allowing the investigation team to obtain clarifications, follow up, and provide information

on the status of the investigation, complaints made anonymously are considered and analysed with

the same degree of diligence.

The Whistleblowing Policy and reporting channels are communicated to all employees by the Risk and

Compliance department on an annual basis and are also available on the Group's website.

The Group received tip-offs in 2021 from both inside the Company, as well as from some of its tenants

and suppliers, in several jurisdictions, concerning specific operational matters. The channels used by

the whistleblowers were, in their order of use: the online portal, information/e-mail to Internal Audit,

e-mail to Risk and Compliance. The tip-offs received, including types of alleged misconduct,

procedures performed, conclusions and recommendations are categorised, traced and reported

periodically to the Audit Committee.

All tip-offs were analysed and, if plausible, investigated, while the reports together with conclusions

and recommendations were discussed at the Audit Committee.

In relation to its external stakeholders, NEPI Rockcastle strongly believes in collabourating with

partners sharing the same values, based on a win-win partnership governed by probity and integrity.

The main principles of this relationship are covered in the Code of Ethical Conduct, Anti Money

Laundering and Counterterrorism Policy and Sustainable Procurement Policy. As such, NEPI

Rockcastle is committed to extend its principles of responsibility through its value chain, which is

crucial to the safety of its employees, tenants and visitors, as well as to proper positioning and

performance of its shopping centres. The Group has implemented compliance clauses covering anti-

money laundering, counter terrorism and anti- corruption in its standard contract templates, and

detailed due diligence processes for its partners.

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Diversity policy

The Group supports the principles of gender diversity at both Board level and throughout the

Company. No voluntary target has been set, however, the approach to gender diversity adopted by the

Group is that if a vacancy on the Board arises, consideration will be given to the appointment on the

Board of female Director(s). Consideration criteria such as expertise, knowledge and competence

should be fully met, and the candidate should be appropriately qualified for the role.

NEPI Rockcastle did not formalise its specific diversity policy. In order to show its commitment to

building a diverse workforce and encouraging diversity of mind, it adhered since 2020 to core

principles of diversity and inclusion, by signing the Diversity Charter in Romania and Poland. The

Diversity Charter is based on a set of general principles promoting multiculturality, aiming at:

•developing an organisational culture based on respect, trust and recognition;

•supporting diversity as a source of progress and innovation; and

•improving economic performance.

Permanent contracts

Temporary contract

Full time

Part-time

260

144

288

144

TOTAL 439

Top and middle management level is represented by 59% women and 41% men.

Details of gender distribution across the Group are presented below:

Level

Gender

Distribution

Senior management team (functions leads)

40%

60%

Middle management and subject matter expert

60%

40%

Non-managerial

71%

29%

An open and engaging culture is maintained, ensuring that the Group is able to attract and retain a

skilled and dedicated team, while recognising that a balanced gender workforce enhances its ability to

meet its objectives.

At 2021 year-end, a total of 439 employees (including Executive Directors) were active, with 66% of

them being women and 34% men.

Ratio of basic salary and remuneration across genders

A key measure of diversity and equity is the pay ratio by gender and location. The Group monitors the

salary ratio of women and men for each category of management and for each market, however, due to

the limited number of employees in some locations, the disclosure of results by each category might

lead to compromising confidentiality.

In aggregate, the ratio of women's salaries to men across all categories and geographies varies

between 1:1.12 and 1:1.31.

185

Age diversity

The Group encourages diversity across age ranges, based on the experience, maturity, needs and

skillset required to deliver the strategy. Distribution of age at Group level is well balanced:

•72% are represented by professionals with 20 years or more professional experience;

•28% are represented by a younger generation of Millennials, growing and developing their

careers, enabling the Group to maintain a strong succession pipeline.

Generation

Headcount

Average age

Generation Z

up to 24 Y

23.5

Millennials

25-34 Y

118

30.7

27%

Generation X

35-49 Y

282

40.2

64%

Baby Boomers

50-65 Y

55.6

TOTAL

439

38.6

Employees benefits

To ensure reward and compensation are aligned with the market, the Group accesses market data

from reliable providers for benchmarking purposes.

The benefits package applies to all employees across the Group, with no differentiation based on

geography or full-time/part-time working schedule, and consists of:

•flexible return-to-work schedule for employees returning from maternity/parental leave;

•one-off allowance for parents upon childbirth;

•one-off allowance for other family events;

•employee well-being initiatives such as: participation in sport events, subsidising gym

subscription, employee health insurance and private subscriptions to medical services;

•social gatherings and parties for both employees and their children at Christmas; and

•paid days off, on top of annual leave and statutory holidays, to allow people to bridge through

longer weekends around Easter, Christmas or New Year's Eve.

The Group implemented in 2021 a digital wellbeing platform with the aim of increasing employee

engagement and improving access to the wellbeing programme across the business.

Key features of the platform included:

•repository of wellbeing resources and programs (videos, articles, physical therapy exercises,

financial education, do it yourself projects);

•access to wellbeing workshops and challenges;

•possibility to upload own materials and gather information in one place; and

•a gamified experience where users can gather points, reach next level and have the possibility

to earn prizes.

In order to promote a healthy lifestyle, the Group launched a step challenge using the well-being

digital platform connected to Google Fit. 35% of the total employees, organised in 16 teams, 10

members per team, participated during the 36 days of competition and accumulated 49.5 million

steps, which translate to almost 38,000km.

The virtual departure point was Shopping City Ramnicu Valcea, Romania, and the aim was to get to

the destination, Ozas Shopping and Entertainment Center, Vilnius, Lithuania.

186

The challenge increased the employees’ interest in daily exercise (9,000 average steps per participant,

per day), team collabouration, and competitiveness.

Parental leave

A total of 8,720 days were granted in 2021 for parental/childcare leave, across all countries.

Collective bargaining

Considering the relatively small number of employees spread across different geographies in the

region where the Group operates, together with the HR policies around remuneration, retention,

development, selection, as well as the Code of Conduct provisions governing the business, the Group

did not consider it relevant and material to implement a collective bargaining agreement.

Health and Safety

The Group's policy is to create a safe and healthy working environment, with procedures to manage

safety and environmental matters that may affect employees, customers and other partners. All

programs/rules/documents/measures are updated and modified in accordance with the applicable

legislation. In 2021, in line with the legislation in place, measures and instructions to prevent and

combat the effects of the Covid-19 pandemic were prepared and implemented.

The procedures in place to improve working conditions and reduce risks of developing occupational

diseases are:

•annual occupational medicine checks; and

•assessments of the risk of injury and occupational disease in case of modified risk factors.

During 2021, there were no accidents at work, no reported occupational diseases and no deaths.

Consequently, no days of sick leave or absenteeism have been reported due to accidents at work/

occupational hazards. Employees training on occupational health and safety is provided in all

jurisdictions, in line with the local legislation requirements.

People approach during Covid-19

The pandemic led to significant adjustment to the 2021 employees development plans. During

Covid-19, the Group's efforts focused on keeping staff safe, while ensuring business continuity and

productivity.

The wellbeing programme, structured on three pillars: Health, Hobbies, Personal Development, was

meant to support the Group’s employees transition the difficult period safe and sound.

Communication within the Group remained a priority and was ensured through:

•regular communication from CEO updating staff on health issues, Work from Home ('WFH')/

Work from Office ('WFO') recommendations;

•flexibility by adapting work planning to the business needs and specificity of each country

(related to the progression of Covid-19 cases and national recommendations); and

•de-centralisation of decision regarding WFH at the level of top management team members

(with Human Resources function supporting planning and monitoring).

• Keeping employees safe during the pandemic required implementation of additional

measures in relation to the workspace, work conditions, information and communication,

such as:

187

•promote, facilitate, and signal appropriate hygiene measures;

•perform regular office disinfection;

•limit physical interaction with visitors, restrict number of people in meeting rooms and social

areas (meetings held primarily online, with travel restricted);

•monitor employees’ health for fourteen days after returning home from holiday or business

trip;

•closely monitoring Covid-19 cases and isolation of those in contact/direct contact with

infected individuals; and

•Covid-19 tests, in line with some local jurisdictions requirements.

The Group ensured good connection with people while working remotely and ensured adequate

communication under the circumstances, by developing and implementing:

•workshops/keep-in-touch meetings;

•workshops on emotional impact of Covid-19, such as Emotional Agility, with general

coverage;

•workshops on managing work during Covid-19/WFH including Productivity and Focus/

Remote Working Routines, with general coverage;

•updates with team leaders (HR check-ins with specific team leaders, as required); and

•wellbeing programme with 65 workshops delivered along with additional materials and

podcasts on physical and mental health.

