Picton Property Income Limited Sustainability Report 2022

Sustainable thinking, positive change.

Introduction

Environmental Focus

Stakeholder Engagement

Governance

Appendix

Welcome to our 2022 Sustainability Report

Purpose We aim to be a responsible owner of commercial real estate, helping our occupiers succeed and being valued by all our stakeholders. We are committed to integrating sustainability within all our business activities and in a way that makes a positive contribution to society, whilst minimising any negative impact on people, local communities and the environment.

Introduction 2

Picton at a glance 2022 Highlights Leadership Letters

3 4 7

Global trends driving sustainability

10 Our Approach to Sustainability 12 Sustainability in action Environmental Focus 14 Summary 15 Net zero carbon 16 Energy efficiency 19 Sustainable buildings 22 Biodiversity 23 Water consumption 24 Materials and waste Stakeholder Engagement 25 Summary 26 Health and Safety 27 Employees and skills 29 Occupier satisfaction and wellbeing 31 Supplier and contractor responsibility 32 Community and social value Governance

Visit our website for more information on our sustainable thinking www.picton.co.uk/Sustainability

34 Summary 35 Leadership 36 Reporting 36 Policies and Data Appendix

38 EPRA Commentary 40 EPRA Disclosures 42 GRESB and EPRA data 53 Data assurance 54 Glossary 55 Contacts and Resources

Picton Property Income Limited Sustainability Report 2022

Introduction

Environmental Focus

Stakeholder Engagement

Governance

Appendix

Picton at a glance Occupier focused, opportunity led.

£657m Net assets (2021: £528m) (2020: £509m) £849m Portfolio valuation

£147m Profit for the year (2021: £34m) (2020: £23m) 47 Number of properties

4.1% EPRA net initial yield (2021: 4.8%) (2020: 4.8%) 7.2% EPRA vacancy rate

3.9p EPRA earnings per share

We are an award winning Real Estate Investment Trust (‘REIT’) investing in UK commercial property. Our diversified property portfolio consists of 47 assets and is valued at £849 million as at 31 March 2022. By applying insight, agility and a personalised service, we provide attractive, well-located spaces to help our occupiers’ businesses succeed and in turn enhance value for our shareholders. We have a long-term track record and have outperformed the MSCI UK Quarterly Property Index over one, three, five and ten years, and since inception.

(2021: 3.7p) (2020: 3.7p) 93% Occupancy (2021: 91%) (2020: 89%)

(2021: £682m) (2020: £665m)

(2021: 46) (2020: 47)

(2021: 8.8%) (2020: 11.5%)

Industrial weighting

Office weighting

Retail and Leisure weighting

60% South East

10% Retail Warehouse High Street Rest of UK

30% South East

44% 16%

7% 2% 1%

11% 10%

Rest of UK

Leisure

City and West End

Picton Property Income Limited Sustainability Report 2022

Introduction

Environmental Focus

Stakeholder Engagement

Governance

Appendix

2022 Highlights Sustainable thinking, positive change.

How we performed in 2022 Environmental focus — Developed and published net zero carbon pathway

This year we have further refined our approach to sustainability and key priorities, ensuring these are fully embedded within our corporate strategy. Our focus has been on developing our net zero carbon pathway, which we have now published. We will start implementing the initial actions from the pathway over the coming year.

Stakeholder engagement — Commenced roll out of sustainability workshops with our largest occupiers — Introduced new occupier — Introduced new supplier clauses and a due diligence questionnaire to address modern slavery risks — Helped develop the BBP Responsible Property Management Toolkit — Carried out annual employee engagement survey — Returned to working in the office on a flexible basis — Provided further sustainability training for the team — Held two employee offsite days amenities and improved communication methods

Governance — Became a signatory to the Better Buildings Partnership Climate Commitment — Completed assessment of climate- related risks to the business — Reported in line with Task Force on Climate-related Financial Disclosures — Maintained EPRA Gold awards for both Annual Report and Sustainability Report

— Improved portfolio EPC ratings — Removed gas supplies from three assets — Increased the number of green leases completed — Introduced further biodiversity measures — Reduced Scope 1 and 2 GHG emissions compared to 2019 baseline — Undertook two energy efficiency audits at office assets 71% EPC ratings A-C

Read more on page 15

— Published sustainability policy — Implemented assurance over published sustainability data 73% Improved occupier energy data collection

£16,000 In charitable donations made to 15 charities

Picton Property Income Limited Sustainability Report 2022

Introduction

Environmental Focus

Stakeholder Engagement

Governance

Appendix

Leadership Letters Chair’s Statement

We have become a signatory to the Better Buildings Partnership Climate Commitment.

