Desarrollar programas de ordenamiento para la venta de insumos dentro del mercado de abastos.

3RD LINE

3RD LINE

THREE LINES OF DEFENCE

CONTRACTUAL RELATION

REPORTING LINE, ESCALATION LINE RISK MANAGER - ADVISORY BOARD FUND MANAGER

Fund Management

The authorities and responsibilities of the ARC Fund are clearly set out in the ARC Fund documents: the PPM including the Terms and Conditions, the Fund Services Agreement, and the Portfolio Plan. These documents describe the parameters within which Amvest is authorised to act as a Fund Manager, e.g. the annual investment and divestment volume and required returns for new investments and annual budgets.

The management and operation of the portfolios of the individual funds and the related control measures are described in the ISAE 3402 framework.

Portfolio management is aimed at optimising the portfolio’s long- term return on property. Tenant satisfaction is surveyed regularly and tenant processes are adjusted where necessary. Each year, residential properties are assessed based on their contribution to fund returns through hold-or-sell analyses.

The fund team uses a hands-on approach assisted by a research department that maintains an independent position from the ARC Fund.

The team focuses continuously on improving and monitoring operating cash flows from the individual residential properties. Property management has been outsourced to leading companies, managed directly by the ARC Fund team.

An experienced financial staff supports the Fund Manager in the financial reports of the ARC Fund. For the appraisal of the residential properties, the Fund Manager works with external appraisers with proven track records in residential appraisal in the Netherlands. The ARC Fund’s property portfolio is appraised by external appraisers only.

ISAE 3402

The Fund Manager is structured with an affiliated Fund Services Provider (Amvest Management B.V.), which employs all employees of Amvest group. An ISAE 3402 Type 2 framework is in place to warrant a consistent high quality level of services of the Fund Services Provider to the investment management department. ISAE 3402 provides guidance to enable investors to issue an opinion on a service organisation’s description of controls through an independent service auditor’s assurance report. The scope includes the classes of transactions in the service auditor’s operations that are significant to the user organisation’s financial statements, and processes that are specifically defined by the service organisation.

The ISAE 3402 framework in the context of the ARC Fund consists of the following processes:

 Create and authorise Portfolio Plan  Authorise investment/divestment proposals  Contract matching  Investment authorisation  Divestment authorisation  Valuation  External reporting  Calculating NAV  Distributions

 Subscription and redemption of units, capital calls  Fund governance and deadline management  General IT controls

These key processes carried out by the Fund Services Provider under the responsibility of the Fund Manager are described on an operational level and control objectives and controls within these processes are defined. These controls are tested internally and externally several times a year.

After a test round period the external auditor determines whether the control objectives and controls are suitably designed and in place (Type 1) and performs tests on the operating effectiveness of the controls defined (Type 2). In the end the external auditor gives a yearly assurance report.

The ISAE 3402 framework is a very helpful and relevant addition to the risk management framework and gives the Fund Manager the comfort that procedures on relevant operational processes are followed as agreed.

Every year the process and framework are evaluated. Fund Management does this in close consultation with the fund team, the Fund Services Provider and the external auditor of the ARC Fund. In 2015, minor adjustments were made.

For 2015 (1 December 2014 - 30 November 2015), an ISAE 3402 Type 2 was achieved.

Stress testing

The Fund Manager aims to give the Investors an attractive return against acceptable risks. Stress testing allows the Fund Manager to examine the effect of exceptional but plausible future events on the performance and liquidity position of the ARC Fund. The Fund Manager considers stress testing to be a central tool in identifying, measuring, managing and monitoring performance and liquidity risks, providing a complementary and forward-looking perspective to other performance, and liquidity risk management tools. Stress testing results are reported and used for policy making and for monitoring the Portfolio Plan. The Fund Manager can take mitigating actions or other control measures as required, given the business strategy and risk appetite of the ARC Fund. After discussing the outcome, the most important results will be presented to the Investors through the quarterly report. Liquidity management

Liquidity management is an important element of risk

management. The Fund Manager uses several tools for monitoring its cash flows. Most important is the liquidity forecast in which all real estate and fund related cash flows are forecasted. In addition, the Fund Manager employs a number of control measures to prevent liquidity shortages and takes corrective actions if a

AMVEST RESIDENTIAL CORE FUND - ANNUAL REPORT 2015 41 As at 31 December 2015, the balance of cash and cash equivalents,

receivables and payables amounts to EUR 29.0 million (positive). Also the revolving credit facility of EUR 50.0 million is fully available within 3 working days.

Besides this, the ARC Fund also has undrawn capital commitments from new investors amounting to EUR 155 million and no

redemption requests pending.

In conclusion: there is no need for additional external debt funding in the short term. However, because of the size of the pipeline and investment opportunities, the process of refinancing the external loan facility was already initiated in 2015 (also see under “Portfolio Funding”).

The Alternative Investment Fund Managers Directive (AIFMD) entered into force on 21 July 2011. The aim of AIFMD is to create a comprehensive and effective regulatory and supervisory framework for alternative investment fund managers within the EU. EU Member States had to implement the directive in local Member State law by 22 July 2013. The period 22 July 2013 - 22 July 2014 is a transitional phase and from 22 July 2014 all alternative investment funds (AIF) have to meet the complete legislation and require a license.

The ARC Fund and its Fund Manager are fully in scope of the AIFM directive. The year 2013 was used to prepare all documents for the license application. Accordingly, the Fund Manager submitted an AIFM license application to the Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten, AFM) in January 2014 and received the AIFM license on 26 November 2014.