People engagement, retention and development

Engagement and retention

Engagement and retention of key staff are two interlinked essential elements for the efficiency and

continuity of the business. Retention of staff is a challenging mandate for the Group's leadership in

the context of a difficult and competitive labour market in CEE, which is facing significant migration

of its labour force towards Western Europe.

To keep existing staff engaged, NEPI Rockcastle considers that being transparent, creating

opportunities for people to understand the Company purpose, strategy and performance, is essential

in encouraging employees to feel proud they work for NEPI Rockcastle. Despite the physical

limitations in 2021, the Group continued to strengthen management communication with its teams, in

both regular meetings, as well as through top management communication, online strategy

discussions and business updates.

A new communication concept, introduced during 2020– Friday Talks – was maintained during 2021,

to keep closer connection with Group’s employees.

The internal communication platform SPOT continued to be accessed by all employees. SPOT brings

together information that used to be spread across different locations, from messages from CEO to

staff, to strategy and financial updates, internal policies awareness campaigns, news on the Group's

portfolio and its employees. A total of 330 posts were published across the year, enabling people to

stay informed and participate in different internal challenges.

The Group continued to engage its staff by celebrating important business milestones or traditional

holidays through online and face-to-face team social gatherings for staff and their children (on

Christmas, Women’s Day). In addition, the employees were involved in various practical and well-

being workshops (for example, painting classes).

Employee engagement survey

During 2021 NEPI Rockcastle launched its first formal Employee Engagement survey, to analyse on a

consolidated basis employee satisfaction triggers, to make the workplace a great place and the

organisation healthier, happier, and #strongertogether. Covering all employees of the Group, the

survey was performed in collabouration with a top global provider of engagement surveys.

188

Key highlights:

•areas surveyed: My Leadership and Contribution, Covid-19 Crisis Management,

Collabouration, Engagement, Growth and Development, Recognition, Leadership, Direction

and Alignment, Well-being and Flexibility;

•respondents: 350;

•response rate: 89%;

•engagement favourable score: 81%; and

•words that describe the Group based on employees feedback: professional, development,

challenging, team, good, leader, dynamic.

The next steps will be to interpret and analyse the feedback in a professional manner, assuring strict

confidentiality of data and an effective interpretation of results for planning future actions and

priorities in workforce management.

Recruitment and selection

Having the right people in the right place, with the appropriate skillset in the Group is a business

imperative for leadership as well as a core HR responsibility.

Moreover, considering the CEE market is incredibly competitive in terms of workforce, the

recruitment and selection process remain a strategic area of focus for the business. The Company uses

people analytics to make decisions in relation to the personnel strategy. The data is stored in the HR

administrative internal system.

The Group's range of initiatives for managing recruitment continued to be developed during 2021.

This was essential as the continuing pandemic created new challenges, from reinforcing the need to

source appropriate candidates (focusing on internal and external references, professional channels

and agencies), to a more compelling need for testing candidates’ competency, personality and

commitment, and further ensuring that their onboarding is coordinated by their respective manager.

The Group reinforced, as part of the recruitment process, an efficiency approach which requires

management to support the decision to hire with a business case. This allowed the Group to

reorganise activities, leverage more and better on internal available resources and support career

growth of its existing personnel.

Retention

In managing retention, the Group paid significant attention to supporting employees in finding the

appropriate work-life balance and integrating their professional and personal responsibilities,

especially within the work context imposed by the pandemic. Such efforts led to more engaged,

motivated and committed employees.

Initiatives that were added or adjusted based on the changing legal obligations, business activity or

social context, include:

•flexible return-to-work schedule for employees; and

•safety, health and wellbeing solutions made available to all employees.

New employee hires and employee turnover

New employees

Turnover

2020

2021

2020

2021

Gender

Female

75%

68%

60%

69%

Male

25%

32%

40%

31%

189

Age

<30

23%

18%

12%

30-50

69%

71%

75%

83%

>50

Total

As a measure of the impact of people management and sustainability from a human resources point of

view, monitoring staff turnover is particularly important.

In 2021, the labour market dynamic and staff turnover have increased. The attractiveness of retail and

shopping centres business has decreased, causing an increased turnover, decreased acceptance of

offers and a challenging recruitment process.

For 2021, the blended voluntary turnover rate across all jurisdictions was 10.6%, while the non-

voluntary rate was 6.4%. 2.1% of leavers were a result of business areas being outsourced or

discontinued (i.e., as a result of the disposal of assets and outsourcing of specific services in property

management). The non-voluntary turnover is related to the Group's performance-focused approach,

as strong performance and delivery against the role is essential for building a long-term career within

the Company.

NEPI Rockcastle encourages management to empower strong performance and not to tolerate lack of

commitment or compromising on values and business integrity.

During 2021, a total of 90 professionals joined the Group in either new positions or as replacements.

Out of these, 78 are still employed in the Group, translating into a retention rate of almost 90% for the

first twelve months.

190

Management level

Number

of leavers

Average

headcount

Top management

business (functions

leads)*

Voluntary

10*

Non-voluntary

Middle management

and subject matter

expert

Voluntary

155.5

3.2%

Non-voluntary

6.4%

Business

discontinued/

outsourcing

2.6%

Non-managerial

Voluntary

273

16.1%

Non-voluntary

5.5%

Business

discontinued/

outsourcing

1.8%

TOTAL

438.5**

18.9

*Including 4 Executive Directors, CEO, CFO, Executive Director and COO

** Average headcount 31 December 2020 - 31 December 2021.

Transition assistance programme

The Group implemented a transition assistance programme, which consists of individual career

discussions, applicable to all employees in case of involuntary termination of the employment

agreement. The programme aims to ensure continued employability in case of termination through:

•individual career discussions with the HR team; and

•support in accessing professional services in this area.

Training and development

Professional learning content

In 2021, NEPI Rockcastle implemented and promoted new development programmes for all staff and

management. The professional learning curricula continued to be adapted to Covid-19 requirements

and staff was equipped with the necessary skills to face difficult conversations and tough negotiations,

upgrade their digital skills and develop a flexible mindset. The Group organised development

programmes for a broad variety of skills covering all business functions, to ensure the necessary

competencies to deal with the challenges of the year. The programmes consisted of a blended

approach with both face to face and live online interactions, while also including articles, podcasts and

video materials as pre- and post-work, to ensure the highest impact.

NEPI Rockcastle implemented in 2021 a leadership development programme, the Leadership

Journey. Consisting of six modules delivered across three months, the programme covered topics such

as: Your leadership profile, Market trends and industry insights, Strategic partnerships and

stakeholders, Retail and mall management, Financial management and Inspirational team leadership.

The main scope was to equip team leaders with the right skills to effectively navigate and lead in the

face of digital transformation. The modules were delivered by well-known trainers and experts in

Bucharest and Barcelona, but also live online.

Another well received programme for middle management, introduced in 2021, was Project

Management Essentials. The main objectives of the programme were for the participants to acquire

knowledge about the project life-cycle, the importance of the structured approach to projects, the most

common tools and techniques used, mapping new knowledge and understanding how to use it in

everyday business activities, as well as in life.

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Development programme

category

Development programme

Competencies developed

Customised programmes soft

skills and hard-skill

Communicate and collaborate to

win

Rapid Resilience and Crisis

Management

Personal Effectiveness and Time

management

Global leadership mindset

programme

Integrated Digital Marketing

Planning

Influencer Marketing

Marketing Gateway Course

Applied Marketing

Marketing strategy for Center

Managers

Innovation in Marketing Intensive

Product Management

Project Management Essentials

Planning Campaigns in Practice

Customer First Strategies

Strategy for Listed Real Estate -

What Good Looks Like

Digital Optimisation

English

Excel

Communication skills

Negotiation skills

Productivity

Flexibility

Open-mindedness

Marketing and consumer trends

Project Management

Influencing skills

Planning skills

Language skills

Time management

Certifications and conferences

Cybersecurity certification

ACCA certification

Tickets to professional

conferences, relevant for different

employee functions (Brand-Minds,

Compliance, Governance, Risk,

etc.)

Hogan Assessment Certification

Cybersecurity and protection against cyber-

attacks

Financial and tax skills

Technical competencies depending on the

function: budgeting, procurement, risk,

business and digital skills, finance and tax

Human Resources Management

Mentoring and coaching

Individual coaching programme

Relationship coaching programme

Women as future leaders

mentoring programme

Business skills

Building relationship

Networking

Flexibility and adaptability

Workforce of the future

Leadership

Leadership Journey Programme

Business acumen

Investment principles and investor profiling

Basic technical skills: finance, reporting,

property

Consumer understanding and profiling

Commercial relationships and

communication

Whole leadership: self (growth mindset and

intrapreneurship) and others (leading by

objectives, coaching and mentoring,

delegation)

Upgraded learning methods and sources

Recent research on the learning and development trends shows that the traditional learning model is

no longer suitable for most employees. Employees spend on average 30 minutes/week learning and

their preference is to have the learning embedded in their work. The need to switch to online trainings

led to adapting the type of delivery through gamified exercises and other learning digital tools, while

condensing the knowledge into small learning bites.