Welcome to our Sustainability Report 2022.

We have also made progress against our other sustainability priorities, and this is discussed further within this Report. We have continued to improve our EPC ratings and increased the number of green leases within the portfolio. We have engaged further with our occupiers by holding workshops focused on sustainability, and have further developed our biodiversity initiatives. I am pleased that we have moved towards a more normal working pattern, including a number of in person Board meetings taking place at Picton’s offices. This has helped us to engage further with the whole team, following the difficult circumstances during the pandemic. Looking forwards, the team will now be focused on the immediate actions identified in both the net zero carbon pathway and the climate- related risk assessment, so we have the foundations in place to meet our sustainability ambitions.

This year we have made significant progress on our sustainability priorities. In my statement in last year’s Report I noted that we would be embarking on our journey to becoming net zero carbon. I am pleased that we have now set our pathway towards this, with a target date of 2040. This is a major commitment by the whole team and recognises the importance of addressing the risks arising from climate change. In tandem with publishing our pathway we have also become a signatory to the Better Buildings Partnership Climate Commitment. This signals our commitment to working collaboratively to help to tackle climate change. Additionally, in order to report fully under the Task Force on Climate- related Financial Disclosures this year we have undertaken a detailed assessment of climate-related risks relevant to our business, and how we identify and manage these.

Lena Wilson CBE Chair

Picton Property Income Limited Sustainability Report 2022

Introduction

Environmental Focus

Stakeholder Engagement

Governance

Appendix

Leadership Letters continued Chief Executive’s Statement

Welcome to our fourth annual Sustainability Report. We have reviewed and updated our corporate strategy, adding two further sustainability priorities. This Report sets out our approach to sustainability and provides a summary of our key activities over the past year and progress made against our sustainability priorities and future targets. The real estate and business environment in which we operate is changing rapidly, with awareness of climate change and other sustainability issues at the top of most agendas. Sustainability is embedded into our corporate strategy and business model and to reflect this we have reviewed and updated our corporate strategy, adding two further priorities to our Acting Responsibly pillar. These are: — Adapting to, and mitigating, the impact of climate change; and — Reducing emissions to become carbon net zero by 2040.

Key highlights £10m Portfolio investment 73% Improvement in occupier energy data collection 71% EPC ratings A-C

Picton Property Income Limited Sustainability Report 2022

Introduction

Environmental Focus

Stakeholder Engagement

Governance

Appendix

Leadership Letters continued

The transition to net zero carbon is vital for safeguarding our long- term resilience and business performance.

We have been focused particularly this year on the issue of climate change adaptation and mitigation, through the development and publication of our pathway to net zero carbon. The transition to net zero carbon is vital for safeguarding our long-term resilience and business performance while continuing to deliver value for all our stakeholders. We have identified a number of priority actions to be addressed in the short-term, and we will be reporting against these next year. We have set our baseline year as 2019, being the most recent normal year prior to the pandemic. I am pleased that our emissions this year have reduced in comparison to the baseline.

Our commitment is to achieve net zero carbon by 2040, including both operational and embodied carbon. As well as introducing energy efficiency measures to reduce operational carbon from our assets we will also be investigating how to reduce the embodied carbon associated with our refurbishment projects. We have also published our sustainability policy this year, which guides long-term sustainability priorities, including tackling environmental challenges, providing sustainable buildings for our occupiers and engaging with our stakeholders.

We have continued to improve the sustainability credentials of the portfolio in other areas, such as EPC ratings, green leases and biodiversity. This year our environmental data has been assured by a third party. This is to ensure the accuracy of our data, which we believe is key to the implementation of our pathway to net zero carbon and our sustainability initiatives across our portfolio.

Michael Morris Chief Executive

Picton Property Income Limited Sustainability Report 2022

Introduction

Environmental Focus

Stakeholder Engagement

Governance

Appendix

Global trends driving sustainability

The sustainability landscape continues to evolve, bringing both new challenges and opportunities. There are severe risks we face on a global scale and many of these are interconnected in nature. This year the war in Ukraine brought a new humanitarian crisis and has added millions to the number of refugees globally. The Covid-19 pandemic is evolving towards its endemic phase but its legacy in terms of health, education, social care and vaccine inequality live on. These global events, coupled with the ongoing climate change emergency, are amongst the largest drivers of environmental and social disruption the world is facing.