As of 26 November 2014, Amvest RCF Management B.V. was replaced by Amvest REIM B.V. as Fund Manager of the ARC Fund. This was done in view of the ambitions of the Amvest group to possibly take on the management of additional alternative investment funds that fall under the scope of AIFMD, and, at the same time to obtain only one AIFM license for all such management activities instead of separate licenses for each (special purpose) manager.

Professional liability (Article 9(7) AIFMD)

To cover potential professional liability risks resulting from activities carried out by the Fund Manager, AIFMD allows the Fund Manager two options:

1. Have additional funds which are appropriate in relation to the potential risks arising from professional negligence;

2. Carry a professional indemnity insurance against liabilities related to professional negligence, which are appropriate in relation to the potential risks.

The Fund Manager has chosen to have additional own funds. The amount of additional funds is calculated in conformity with criteria as set in the AIFM directive and discussed with the Dutch Central Bank (DNB).

Every quarterly closing, the Fund Manager recalculates the value of the portfolio (one of the AIFMD criteria) to determine if significant increases have occurred. If this is the case, the Fund Manager recalculates the additional own funds required without undue delay and adjusts the additional own funds accordingly. The Fund Manager ensures that the additional own funds are held in cash on the balance sheet of the Fund Manager.

Leverage: gross and commitment method (Article 109(3) Level II) For the purpose of AIFMD (report to competent authorities) the leverage of the fund is expressed as the ratio between the exposure of the fund and its NAV. The Fund Manager calculates the exposure of the funds managed in accordance with the gross method and the commitment method. AIFMD stipulates a limit of three for the leverage.

Leverage - gross method: (total of assets + notional contract value derivatives -/- cash) / (INREV NAV).

Leverage - gross ARC Fund: (1,333,730 + 240,000 -/- 49,940) / 1,064,184 = 1.43 (2014: 1.61).

Leverage - commitment: (total of assets) / (INREV NAV). Leverage - commitment ARC Fund: 1,333,730 / 1,064,184 = 1.25 (2014: 1.35).

As of 2002 the European Association for Investors in Non-listed Real Estate Vehicles (INREV) has published various guidelines and recommendations that were incorporated in a set of standard INREV Guidelines in 2008. This set was revised in 2014.

The ARC Fund follows these guidelines for all financial ratios, such as NAV, TER and REER (reference is made to the key figures). In 2014 the ARC Fund participated in a reporting best practice survey executed by PwC Luxembourg by order of INREV. In total, 39 non-listed real estate funds were reviewed and compared to the detailed reporting requirements of the revised INREV Guidelines. The overall compliance level was 75%. The ARC Fund scored 84%. The following subjects were reviewed:

 Fund documentation

 Content and frequency of reporting

 General vehicle information, organisation and governance  Capital structure

 Manager’s report  Property report  Risk management

 Other disclosure requirements

The ARC Fund outperformed the average of the sample especially on fund documentation, capital structure, manager’s reporting and risk management. For the item property reporting, INREV advised to use more like for like calculations and to implement impact analysis on portfolio dynamics.

Fund Management followed this advice and added more like for like and impact analyses in the portfolio and fund figures section of this annual report.

As for property valuations, the appraisal process of the ARC Fund is fully compliant with the 2014 INREV guidelines.

Solid funding with conservative leverage

A loan facility of EUR 320 million with a 6-year term from April 2011 until April 2017 is in place. This facility was supplied by a banking consortium of five banks, with NIBC Bank N.V. acting as Facility Agent and Aareal Bank AG as Security Agent.

The EUR 320 million loan facility consists of a bullet loan of EUR 270 million and a revolving credit facility of EUR 50 million. In the first quarter of 2015, EUR 30 million was repaid on the bullet loan (no additional fees involved) leaving a facility of EUR 290 million. As at 31 December 2015 the full amount of the revolving credit facility is available, concluding in a total commitment as at 31 December of EUR 240 million.

At year-end 2015, the ARC Fund performed well within the covenants set by the bank. With an LTV of 19.2% as at 31 December 2015, the funding structure is very solid (31 December 2014: 25.1%).

Interest rate risk

The interest on the loan is equal to the 3-month Euribor rate plus a premium of 120 basis points.

In total, 100% (EUR 240 million) of the interest rate risk of the remaining bullet loan of EUR 240 million loan has been hedged with four interest rate swaps with the same term as the loan (ending 21 April 2017).

These interest rate swaps were entered into with four (subsidiaries) of the five consortium banks (i.e. Banque LBLux SA, Fortis Bank N.V./SA, LandesBank Berlin AG and NIBC Bank N.V.).

Refinancing before maturity

The size of the pipeline and investment opportunities have led to an evaluation of the current financing needs. When committing a pipeline, a solid and flexible financing basis is a necessity. Over the next three years (2016-2018), the portfolio will grow substantially from EUR 1.3 billion in 2015 to around EUR 2.0 billion in 2018.

Although the cash position (EUR 50 million), available revolving credit facility (EUR 50 million) and committed equity (EUR 155 million) seem comfortable, the current pipeline and investment opportunities are extensive such that a new larger loan facility is necessary. Fund Management must reconsider its current loan facility in order to have sufficient financing means available for the coming years.

Considering the current loan facility, the target LTV of 25% and the size of the investment pipeline, refinancing the current loan facility before the maturity date of 21 April 2017 is a necessity.

The process to refinance the loan facility was initiated in 2015. Various scenarios on portfolio dynamics resulting in financing needs were calculated and a request for proposal was prepared. Conditions are favourable at the moment (low interest rate, eagerness).

An early full repayment of the current loan facility is a possibility; as no fees have to be paid. The current hedging contracts with the same maturity date as the current loan facility must be taken into account.

INREV