The Group ensured that its employees get access to relevant external development programmes on the

market by covering the cost of the participation fees to various technical or business conferences.

Under the same umbrella of blended learning opportunities, the Group offered staff the chance to

access individual and relationship coaching opportunities with internationally certified executive

coaches and mentoring opportunities with top leaders from other industries.

192

Staff development facts and figures

Total number of hours of training attended

9,463

Total number of training participations (cumulative for all participations)

1,157

Average number of training hours per trained employee

8.17

Total training days/employee

1.02

Total number of leadership pipeline coaching and mentoring hours

224

Total number of coaching for performance and OKRs hours

1,600

Total number of soft-skills training hours

3,173

Total number of hard-skills training hours

2,723

Total number of project management training hours

1,400

Overall feedback score

4.8/5

Way forward in staff training and development

NEPI Rockcastle is planning to continue to further develop both technical and business competencies

through leadership, digital programmes and hard-skills trainings.

The training plan for 2022 will emerge from a thorough analysis of the individual needs, performance

review results and discussions with team leaders.

To create an environment where talent is identified and staff develop in the flow of work, all efforts

will be on building and promoting a sustainable development culture, streamlining access to training

and monitoring return on investment. NEPI Rockcastle believes that development and career growth

are important instruments in motivating employees, in giving back to its professionals, as well as in

increasing loyalty and commitment.

Performance review

Another key source of information on staff development needs is the performance review process,

which provides a good picture of where people are performing best and where improvement is needed.

Percentage of employees receiving regular performance and career development reviews during 2021:

Management level

Male

Female

Top management

Middle management

26%

19%

Other management positions

17%

13%

Specialists

53%

192

66%

Total

149

290

The performance review process is an opportunity for manager and employee to assess the

achievement of business, commercial and strategic objectives during the previous year and discuss

areas for future development.

The Group implemented in 2021 the Objectives and Key Results (OKRs) methodology, to manage

performance, set business objectives and monitor progress towards results. This methodology

enhanced focus, productivity, efficiency, alignment of objectives to strategy.

193

Starting 2021 the performance process has been digitalised.

The online performance module was integrated with the internal communication platform SPOT and

serves as repository for individual performance goals and as a communication platform between

manager and team members covering all aspects of performance and objectives monitoring.

The three important milestones of the performance process are run through the platform: 360°

feedback evaluation (applicable for all managerial and subject matter expert roles), self-assessment on

KPIs and OKRs, and manager’s assessment. The 360-feedback evaluation was structured along the

Group’s values: Teamwork and Communication, Innovation and Learning, Excellence and Integrity –

Leadership skills. Overall, the Group reached a balanced scores distribution, which indicates well

differentiated feedback. Categories that increased in score versus last year were Teamwork and

Communication, People management and Integrity.

Framework alignment

GRI and EPRA

NEPI Rockcastle aims to consistently improve upon its practices. Adhering to internationally accepted

standards makes this much easier.

In this Report, the Group has adopted and implemented the framework guidelines and standards of

the EPRA and GRI.

This report has been prepared in accordance with EPRAs sBPR and the Comprehensive option of the

GRI Standards. The table below comprises the index of standards that the Group reported on.

GRI Standard

Reference

Comments/other references

GRI 101. Foundation 2016

GRI 102. General Contents 2016

1. Organisational profile

102-1. Name of the organisation

Front cover

102-2. Activities, brands, products, and services

102-3. Location of headquarters

283

102-4. Location of operations

102-5. Ownership and legal form

214, 230

102-6. Markets served

30-69

102-7. Scale of the organisation

14-14, 70-75

102-8. Information on employees and other workers

180-185

102-9. Supply chain

30-69

102-10. Significant changes to the organisation and its

supply chain

30-69

102-11. Precautionary principle or approach

GRI content index

102-12. External initiatives

158-160

102-13. Membership of associations

5, 158-160

2. Strategy

102-14. Statement from senior management decision-

makers

9-10

102-15. Key impacts, risks, and opportunities

116-129

3. Integrity and ethics

102-16. Values, principles, standards, and norms of

behaviour

142, 178-180

194

102-17. Mechanisms for advice and concerns about

ethics

87, 101, 106, 154-157

4. Governance

102-18. Governance structure

78, 86, 88-89

102-19. Delegating authority

83, 85-87, 100, 111

102-20. Executive-level responsibility for economic,

environmental, and social topics

84-85, 100-107

102-21. Consulting stakeholders on economic,

environmental, and social topics

108-110

102-22. Composition of the highest governance body

and its committees

84-95, 100-107

102-23. Chair of the highest governance body

102-24. Nominating and selecting the highest

governance body

88-89

102-25. Conflicts of interest

97-98, 108

102-26. Role of highest governance body in setting

purpose, values, and strategy

102-27. Collective knowledge of highest governance

body

89-91, 104-107

102-28. Evaluating the highest governance body’s

performance

96-97

102-29. Identifying and managing economic,

environmental, and social impacts

104-107, 152-212

102-30. Effectiveness of risk management processes

125-129

102-31. Review of economic, environmental, and social

topics

160-187

102-32. Highest governance body’s role in

sustainability reporting

101, 106

102-33. Communicating critical concerns

178-180

102-34. Nature and total number of critical concerns

178-180

102-35. Remuneration policies

130-148

102-36. Process for determining remuneration

130-148

102-37. Stakeholders’ involvement in remuneration

130-148

102-38. Annual total compensation ratio

148

102-39. Percentage increase in annual total

compensation ratio

148

5. Participation of stakeholders

102-40. List of stakeholder groups

110

102-41. Collective bargaining agreements

180

102-42. Identifying and selecting stakeholders

110

102-43. Approach to stakeholder engagement

83, 88, 108-110

102-44. Key topics and concerns raised

83, 88, 108-110

6. Reporting practice

102-45. Entities included in the consolidated financial

statements

233-236

102-46. Defining report content and topic Boundaries

154

102-47. List of material topics

156

102-48. Restatements of information

GRI content index

Adjustments to 2020 and

rationale are included in Annex -

Adjustments to 2020

Sustainability Report, page 195

102-49. Changes in reporting

GRI content index

There have been no significant

changes.

102-50. Reporting period

Front cover

195

102-51. Date of most recent report

Front cover

102-52. Reporting cycle

Front cover

102-53. Contact point for questions regarding the

report

278

102-54. Claims of reporting in accordance with the GRI

Standards

188

102-55. GRI content index

188-195

102-56. External assurance

22, 220-225

The Sustainability report is not

subject to external assurance

review.

103-1 103-2 103-3 Management Approach

78-96

201-1 Direct economic value generated and distributed

12, 227

201-2 Financial implications and other risks and

opportunities due to climate change

166-169

201-3 Defined benefit plan obligations and other

retirement plans

GRI content index

NEPI Rockcastle has not

implemented a defined benefit

plan or other retirement plan.