Geopolitical tensions According to United Nations and the UN Refugee Agency, the number of ‘forcibly displaced people’ worldwide has reached 100 million for the first time on record. This number includes refugees, asylum seekers and those displaced within their own countries as a result of war, conflict, human rights violations and persecution. Since Russia’s first attack on Ukraine in February 2022, more than 14 million people have fled their homes, resulting in a humanitarian crisis. The conflict in Ukraine is having a cascading effect throughout the world, as Ukraine and Russia produce significant proportions of the world’s food, oil, energy and fertiliser, causing disruption through shortages, soaring prices, instability and unrest.

Developing countries have been particularly affected, as a larger proportion of their income is spent on food and energy, leading to food insecurity and potentially undernourishment. In addition, the inflationary environment has caused many central banks to increase interest rates, leading to higher debt servicing costs for developing countries. The International Monetary Fund has downgraded projections for global economic growth in the short to medium term. With already high levels of stress and uncertainty resulting from the impacts of the Covid-19 pandemic, the war in Ukraine is exacerbating an already inflationary environment, and in the UK caused the level of inflation to reach a 40-year high, signalling a cost-of-living crisis. Businesses are also facing cost pressures, together with labour shortages and supply chain disruption.

Picton Property Income Limited Sustainability Report 2022

Introduction

Environmental Focus

Stakeholder Engagement

Governance

Appendix

Global trends driving sustainability continued Pandemic recovery The UK Government’s vaccination programme was extended to increase protection against the Omicron variant in late-2021 and by Spring 2022 all coronavirus related restrictions had been lifted. UK Gross Domestic Product (GDP) recovered to its pre-pandemic level in March 2022 following four consecutive quarters of economic growth.

Flexible working practices are now more commonplace and have removed some of the barriers to entering the workplace faced by those with childcare and other caregiving responsibilities, creating more diverse and inclusive environments. In the built environment there is greater emphasis placed on quality space, ventilation, and wellness and occupier amenities. Although normal life has resumed for the majority, there are legacies of Covid-19 that will be felt for years to come. Many social inequalities and injustices were amplified by the pandemic, from access to healthcare, education and Government support. Some of the consequences of isolation, home schooling and an overburdened NHS are still being felt. Covid-19 vaccines were developed at record speed, but their distribution was largely concentrated in developed, wealthier countries. Without vaccine equity globally, the pandemic continues to take its toll on the world’s poorer, more vulnerable populations. Furthermore, without vaccine equity the risk of future problematic variants and health outbreaks is heightened for all countries.

Climate change Extreme weather events resulting from climate change displace vast numbers of people globally each year, from flooding in the UK to storms and cyclones in the Asia-Pacific region and forest fires in Australia and California. A recent survey conducted by the World Economic Forum identified climate action failure as the number one global risk over the next ten years. Building on the achievements of COP21 and the signing of the Paris Agreement in 2015, COP26 hosted by Glasgow in November 2021 made further progress

Achieving net zero carbon must be demonstrably fully embedded within corporate strategy. It is no longer considered acceptable to simply mention reporting in line with the Task Force on Climate related Financial Disclosures (TCFD) or produce a pathway to net zero without demonstrating that a fully comprehensive plan of action is in place, incorporating embodied and operational carbon emissions.

and increased public awareness of climate change risks and consequences. There is wider acceptance that we need to transition to a low carbon economy. Residential and commercial property accounts for around 40% of total global energy use, therefore the industry has a key role to play in limiting emissions and the fight against climate change. Tackling this issue has been placed at the forefront of real estate company agendas. Momentum is clearly building within the industry towards more climate action and many companies have published their net zero commitments and pathways.

Read more on our response to climate change on page 15

Picton Property Income Limited Sustainability Report 2022

Introduction

Environmental Focus

Stakeholder Engagement

Governance

Appendix

Global trends driving sustainability continued

Social value There is growing significance being placed on the ‘S’ in ESG. Public expectations have increased when it comes to the level of transparency required into a company’s wider impacts on society and its surroundings. Social value as an umbrella term can encompass a wide variety of topics and the relevance and meaning of social value differs from industry to industry. At a basic level one might expect to find company policies covering modern slavery, equal pay and Health & Safety.

Financial impact of sustainability Environmental, Social and Governance factors are becoming intrinsically entwined in property values. Particularly during property acquisition due diligence, considerations like EPC ratings, TCFD risk analysis and building accreditations are evaluated and can result in a ‘green premium’ or ‘brown discount’ and potentially even stranded assets. At a company level, corporate ESG ratings are produced largely based on ESG public disclosures. It is therefore vital to be fully transparent and maintain and publish comprehensive and up-to-date corporate policies covering all areas of ESG. Failure to do so can result in poor corporate ESG ratings and impact investor sentiment. Reporting must go beyond climate change and emissions to cover areas such as social value, biodiversity and equality diversity and inclusion. There is clearly a cost of implementing ESG initiatives but there is also an opportunity to add value. This can be to properties through increased rents and capital values and lower operating expenses, and at company level, through improved brand perception.

