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Financial performance in 2016

Total return

The Fund realised a total fund retun of 8.4% (2015: 4.5%), consisting of a 4.6% income return (2015: 4.4%) and a
3.9% capital growth (2015: 0.1%). The total return in Euro's grew to € 64.3 million in 2016, from € 32.2 million in 2015. The main driver of the growth in the total return was the increase in capital growth, compared to 2015.

The Fund's NAV grew to € 824 million from € 738 in 2015, a growth of 12%. The main drivers of the NAV growth were
the acquisitions of investment property, the completion of new assets and redevelopments, and the positive revaluations of the investment properties in the portfolio.

Income return

The Fund realised an income return of 4.6% in 2016, 0.2%-point higher than in 2015.

The main driver of the increase in the income return for 2016, compared to 2015, is the increase of the net rental income in 2016. Due to acquisitions, the completion of new assets and redevelopment, the net rental income in 2016 increased with 13.9% compared to 2015. Also the modest result on the disposal of Kop van Zuid shopping Centre in Rotterdam contributed to a higher income return in 2016.

The secured rent until 2019 (three-year horizon) at year-end 2016 increased to 91% of the 2016 gross rental income (year-end 2015: 83%). The Fund’s expiration risk is very low since more than half of the total rental income of the Fund (51.4%) expires after 2021. In 2016, the new and extended lease contracts, totaling a 72,977 m² and a rental value of € 16.6 million per year, also contributed to the increase of the secured rent and thereby lowering the expiration risk for The Fund. As a result of the new and extend lease contracts, the average financial occupancy rate also increased to 94.7% in 2016, compared to 94.2% in 2015.

Capital growth

The Fund realised a capital growth of 3.9% in 2016, 3.8%-point more then in 2015.

Property values continued to show an upward trend in 2016 compared to 2015. We believe that this is due to the fact that the Fund is largely invested in the Randstad conurbation and the Fund's continued focus on optimising the portfolio by upgrading and future-proofing the assets.

Property performance

The total property return for 2016 came in at 9.3% (2015: 5.3%), consisting of a 5.2% direct property return (2015:
5.0%) and a 4.1% indirect property return (2015: 0.3%). The total property return is with 9.3% an outperformance of 5.5% of the the IPD Property Index return 3.8%.

The fund return (INREV) and property return (IPD) are different performance indicators. The fund return is
calculated according to the INREV Guidelines as a percentage of the net asset value (INREV NAV) and the property
return is calculated according to the IPD methodology as a percentage of the value of the investment properties.
INREV e.g. includes cash, the fee costs and administrative costs in the calculation of the income return (INREV).
Furthermore the amortisation of acquisition is threated differently by INREV and IPD.

Capital Management

Leverage

In accordance with the Information Memorandum, The Fund will be financed solely with equity and will have no
leverage, but may borrow a maximum of 3% of the balance sheet total for liquidity management purposes.

During 2016, the Fund was solely financed with equity and did not use any loan capital for liquidity management
purposes.

Treasury management

For treasury management the Fund acted accordingly its treasury policy in 2016, in order to manage liquidity and financial risks for the Fund. The main objectives of the treasury management activities were to secure shareholders’ dividend pay-out and liquidity by redemptions, as well as managing the Fund’s cash position.

At year-end 2016, The Fund had € 39.8 million in freely available cash and € 13.5 million in a 30-day deposit as at 31 December 2016. During 2016 the cash position increased by € 25.7 million, as compared to year-end 2015.

During 2016, The Fund paid € 33.4 million as dividend to the shareholders. Also during 2016, two capital calls were executed at a total amount of € 55 million.

Interest rate and currency exposure

During 2016 The Fund was subject to the negative interest rate development for its bank balances. In order to minimalize the costs of the negative interest rate on the bank balances, during 2016 the Fund used 30-day bank deposits.

As the Fund had no external loans and borrowings during 2016, as well as The Fund did not had any foreign currency exposure during 2016, The Fund had no exposure to interest rate risks or currency exposure risks.

Dividend and dividend policy

The Board of Directors of Bouwinvest proposes to pay a dividend of € 114.76 per share for 2016 (2015: € 108.84), which corresponds to a pay-out ratio of 100%. It is proposed that the dividend be paid in cash, within the constraints imposed by the company’s fiscal investment institution (FII) status. Of this total dividend, 76.4% was paid out in 2016, with the final quarterly instalment paid out in March 2016. The remainder of the distribution over 2016 will be paid out in a final instalment on 25 April 2017, following approval by the Annual General Meeting of Shareholders to be held on 12 April 2017.

Tax

The Fund is structured as a fiscal investment institution (FII) under Dutch law and is therefore not subject to corporate tax. Being an FII, the Fund is obliged by law to maintain a pay-out ratio of 100% of the Fund’s distributable profit; as stated above, the Fund proposed to pay out 100% of its distributable profit. The Fund met its obligations related to value added tax, transfer tax and other applicable taxes in their entirety in 2016.

AIFMD

Bouwinvest is the fund manager of the Retail Fund. In February 2014, Bouwinvest was among the first Dutch institutions to obtain the AIFMD licence. Under this licence, Intertrust Depositary Services B.V. acts as independent depositary of the Fund for the benefit of the investors and performs all depositary functions and duties pursuant to AIFMD regulations.

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