201-4 Financial assistance received from government

GRI 302. Energy 2016

103-1 103-2 103-3 Management Approach

163-169

302-1 Energy consumption within the organisation

196-205, 210-213

302-2 Energy consumption outside of the organisation

GRI content index

302-3 Energy intensity

200-201, 210-213

302-4 Reduction of energy consumption

162-169

302-5 Reduction in energy requirements of products

and services

162-169

GRI 303. Water and effluents 2018

103-1 103-2 103-3 Management Approach

164-165

303-1 Interactions with water as a shared resource

164-165

303-2 Management of water discharge-related impacts

164-165, 200-202

303-3 Water Withdrawal

164-165, 200-202

303-4 Water discharge

164-165, 200-202

303-5 Water consumption

164-165, 200-202

GRI 305. Emissions 2016

103-1 103-2 103-3 Management Approach

162-163

305-1 Direct (Scope 1) GHG emissions

168, 204-205

305-2 Energy indirect (Scope 2) GHG emissions

168, 204-205

305-3 Other indirect (Scope 3) GHG emissions

168, 204-205

305-4 GHG emissions intensity

169, 204-205

305-5 Reduction of GHG emissions

169, 204-205

305-6 Emissions of ozone-depleting substances

GRI content index

Immaterial in Group's context

305-7 Nitrogen oxides (NOX), sulphur oxides (SOX),

and other significant air emissions

GRI content index

Immaterial in Group's context

GRI 306. Waste 2020

103-1 103-2 103-3 Management Approach

162-163, 166

306-1 Waste generation and significant waste-related

impacts

166, 202-203

306-2 Management of significant waste-related

impacts

166, 202-203

306-3 Waste generated

166, 202-203

306-4 Waste diverted from disposal

166, 202-203

196

306-5 Waste directed to disposal

166, 202-203

GRI 307. Environmental compliance 2016

307-1 Non-compliance with environmental laws and

regulations

166

GRI 308. Supplier environmental assessment

103-1 103-2 103-3 Management Approach

161, 163-164

308-1. New suppliers/providers that were screened

using environmental criteria

161, 163-164

308-2 Negative environmental impacts in the supply

chain and actions taken

GRI content index

GRI 401. Employment 2016

103-1 103-2 103-3 Management Approach

178-187

401-1 New employee hires and employee turnover

184

401-2 Benefits provided to full-time employees that are

not provided to temporary or part-time employees

182

401-3 Parental leave

182

GRI 403. Occupational health and safety 2018

403-1 Occupational health and safety management

system

118-120, 172-173,

182-183

403-2 Hazard identification, risk assessment, and

incident investigation

118-122

403-3 Occupational health services

182-183

403-4 Worker participation, consultation, and

communication on occupational health and safety

182-183

403-5 Worker training on occupational health and

safety

182-183

403-6 Promotion of worker health

118-120, 182-183

403-7 Prevention and mitigation of occupational

health and safety impacts directly linked by business

relationships

118-120, 182-183

403-8 Workers covered by an occupational health and

safety management system

182-183

403-9 Work-related injuries

182-183

403-10 Work-related ill health

182-183

GRI 404. Training and education 2016

103-1 103-2 103-3 Management Approach

185-187

404-1 Average hours of training per year per employee

185-187

404-2 Programs for upgrading employee skills and

transition assistance programs

185-187

404-3 Percentage of employees receiving regular

performance and career development reviews

185-187

GRI 405. Diversity and equal opportunity 2016

103-1 103-2 103-3 Management Approach

180-181

405-1 Diversity of governance bodies and employees

89, 180-181

405-2 Ratio of basic salary and remuneration of

women to men

180-181

GRI 406. Non-discrimination 2016

103-1 103-2 103-3 Management Approach

137, 178-179

406-1 Incidents of discrimination and corrective

actions taken

179

GRI 413. Local communities 2016

103-1 103-2 103-3 Management Approach

172-177

197

413-1 Operations with local community engagement,

impact assessments, and development programs

172-177

413-2 Operations with significant actual and potential

negative impacts on local communities

172-177

EPRA Performance

Measure

Definition

Reference

EPRA Sustainability Performance Measures - Environment

Elec-Abs:

Total amount of electricity consumed. It includes electricity from

renewable and non-renewable sources, whether imported or

generated on site. This accounts for CTP’s corporate offices.

210

Elec-LfL:

The consistency of the electricity consumption in the operation.

A like-for-like comparison of 2020 and 2021.

210

DH&C-Abs

Total amount of indirect energy consumed from district heating

or cooling systems. In this instance, ‘indirect’ means energy

generated off-site and typically bought from an external energy

supplier.

210

DH&C-LfL:

The consistency of the district heating and cooling consumption

in the operation. A like-for-like comparison of 2020 and 2021.

210

Fuels-Abs:

Total amount of fuel used from direct (renewable and non-

renewable) sources (‘direct’ meaning that the fuel is combusted

on-site).

211

Fuels-LfL:

The consistency of the fuel consumption in the operation. A like-

for-like comparison of 2020 and 2021.

211

Energy-Int:

Consumption of direct and indirect energy normalised by an

appropriate denominator.

211

GHG-Dir-Abs:

Total amount of direct greenhouse gas emissions generated

(‘direct’ meaning that GHG emissions are generated on site

through combustion of the energy source/fuel). This calculation

includes use of natural gas in offices, car fuel, as well as jet fuel.

211

GHG-Indir-Abs:

Total amount of indirect greenhouse gas emissions generated

(‘indirect’ meaning that GHG emissions are generated off-site

during combustion of the energy source).

212

GHG-Int:

Emissions of direct and indirect GHGs normalised by an

appropriate denominator.

212

Water-Abs:

Total amount of water consumed within the corporate offices

over the full reporting year.

213

Water-LfL:

The consistency of the water consumption in the operation. A

like-for-like comparison of 2020 and 2021.

213

Water-Int:

Consumption of water normalised by an appropriate

denominator

213

Waste-Abs:

The total amount of waste produced and disposed of.

213

Waste-LfL:

The consistency of the waste production in the operation. A like-

for-like comparison of 2020 and 2021.

213

Cert-Tot

Total number of assets that have formally obtained sustainability

certification, rating, or labelling at the end of the reporting year.

Pillar two

EPRA Sustainability Performance Measures - Social

Diversity-Emp:

The percentage of male and female employees in the

organisation’s governance bodies and other significant employee

categories.

181

Diversity-Pay:

Ratio of the basic salary and/or remuneration of women to men.

181

Emp-Training:

The average number of hours employees have undertaken.

187

Emp-Dev:

Percentage of total employees who have received regular

performance and career development reviews

187

Emp-Turnover:

The total number and rate of new employee hires and employee

turnover.

184

H&S-Emp

The occupational health and safety performance with relation to

our direct employees.

182-183

H&S-Asset

The proportion of asses controlled by the Group for which health

and safety impacts have been reviewed

182-183

198

H&S-Comp

Incidents of non-compliance with regulations and/or voluntary

standard concerning the health and safety impacts of assets

assessed

182-183

Comty-Eng

percentage of assets under operational control that have

implemented local community engagement, impact assessments

and/or development programmes.

177, 210

EPRA Sustainability Performance Measures - Governance

Gov-Board:

The composition of the highest governance body

84-95, 100-107

Gov-Select:

The nomination and selection process for the highest governance

body and its members, and the criteria used to guide the

nomination and selection process.

88-89

Gov-CoI

The processes for the highest governance body to ensure

conflicts of interest are avoided and managed.

97-98, 108

TCFD

The table below provides section and page references to the Sustainability Report 2021 or the Annual

Report 2021, where information recommended for disclosure by the Task Force on Climate-related

Financial Disclosures (TCFD) can be found.

Theme

Recommendation

Reference

Governance Disclose the

organisation’s governance

around climate-related risks

and opportunities.

Describe the board’s oversight of climate related risks

and opportunities

Landscape section of this report

Describe management’s role in assessing and

managing climate- related risks and opportunities.

Statement from CEO section

Risks and opportunities, pages

166-167 of this Report

Strategy Disclose the actual

and potential impacts of

climate-related risks and

opportunities on the

organisation’s businesses,

strategy and financial planning

where such information is

material

Describe the climate-related risks and opportunities

the organisation has identified over the short,

medium, and long-term.

Pillar one: Carbon Footprint

and Climate Change

Financial, and other Risks and

Opportunities due to Climate

change

Describe the impact of climate-related risks and

opportunities on the organisation’s businesses,

strategy, and financial planning.

Pillar one: Carbon Footprint

and Climate Change

Financial, and other Risks and

Opportunities due to Climate

change

Describe the resilience of the organisation’s strategy,

taking into consideration different climate related

scenarios, including a 2˚C or lower scenario.

The CRREM implementation

initiative described in page

168-169 aims to enable NEPI

Rockcastle to assess

implications of potential

scenarios, as well as prioritise

measures in line with the global

temperature rise targets.

199

Risk management Disclose

how the organisation identifies,

assesses and manages climate-

related risks.

Describe the organisation’s process for identifying

and assessing climate-related risks.

Risks and opportunities, page

166-167 of this Report

Describe the organisation’s process for managing

climate-related risks.

Risks and opportunities, page

166-167 of this Report

Pillar one and Pillar two

management approach

description

Describe how processes for identifying, assessing,

and managing climate- related risks are integrated

into the organisation’s overall risk management.

Financial, and other risks and

opportunities due to climate

change page 166-167

Metrics and targets Disclose

the metrics and targets used to

assess and manage relevant

climate-related risks and

opportunities where such

information is material.

Disclose the metrics used by the organisation to

assess climate related risks and opportunities in line

with its strategy and risk management process.

Pillar one, Objectives and

Targets, page 162

Disclose Scope 1, Scope 2 and, if appropriate, Scope 3

greenhouse gas (GHG) emissions and the related

risks.

Factbook

Climate change, page 204

Describe the targets used by the organisation to

manage climate- related risks and opportunities and

performance against targets.

Pillar one, Objectives and

Targets, page 162

United Nations Sustainable Development Goals

As part of its continuous improvement process and contribution to a better environment, the Group

continued to align its sustainability strategy and operations and adhere to the UN SDGs in 2020.