A further developed and more sophisticated understanding of current issues is a key differentiator. For example, equality diversity and inclusion policies which reach beyond the gender pay gap to cover gender identity, race, disability and neurodiversity. Companies must demonstrate action beyond policies and statements of intention; how they invest in people and communities, share resources, support vulnerable groups, and promote equality and inclusion.

Read more on our response on pages 25–33

Picton Property Income Limited Sustainability Report 2022

Introduction

Environmental Focus

Stakeholder Engagement

Governance

Appendix

Our Approach to Sustainability

Integrating sustainability within our corporate strategy We believe that sustainability must be fully embedded into all of our activities. A responsible and ethical approach to business is essential for the benefit of all our stakeholders and understanding the long-term impact of our decisions will help us to manage risk and continue to generate value.

Portfolio

Operational Excellence

Acting

Performance

Responsibly

1 Creating and owning a portfolio which provides income and capital growth 2 Growing occupancy and income profile 3 Enhancing asset quality, providing space that exceeds occupier expectations 4 Outperforming the MSCI UK Quarterly Property Index

1 Maintaining an efficient operating platform, utilising technology as appropriate 2 Having an agile and flexible business model, adaptable to market trends 3 Delivering earnings growth 4 Having an appropriate capital structure for the market cycle 5 Growing to deliver economies of scale

1 Ensuring we maintain our company values, positive working culture and alignment of the team 2 Working closely with our occupiers, shareholders and other stakeholders 3 Ensuring sustainability is integrated within our business model 4 Adapting to and mitigating impact of climate change 5 Reducing emissions to become carbon net zero by 2040

Read more in table 13

Picton Property Income Limited Sustainability Report 2022

Environmental Focus

Introduction

Stakeholder Engagement

Governance

Appendix

Sustainable buildings

We aim to provide buildings which meet occupier expectations for safe and sustainable workspace that adds value to their operations and helps their businesses succeed.

We are committed to monitoring and enhancing the environmental performance of our buildings and ensuring they are resilient to changes in both climate and the regulatory environment. As reoccupation and activity increases following the easing of lockdown restrictions, it is important that we ensure our buildings meet changes in occupier requirements, and our approach to our portfolio management adheres to best practice with respect to data collection, communication and implementation.

— Continued to implement Green Lease clauses (with improved incorporation of ‘gold’ standard clauses)

— Rolled out more biodiversity measures across our portfolio — Assisted our occupiers on re-occupation of properties in line with Covid-19 guidance

Looking ahead the key challenge is to implement and monitor our pathway to net zero carbon. We will be undertaking five net zero audit reports at two office assets, two industrial assets and one retail warehouse asset in order to assist our implementation strategy. We will support and supplement this by continuing to remove fossil fuel supplies where practical, introduce on-site renewable energy, increase efficiency of existing equipment and support our occupiers with their own sustainability strategies.

What we have done this year: — Undertaken energy audits at two buildings

— Continued to develop our strategy for on-site solar power generation — Continued to develop our strategy for the roll out of electric vehicle charging — Improved our portfolio EPC ratings (which are now reported as a percentage of ERV in order to better reflect risk) of which 71% is rated A-C

Picton Property Income Limited Sustainability Report 2022

Environmental Focus

Introduction

Stakeholder Engagement

Governance

Appendix

Sustainable buildings continued

Electric car charging points We have taken steps to expand the number of car charging points across our properties over the year either through direct action or in conjunction with our occupiers. We have selected an EV charge point operator to install and manage up to 40 charging points across five of our sites, including our retail parks at Gloucester, Swansea and Bury. The terms of the agreement are being finalised and we expect installation works to commence during 2022. Alongside existing charging points that we had in place in locations such as 180 West George Street, Glasgow, we have worked with occupiers during 2021 to deliver further installations at Atlas House Marlow, Tower Wharf Bristol, Sundon Business Park, Luton, Parkbury Industrial Estate, Radlett and Metro, Manchester. Energy audits During the year we undertook energy audits at Graton Gate, Milton Keynes and Atlas House, Marlow. The planned audits at 50 Farringdon Road, London and Longcross, Cardiff were postponed due to the works which were undertaken at the buildings to improve the heating and cooling systems and remove gas supplies. A number of the adjustments to systems recommended in these reports have already been undertaken. For example we installed new ‘smart’ controllers to the heating and cooling system at Grafton Gate, Milton Keynes, which will enable the system to adjust its operation depending on occupancy and ambient temperatures.