While aiming to align its contribution with all applicable UN SDGs, the Group focused its approach on

the following:

200

Source: https://www.un.org/sustainabledevelopment/sustainable-development-goals/

Annex

Adjustments to 2020 sustainability report

Electricity, gas and water consumption was corrected with improved data quality and/or reporting

boundary change.

District heating was not reported in 2020 due to inadequate level of data quality. Accurate 2020

figures can be found in this report, together with 2021 figures.

201

Carbon emissions were lower in 2020 than reported. This change comes from improved data quality

and/or reporting boundary change on utility consumption, as well as improved calculation

methodology.

Total electricity consumption: 447,717 MWh corrected instead of 427,409 MWh reported (+20,308

MWh/+5%).

Share of renewables: 44% instead of 40%, reported (-4%).

Gas consumption: 83,311 MWh corrected instead of 87,076 MWh reported (-3,765 MWh/-5%).

Water consumption: 1,496,792m3 corrected instead of 1,492,030m3 reported (+4,762/<1%).

Waste: 22,247 MT corrected instead of 21,238 MT reported (+1,009 MT/+5%). Recycled waste: 35%

instead of 33%.

District heating of 48,437 MWh not included in 2020 reported figures.

Carbon emissions were lower in 2020 than reported, by 45,220 metric tones CO2 due to the

adjustments mentioned above, as well as the fact that the renewable energy was not considered with

zero emissions factor, in line with the GRI market-based approach.

Energy intensity was calculated in 2020 only based on electricity figures. Recomputed energy,

considering also gas and district heating consumption, was included in this report.

ENVIRONMENTAL Factbook

PORTFOLIO OVERVIEW - INCOME PRODUCING PROPERTIES

Country

Total number of

properties 2021

Like-for-like number of

properties 2021 -2020

Retail

Romania

Poland

Slovakia

Bulgaria

Hungary

Serbia

Lithuania

Croatia

Czech Republic

Office

Romania

Slovakia

Bulgaria

Industrial

Romania

TOTAL

202

Electricity

Country

Absolute electricity (MWh)

Like-for-like electricity (MWh)

2021

2020

%(2021-2020

)

2021

2020

%(2021-2020

)

Retail

468,163

423,406

11%

387,523

349,391

11%

Romania

186,369

154,771

20%

166,157

141,166

18%

Poland

110,809

103,299

77,731

73,272

Slovakia

23,150

24,290

-5%

23,150

24,290

-5%

Bulgaria

37,536

34,309

37,536

34,309

Hungary

35,379

33,351

35,379

33,351

Serbia

20,623

22,133

-7%

17,178

15,023

14%

Lithuania

15,088

15,125

Croatia

22,925

21,364

22,925

21,364

Czech Republic

16,284

14,764

10%

7,467

6,616

13%

Office

3,115

19,483

-84%

3,115

3,300

-6%

Romania

16,183

Slovakia

1,182

1,230

-4%

1,182

1,230

-4%

Bulgaria

1,933

2,070

-7%

1,933

2,070

-7%

Industrial

4,885

4,828

4,885

4,828

Romania

4,885

4,828

4,885

4,828

TOTAL

476,163

447,717

395,523

357,519

11%

203

Renewable energy

Gas consumption

Country

Absolute gas (MWh)

Like-for-like gas (MWh)

2021

2020

%(2021-2020)

2021

2020

%(2021-2020)

Retail

81,471

70,977

15%

71,698

62,516

15%

Romania

44,292

37,982

17%

36,942

32,388

14%

Poland

1,240

1,270

-2%

554

560

-1%

Slovakia

8,798

7,377

19%

8,798

7,377

19%

Bulgaria

4,901

4,528

4,901

4,528

Hungary

13,245

13,310

13,245

13,310

Serbia

3,477

2,189

59%

2,415

783

208%

Lithuania

675

751

-10%

Croatia

4,843

3,570

36%

4,843

3,570

36%

Czech

Republic

Office

176

2,719

-94%

176

112%

Romania

2,636

Slovakia

176

112%

176

112%

Bulgaria

Industrial

11,357

9,615

18%

11,357

9,615

18%

Romania

11,357

9,615

18%

11,357

9,615

18%

TOTAL

93,004

83,311

12%

83,231

72,214

15%

District heating

Country

Absolute district heating (MWh)

Like-for-like district heating (MWh)

2021

2020

%(2021-2020)

2021

2020

%(2021-2020)

Retail

55,280

45,452

22%

39,327

33,811

16%

Romania

Poland

25,150

20,497

23%

18,234

14,872

23%

Slovakia

13,175

12,264

13,175

12,264

Bulgaria

1,520

1,535

-1%

1,520

1,535

-1%

Hungary

Serbia

Lithuania

5,454

2,701

102%

Croatia

Czech Republic

9,981

8,455

18%

6,398

5,140

24%

Office

3,062

2,985

3,062

2,985

Romania

Slovakia

1,328

1,220

1,328

1,220

Bulgaria

1,734

1,765

-2%

1,734

1,765

-2%

Industrial

Romania

TOTAL

58,342

48,437

20%

42,389

36,796

15%

205

Energy intensity

*Serbian properties sold in 2021 and Romanian Office portfolio sold in 2020 were excluded from the

figures above **Footfall not monitored for retail parks, office and industrial

Water

Country

Absolute water (m3)

Like-for-like water (m3)

2021

2020

%(2021-2020)

2021

2020

%(2021-2020)

Retail

1,514,120

1,435,035

1,298,314

1,203,519

Romania

702,095

659,407

628,851

589,294

Poland

269,492

246,928

192,785

173,859

11%

Slovakia

87,678

93,643

-6%

87,678

93,643

-6%

Bulgaria

133,734

113,945

17%

133,734

113,945

17%

Hungary

113,452

117,700

-4%

113,452

117,700

-4%

Serbia

67,750

71,206

-5%

58,574

43,216

36%

Lithuania

37,500

40,681

-8%

Croatia

38,139

32,747

16%

38,139

32,747

16%

Czech Republic

64,280

58,778

45,101

39,115

15%

Office

8,428

47,087

-82%

8,428

11,785

-28%

Romania

35,302

Slovakia

2,052

3,260

-37%

2,052

3,260

-37%

Bulgaria

6,376

8,525

-25%

6,376

8,525

-25%

Industrial

20,170

14,670

37%

20,170

14,670

37%

Romania

20,170

14,670

37%

20,170

14,670

37%

TOTAL

1,542,718

1,496,792

1,326,912

1,229,974

WATER INTENSITY

Country

Water intensity (m3/m2/year)

Like-for-like water intensity (m3/m2/

year)

2021

2020

%(2021-202

2021

2020

%(2021-202

Retail

0.38

0.36

0.41

0.38

Romania

0.51

0.47

0.52

0.48

Poland

0.28

0.27

0.31

0.28

11%

Slovakia

0.32

0.34

-6%

0.32

0.34

-6%

Bulgaria

0.39

0.33

18%

0.39

0.33

18%

Hungary

0.39

0.41

-5%

0.39

0.41

-5%

Serbia*

0.39

0.34

15%

0.39

0.29

34%

Lithuania

0.24

0.26

-8%

Croatia

0.18

0.15

20%

0.18

0.15

20%

Czech Republic

0.47

0.43

0.7

0.61

15%

Office

0.15

0.2

-25%

0.15

0.2

-25%

Romania*

Slovakia

0.11

0.18

-39%

0.11

0.18

-39%

Bulgaria

0.16

0.22

-27%

0.16

0.22

-27%

Industrial

0.71

0.52

37%

0.71

0.52

37%

206

Romania

0.71

0.52

37%

0.71

0.52

37%

TOTAL

0.38

0.36

0.41

0.37

11%

*Serbian properties sold in 2021 and Romanian Office portfolio sold in 2020 were excluded from the figures

above

WATER PUMPED ON PREMISE FROM THE UNDERGROUND - USED FOR TECHNICAL

AREAS AND EQUIPMENT IN GENERAL

Property

Country

2021 (m3)

2020 (m3)

City Park

Romania

6,614

2,601

Aupark Kosice Mall & Aupark Kosice Tower

Slovakia

13,789

13,843

Aupark Shopping Center Piestany

Slovakia

Aupark Zilina

Slovakia

3,240

4,755

Paradise Center

Bulgaria

283

514

Arena Centar And Retail Park

Croatia

10,068

9,724

Otopeni Warehouse

Romania

770

Total

34,798

31,467

WASTE

CO2 EMISSIONS

Emissions CO2 - Intensity

Country

Carbon emissions (kg CO2e /m2/ year)

Like-for-like carbon emissions (kg

CO2e /m2/ year)

2021

2020

%(2021-202

2021

2020

%(2021-202

Retail

26.6

34.5

-23%

25.3

33.8

-25%

Romania

17.2

24.3

-29%

17.3

25.1

-31%

Poland

57.7

71.5

-19%

59.8

74.2

-19%

Slovakia

16.5

10%

16.5

10%

Bulgaria

12.5

31.3

-60%

12.5

31.3

-60%

Hungary

36.2

Serbia*

2.9

1.9

53%

2.9

0.9

222%

Lithuania

8.6

4.7

83%

Croatia

4.1

7.7

-47%

4.1

7.7

-47%

Czech Republic

16.6

63.6

-74%

22.5

65.1

-65%

Office

24.9

-20%

24.9

-20%

Romania*

Slovakia

15.7

15%

15.8

14%

Bulgaria

20.9

29.2

-28%

20.9

29.2

-28%

Industrial

101

90.8

11%

101

90.8

11%

Romania

101

90.8

11%

101

90.8

11%

TOTAL

34.7

-22%

25.9

34.1

-24%

*Serbian properties sold in 2021 and Romanian Office portfolio sold in 2020 were excluded from the figures

above

207

Covid-19 properties certified as Covid-19 compliant

Property

Country

Alfa Centrum Bialystok

Poland

Arena Centar and Retail Park

Croatia

Arena Mall

Hungary

Aura Centrum

Poland

Bonarka City Center

Poland

City Park

Romania

Focus Mall Piotrkow Trybunalski

Poland

Focus Mall Zielona Gora

Poland

Forum Liberec Shopping Centre

Czech Republic

Forum Ústí nad Labem

Czech Republic

Galeria Tomaszow

Poland

Galeria Warminska

Poland

Galeria Wolomin

Poland

Karolinka Shopping Centre

Poland

Mammut Shopping Centre

Hungary

Mega Mall

Romania

Paradise Center

Bulgaria

Platan Shopping Centre

Poland

Pogoria Shopping Centre

Poland

Promenada Mall

Romania

Promenada Novi Sad

Serbia

Promenada Sibiu

Romania

Serdika Center

Bulgaria

Serdika Office

Bulgaria

Severin Shopping Center

Romania

Shopping City Satu Mare

Romania

Shopping City Sibiu

Romania

Shopping City Targu Jiu

Romania

Shopping City Targu Mures

Romania

Shopping City Timisoara

Romania

Solaris Shopping Centre

Poland

Aupark Kosice Mall

Slovakia

Aupark Zilina

Slovakia

Galeria Mlyny

Slovakia

Korzo Shopping Centrum

Slovakia

Aupark Shopping Center Piestany

Slovakia

Aupark Kosice Tower

Slovakia

BREEEAM CERTIFICATION STATUS

Property

type

Property name

Country

Status

Scoring obtained/

targeted

Retail

Bonarka City Center

Poland

Certified

excellent

Retail

Arena Mall

Hungary

Certified

very good

Retail

Mega Mall

Romania

Certified

excellent

Retail

Mammut Shopping Centre

Hungary

Certified

very good

Retail

Paradise Center

Bulgaria

Under ongoing certification

excellent

208

Retail

Arena Centar

Croatia

Certified

very good

Retail

City Park

Romania

Certified

excellent

Retail

Promenada Mall

Romania

Certified

excellent

Retail

Focus Mall Zielona Gora

Poland

Under ongoing certification

excellent

Retail

Aupark Kosice Mall

Slovakia

Under ongoing certification

very good

Retail

Galeria Warminska

Poland

Certified

excellent

Retail

Serdika Center

Bulgaria

Under ongoing certification

excellent

Retail

Karolinka Shopping Centre

Poland

Certified

excellent

Retail

Ozas Shopping and

Entertainment Centre

Lithuania

Certified

excellent

Retail

Shopping City Sibiu

Romania

Certified

excellent

Retail

Shopping City Timisoara

Romania

Certified

excellent

Retail

Aupark Zilina

Slovakia

Certified

excellent

Retail

Galeria Mlyny

Slovakia

Certified

very good

Retail

Promenada Novi Sad

Serbia

Under ongoing certification

excellent

Retail

Shopping City Galati

Romania

Certified

excellent

Retail

Iris Titan Shopping Center

Romania

Certified

excellent

Retail

Promenada Sibiu

Romania

Certified

excellent

Retail

Alfa Centrum Bialystok

Poland

Certified

excellent

Retail

Shopping City Targu Mures

Romania

Under ongoing certification

excellent

Retail

Forum Ústí nad Labem

Czech

Republic

Under ongoing certification

very good

Retail

Shopping City Deva

Romania

Certified

very good

Retail

Braila Mall

Romania

Certified

very good

Retail

Forum Liberec Shopping

Centre

Czech

Republic

Under ongoing certification

excellent

Retail

Solaris Shopping Centre

Poland

Under ongoing certification

excellent

Retail

Vulcan Value Centre

Romania

Certified

excellent

Retail

Pogoria Shopping Centre

Poland

Certified

excellent

Retail

Platan Shopping Centre

Poland

Certified

excellent

Retail

Aura Centrum

Poland

Under ongoing certification

excellent

Retail

Shopping City Buzau

Romania

Under ongoing certification

excellent

Retail

Galeria Wolomin

Poland

Certified

very good

Retail

Shopping City Satu Mare

Romania

Certified

excellent

Retail

Shopping City Piatra Neamt

Romania

Certified

excellent

Retail

Shopping City Targu Jiu

Romania

Certified

excellent

Retail

Shopping City Râmnicu Vâlcea

Romania

Certified

excellent

Retail

Focus Mall Piotrkow

Trybunalski

Poland

Certified

excellent

Retail

Aupark Shopping Center

Piestany

Slovakia

Under ongoing certification

very good

Retail

Korzo Shopping Centrum

Slovakia

Under ongoing certification

very good

Retail

Severin Shopping Center

Romania

Certified

very good

Retail

Galeria Tomaszow

Poland

Certified

excellent

Retail

Pitesti Retail Park

Romania

Certified

excellent

Office

Aupark Kosice Tower

Slovakia

Under ongoing certification

very good

Office

Serdika Office

Bulgaria

Under ongoing certification

excellent

209

LED status at Group level

Asset

LED status

Bonarka City Center

20%

Arena Mall

Mega Mall

100%

Mammut Shopping Centre

Paradise Center

100%

Arena Centar and Arena Retail Park

100%

City Park

100%

Promenada Mall

50%

Aupark Kosice Mall

Galeria Warminska

100%

Serdika Center

100%

Karolinka Shopping Centre

100%

Ozas Shopping and Entertainment Centre

Shopping City Sibiu

100%

Shopping City Timisoara

100%

Galeria Mlyny

Aupark Zilina

Promenada Novi Sad

100%

Focus Mall Zielona Gora

100%

Shopping City Galati

100%

Promenada Sibiu

100%

Iris Titan Shopping Center

100%

Alfa Centrum Bialystok

Forum Ústí nad Labem

100%

Shopping City Deva

100%

Shopping City Targu Mures

100%

Braila Mall

70%

Solaris Shopping Centre

100%

Forum Liberec Shopping Centre

100%

Pogoria Shopping Centre

100%

Platan Shopping Centre

100%

Vulcan Value Centre

90%

Aura Centrum

70%

Galeria Wolomin

100%

Shopping City Buzau

100%

Shopping City Satu Mare

100%

Shopping City Piatra Neamt

100%

Shopping City Targu Jiu

100%

Shopping City Ramnicu Valcea

100%

Focus Mall Piotrkow Trybunalski

100%

Aupark Shopping Center Piestany

Korzo Shopping Centrum

Severin Shopping Center

100%

Galeria Tomaszow

100%

Pitesti Retail Park

Regional strip centres

100%

210

Serdika Office

100%

Aupark Kosice Tower

100%

Rasnov Industrial Facility

60%

Otopeni Warehouse

60%

List of studies, reports, assessments

Property

Legionella

Assessment

Illuminance

levels

measurement

Acoustic survey

Ecology Report,

Landscape and

Habitat

management

Plan

Iris Titan Shopping

Center

Yes

Shopping City Galati

Yes

Braila Mall

Yes

Mega Mall

Yes

Promenada Mall

Yes

City Park

Yes

Shopping City Deva

Yes

Ploiesti Shopping

City

Yes

Severin Shopping

Center

Yes

Shopping City Buzau

in progress

Shopping City Sibiu

Yes

Pitesti Retail Park

Yes

Vulcan Value Centre

Yes

Shopping City

Timisoara

Yes

Shopping City Targu

Jiu

Yes

Shopping City Piatra

Neamt

Yes

Shopping City

Ramnicu Valcea

Yes

Shopping City Satu

Mare

Yes

Promenada Sibiu

Yes

Shopping City Targu

Mures

Aupark Zilina

Yes

Aupark Kosice Mall

Yes

Aupark Shopping

Center Piestany

Yes

Korzo Shopping

Centrum

Yes

Galeria Mlyny

Yes

Forum Usti nad

Labem

Yes

Forum Liberec

Shopping Centre

Yes

211

Promenada Novi

Sad

Yes

Arena Centar and

Retail Park

Yes

Serdika Center

Yes

Paradise Center

Yes

Focus Mall Zielona

Gora

Yes

Galeria Tomaszow

Yes

Karolinka Shopping

Centre

Yes

Platan Shopping

Centre

Yes

Pogoria Shopping

Centre

Yes

Bonarka City Center

Yes

Galeria Warminska

Yes

Alfa Centrum

Bialystok

Yes

Solaris Shopping

Centre

Yes

Focus Mall Piotrkow

Trybunalski

Yes

Galeria Wolomin

Yes

Aura Centrum

Yes

Arena Mall

Yes

Mammut Shopping

Centre

Yes

Ozas Shopping and

Entertainment

Centre

Yes

Aupark Kosice

Tower

Yes

Serdika Office

Occupant satisfaction survey

Country

Score

Number of assets in scope

Croatia

4.4

Czech Republic

4.16

Lithuania

4.08

Poland

3.84

Romania

3.81

Serbia

3.92

Slovakia

3.46

Hungary

not assessed

Bulgaria

not assessed

212

EPRA sustainability performance measures

Absolute performance (Abs)

Like-for-like performance (LFL)

EPRA

Code

Units of

measure

Indicator

2021

2020

(2020-

2021)

2021

2020

(2020-2021

)

Energy

Elec-Abs

Elec-LfL

MWh

Electricity

Retail

468,163

423,406

11%

387,523

349,391

11%

Romania

186,369

154,771

20%

166,157

141,166

18%

Poland

110,809

103,299

77,731

73,272

Slovakia

23,150

24,290

-5%

23,150

24,290

-5%

Bulgaria

37,536

34,309

37,536

34,309

Hungary

35,379

33,351

35,379

33,351

Serbia

20,623

22,133

-7%

17,178

15,023

14%

Lithuania

15,088

15,125

Croatia

22,925

21,364

22,925

21,364

Czech

Republic

16,284

14,764

10%

7,467

6,616

13%

Office

3,115

19,483

-84%

3,115

3,300

-6%

Romania

16,183

-100%

Slovakia

1,182

1,230

-4%

1,182

1,230

-4%

Bulgaria

1,933

2,070

-7%

1,933

2,070

-7%

Industrial

4,885

4,828

4,885

4,828

Romania

4,885

4,828

4,885

4,828

TOTAL

476,163

447,717

395,523

357,519

11%

DH&C-

Abs

DH&C-

LfL

MWh

District

heating and

cooling

Retail

55,280

45,452

22%

39,327

33,811

16%

Romania

Poland

25,150

20,497

23%

18,234

14,872

23%

Slovakia

13,175

12,264

13,175

12,264

Bulgaria

1,520

1,535

-1%

1,520

1,535

-1%

Hungary

Serbia

Lithuania

5,454

2,701

102%

Croatia

Czech

Republic

9,981

8,455

18%

6,398

5,140

24%

Office

3,062

2,985

3,062

2,985

Romania

Slovakia

1,328

1,220

1,328

1,220

Bulgaria

1,734

1,765

-2%

1,734

1,765

-2%

Industrial

Romania

TOTAL

58,342

48,437

20%

42,389

36,796

15%

Absolute performance (Abs)

Like-for-like performance (LFL)

EPRA

Code

Units of

measure

Indicator

2021

2020

(2020-

2021)

2021

2020

(2020-2021

)

213

Energy

Fuels-Abs

Fuels-LfL

MWh

Fuels (Gas)

Retail

81,471

70,977

15%

71,698

62,516

15%

Romania

44,292

37,982

17%

36,942

32,388

14%

Poland

1,240

1,270

-2%

554

560

-1%

Slovakia

8,798

7,377

19%

8,798

7,377

19%

Bulgaria

4,901

4,528

4,901

4,528

Hungary

13,245

13,310

13,245

13,310

Serbia

3,477

2,189

59%

2,415

783

208%

Lithuania

675

751

-10%

Croatia

4,843

3,570

36%

4,843

3,570

36%

Czech

Republic

Office

176

2,719

-94%

176

112%

Romania

2,636

Slovakia

176

112%

176

112%

Bulgaria

Industrial

11,357

9,615

18%

11,357

9,615

18%

Romania

11,357

9,615

18%

11,357

9,615

18%

TOTAL

93,004

83,311

12%

83,231

72,214

15%

Energy-

Int

kWh/m2/

year

Energy

intensity

Retail

161.6

144.4

12%

166

147.7

12%

Romania

189.5

156.6

21%

187.2

157.9

19%

Poland

144.1

138.6

160

147.1

Slovakia

174.6

170.9

174.6

170.9

Bulgaria

127.1

116.7

127.1

116.7

Hungary

174.4

167.1

174.1

167.1

Serbia

131.1

115.7

13%

131.1

105.8

24%

Lithuania

134.2

117.5

14%

Croatia

129.3

116.1

11%

129.3

116.1

11%

Czech

Republic

202.5

179

13%

218.3

185.2

18%

Office

109.6

109.9

109.6

109.9

Romania

Slovakia

145.2

136.9

145.2

136.9

Bulgaria

97.2

-4%

97.2

-4%

Industrial

575.7

511.9

12%

575.7

511.9

12%

Romania

575.7

511.9

12%

575.7

511.9

12%

TOTAL

163.8

146.6

12%

168.6

150.3

12%

Greenh

ouse

gas

GHG-Dir-

Abs

MTCO2e

Direct -

Scope 1

Retail

6,497

6,201

6,175

5,752

Romania

1,544

1,752

-12%

1,448

1,594

-9%

Poland

-8%

Slovakia

1,560

1,306

19%

1,560

1,306

19%

Bulgaria

589

556

589

556

Hungary

1,612

1,621

-1%

1,612

1,621

-1%

Serbia

281

283

-1%

214%

Lithuania

Croatia

878

647

36%

878

647

36%

Czech

Republic

Office

493

-94%

113%

Romania

478

Slovakia

113%

Bulgaria

Industrial

22%

Romania

22%

TOTAL

6,601

6,753

-2%

6,279

5,826

Absolute performance (Abs)

Like-for-like performance (LFL)

EPRA

Code

Units of

measure

Indicator

2021

2020

(2020-

2021)

2021

2020

(2020-2021

)

214

Greenh

ouse

gas

GHG-

Indir-Abs

MT CO2e

Indirect -

Scope 2

Retail

32,363

52,314

-38%

23,935

40,221

-40%

Romania

3,691

6,857

-46%

3,417

6,358

-46%

Poland

16,900

26,942

-37%

10,794

18,982

-43%

Slovakia

2,985

2,817

2,985

2,817

Bulgaria

1,664

5,720

-71%

1,664

5,720

-71%

Hungary

3,626

3,473

3,626

3,473

Serbia

Lithuania

1,236

612

102%

Croatia

351

Czech

Republic

2,261

5,542

-59%

1,449

2,520

-43%

Office

496

682

-27%

496

536

-7%

Romania

146

Slovakia

301

276

301

276

Bulgaria

195

260

-25%

195

260

-25%

Industrial

Romania

TOTAL

32,859

52,996

-38%

24,431

40,757

-40%

GHG-

Indir-Abs

MT CO2e

Indirect -

Scope 3

Retail

65,825

77,984

-16%

50,495

61,997

-19%

Romania

18,680

25,441

-27%

16,144

22,784

-29%

Poland

39,299

39,177

26,627

27,427

-3%

Slovakia

-15%

Bulgaria

2,059

4,536

-55%

2,059

4,536

-55%

Hungary

5,281

4,773

11%

5,281

4,773

11%

Serbia

349

114

206%

349

114

206%

Lithuania

122

136

-10%

Croatia

653

-100%

Czech

Republic

3,113

1,669

-100%

Office

631

3,206

-80%

631

890

-29%

Romania

2,316

Slovakia

Bulgaria

631

890

-29%

631

890

-29%

Industrial

2,779

2,503

11%

2,779

2,503

11%

Romania

2,779

2,503

11%

2,779

2,503

11%

TOTAL

69,235

83,693

-17%

53,905

65,390

-18%

GHG-Int

kg CO2e/

m2/year

GHG

emissions

intensity -

Scope 1,2,3

emissions

Retail

26.6

34.5

-23%

25.3

33.8

-25%

Romania

17.2

24.3

-29%

17.3

25.1

-31%

Poland

57.7

71.5

-19%

59.8

74.2

-19%

Slovakia

16.5

10%

16.5

10%

Bulgaria

12.5

31.3

-60%

12.5

31.3

-60%

Hungary

36.2

Serbia

2.9

1.9

53%

2.9

190%

Lithuania

8.6

4.7

83%

Croatia

4.1

7.7

-47%

4.1

7.7

-47%

Czech

Republic

16.6

63.6

-74%

22.5

65.1

-65%

Office

24.9

-20%

24.9

-20%

Romania

Slovakia

15.7

15%

15.7

15%

Bulgaria

20.9

29.2

-28%

20.9

29.2

-28%

Industrial

101

90.8

11%

101

90.8

11%

Romania

101

90.8

11%

101

90.8

11%

TOTAL

34.7

-22%

25.9

34.1

-24%

Absolute performance (Abs)

Like-for-like performance (LFL)

EPRA

Code

Units of

measure

Indicator

2021

2020

(2020-

2021)

2021

2020

(2020-2021

)

215

Water

Water-

Abs

Water-

LfL

Water

consumptio

Retail

1,514,120

1,435,035

1,298,314

1,203,519

Romania

702,095

659,407

628,851

589,294

Poland

269,492

246,928

192,785

173,859

11%

Slovakia

87,678

93,643

-6%

87,678

93,643

-6%

Bulgaria

133,734

113,945

17%

133,734

113,945

17%

Hungary

113,452

117,700

-4%

113,452

117,700

-4%

Serbia

67,750

71,206

-5%

58,574

43,216

36%

Lithuania

37,500

40,681

-8%

Croatia

38,139

32,747

16%

38,139

32,747

16%

Czech

Republic

64,280

58,778

45,101

39,115

15%

Office

8,428

47,087

-82%

8,428

11,785

-28%

Romania

35,302

Slovakia

2,052

3,260

-37%

2,052

3,260

-37%

Bulgaria

6,376

8,525

-25%

6,376

8,525

-25%

Industrial

20,170

14,670

37%

20,170

14,670

37%

Romania

20,170

14,670

37%

20,170

14,670

37%

TOTAL

1,542,718

1,496,792

1,326,912

1,229,974

Water-Int

m3/m2/year

Water

Intensity

Retail

0.38

0.36

0.41

0.38

Romania

0.51

0.47

0.52

0.48

Poland

0.28

0.27

0.31

0.28

11%

Slovakia

0.32

0.34

-6%

0.32

0.34

-6%

Bulgaria

0.39

0.33

18%

0.39

0.33

18%

Hungary

0.39

0.41

-5%

0.39

0.41

-5%

Serbia

0.39

0.34

15%

0.39

0.29

34%

Lithuania

0.24

0.26

-8%

Croatia

0.18

0.15

20%

0.18

0.15

20%

Czech

Republic

0.47

0.43

0.7

0.61

15%

Office

0.15

0.2

-25%

0.15

0.2

-25%

Romania

Slovakia

0.11

0.18

-39%

0.11

0.18

-39%

Bulgaria

0.16

0.22

-27%

0.16

0.22

-27%

Industrial

0.71

0.52

37%

0.71

0.52

37%

Romania

0.71

0.52

37%

0.71

0.52

37%

TOTAL

0.38

0.36

0.41

0.37

11%

Waste

Waste-

Abs

Waste-

LfL

Waste

Retail

23,090

21,216

18,839

17,407

Romania

11,843

10,188

16%

9,745

8,582

14%

Poland

4,035

3,645

11%

2,811

2,544

10%

Slovakia

1,268

1,377

-8%

1,268

1,377

-8%

Bulgaria

2,168

2,250

-4%

2,168

2,250

-4%

Hungary

1,162

1,116

1,162

1,116

Serbia

1,032

1,305

-21%

674

652

Lithuania

187

128

46%

Croatia

808

635

27%

808

635

27%

Czech

Republic

587

572

203

251

-19%

Office

990

-99%

-65%

Romania

970

Slovakia

-63%

Bulgaria

-100%

Industrial

34%

Romania

34%

TOTAL

23,152

22,247

18,901

17,468

216

Analysis of shareholders and share trading

Shareholder spread in terms of

the JSE Listing Requirements

Number of

shareholders

Number of shares

held

Percentage of

issued shares (%)

Public

12 457

395 795 632

64.99

Non-public

209 825 448

34.45

Directors and employees

2 185 565

0.36

Other

1 188 262

0.2

TOTAL

12 511

608 994 907

100

Size of holding

Number of

shareholders

Number of shares

held

Percentage of

issued shares (%)

1 to 2 500 shares

9 798

5 887 030

0.97

2 501 to 10 000 shares

1 263

6 351 358

1.04

10 001 to 100 000 shares

986

33 578 744

5.51

100 001 to 1 000 000 shares

376

121 052 281

19.88

1 000 001 to 3 500 000 shares

86 042 504

14.13

More than 3 500 000 shares

354 894 728

58.28

Other

1 188 262

0.2

TOTAL

12 511

608 994 907

100

Registered shareholders owning 5% or more of issued

Number of shares held

Percentage of issued

shares (%)

2021

Fortress REIT Limited

143 308 793

23.53

Public Investment Corporation

66 516 655

10.92

State Street Bank and Trust Company (Custodian)

34 326 524

5.64

TOTAL

244 151 972

40.09

2020

Fortress REIT Limited

134 650 890

22.11

Public Investment Corporation

63 162 350

10.37

Resilient REIT Limited

44 516 262

7.31

State Street Bank and Trust Company (Custodian)

32 502 543

5.34

TOTAL

274 832 045

45.13

Beneficial shareholding of 5% or more of issued

Number of shares

controlled

Percentage of issued

shares (%)

2021

Fortress REIT Limited

143 308 793

23.53

Public Investment Corporation

66 516 655

10.92

TOTAL

209 825 448

34.45

2020

Fortress REIT Limited

134 650 890

22.11

Public Investment Corporation

63 162 350

10.37

Resilient REIT Limited

44 516 262

7.31

TOTAL

242 329 502

39.79

217

Beneficial shareholding of Directors

At 31 Dec 2021

Direct Holding

Indirect

Holding

Associates

Total

Held

Percentage of issued

shares (%)

Alex Morar*

487 903

925 292

1 413 195

0.23

Mirela Covasa*

359 432

200 199

559 631

0.09

Rüdiger Dany

Marek Noetzel

253 594

0.04

George Aase

10 000

Antoine Dijkstra

4 693

Andreas Klingen

Andre van der Veer

55 000

8 458

63 458

0.01

Steven Brown

Andries de Lange

52 146

0.01

Ana-Maria Mihaescu

Jonathan Lurie

TOTAL

1 170 622

1 177 637

8 458

2 356 717

0.38

*As a result of the exit arrangements signed with the former CEO and CFO during 2021, the Company transferred to them

299,587 shares and 214,053 shares respectively, representing the total number of unvested shares as at exit date from the

previous 2017 – 2021 awards. The shares have an associated selling restriction correlated with the initial vesting of each

tranche.

There were no changes in the Directors beneficial shareholding between year-end and the publication

of this annual report. None of the shares held by the Executive and non-Executive Directors are

subject to security, guarantee, collateral and they are not encumbered in any way, except for 88, 358

shares held by Marek Noetzel, which are pledged as security for the loan under Share Purchase

Scheme. For further details on the Executive Directors shareholding as a result of share-based

incentive programs, please refer to Note 37 of the Financial Statements.

At 31 Dec 2020

Direct Holding

Indirect

Holding

Associates

Total Shares

Held

Percentage of

issued shares

(%)

Alex Morar

459 007

925 292

1 384 299

0.22

Mirela Covasa

340 168

200 199

540 367

0.09

Marek Noetzel

239 146

0.04

Robert Emslie

10 429

George Aase

Antoine Dijkstra

4 693

Andreas Klingen

Andre van der

Veer

101 000

8 458

109 458

0.02

Steven Brown

Andries de Lange

52 146

0.01

Sipho Vuso Majija

(alternate to

Steven Brown)

TOTAL

1 144 014

1 188 066

8 458

2 340 538

0.38

There were no changes in the Directors beneficial shareholding between 2020 year-end and the

publication of the 2020 annual report. None of the shares held by the Executive and non-Executive

Directors are subject to security, guarantee, collateral and they are not encumbered in any way, except

for 88,358 shares held by Marek Noetzel, which are pledged as security for the loan under Share

Purchase Scheme. For further details on the Executive Directors shareholding as a result of share-

based incentive programs, please refer to Note 37 of the Financial Statements.

218