Sustainable refurbishments In 2021 we established our sustainability refurbishment guidelines for refubishment and redevelopment projects with the aim of ensuring sustainability is at the heart of our design and implementation process. The guidelines assist our advisers and help to ensure that our spaces meet the requirements of our existing and prospective occupiers. These are customised based on the level of work required, from minor works through to new build. The sustainability refurbishment guidelines cover the following areas: — Building certification and rating, for example BREEAM, Fitwel — Services, covering ventilation, lighting, heating and cooling, and building management strategies — Structures and fabrics with considerations made for the carbon cost of building materials

Whilst the impact of the pandemic on building occupancy and systems operation makes like-for-like comparison of energy consumption more difficult, by comparing consumption figures in early 2022 (when office occupancy was starting to increase) with levels in 2019 we can see that consumption has reduced by up to 28% at the buildings involved. As set out above, we will also be undertaking net zero carbon audits to establish a strategy for reducing carbon at a representative sample of our building types at Parkbury Industrial Estate, Radlett, Sundon Business Park, Luton, Angouleme Retail Park, Bury, Grafton Gate, Milton Keynes and Pembroke Court, Chatham. Sustainability action plans Over the year we have implemented sustainability action plans at all sites where we run a service charge (and therefore have operational control over the common parts). These plans cover areas such as biodiversity and social amenities as well as energy efficiency. Over 2022 we will implement the improvement measures identified. For example, at Colchester Business Park, Colchester, a report on biodiversity enhancement was carried out and the recommendations included in the sustainability action plan. Biodiversity initiatives that have been implemented include the installation of bat boxes and the restoration and development of a pond.

— Energy and resource efficiency, covering renewable energy, green walls, and roofs — Landscaping covering biophilic designs — Technology covering smart building capability — Net zero asset review — Supplier codes of conduct We have built sustainability criteria into our approval process for projects and have now started to see the output from these guidelines such as at buildings including Regency Wharf, Birmingham, which was shortlisted for a British Council of Offices Refurbished Workspace Award, and at Longcross, Cardiff. We intend to ensure the guidelines are regularly updated to reflect best practice. Visit our website for more information on our sustainable refurbishment guidelines

Picton Property Income Limited Sustainability Report 2022

Environmental Focus

Introduction

Stakeholder Engagement

Governance

Appendix

Sustainable buildings continued

Building certifications The Green Building certifications across the portfolio have remained the same as in the previous reporting year, however the scale of coverage has increased due to the sale of one asset. Certifications are BREEAM and ISO at three office locations, Angel Gate, London, Tower Wharf, Bristol and Metro, Manchester. The two BREEAM awards are both rated as ‘Excellent’. As part of our ongoing strategy we are exploring the suitability of obtaining ‘in use’ certifications at some of our assets, in addition to following the guidance set out in our sustainable refurbishment guidelines. Site type Green Building certification 2021

Green lease clauses Green leasing continues to be a collaborative tool between ourselves and our occupiers to improve the performance of a building. The majority of an average commercial building’s greenhouse gas emissions come from occupier controlled areas and therefore the best way to improve the efficiency and productivity of the whole building is through collaboration. The ideal green lease will help enhance the environmental performance of a building and mitigate any environmental legislative and market risk in addition to fostering improvements in data collection. Our bespoke set of green lease clauses continue to be successfully incorporated in new leases and lease renewals. We have found that the adoption of these clauses by occupiers is continually increasing as the benefits to both parties’ own sustainability strategies become clearer. Our target is to ensure all of our lease agreements include green lease clauses. We continue to monitor best practice and will amend the clauses accordingly where appropriate. Over the year we have completed a further 42 green leases, of which 81% were gold rated (based on the strength of the clauses adopted). In total there are now over 30% green leases across the portfolio. This number will continue to rise as we use lease events and letting of vacant units to drive take up.

Office

29%

Minimum Energy Efficiency Standards (MEES) This year we have amended the basis for reporting our EPCs to better reflect risks and recognise the diversified nature of the portfolio. Looking at the percentage of EPC ratings by estimated rental value (ERV) of our portfolio, 71% have an EPC rating of A-C, 29% are D or E and only 0.2% is rated F or G. We continue to proactively manage our compliance with Minimum Energy Efficiency Standards (MEES) which stipulate that a new lease cannot be granted if the building is rated lower than an E rating. This ruling will apply to existing leases from 2023. We have a strategy in place for the small proportion of our portfolio that is affected. Over the year we reassessed 18 EPCs. Using the same reporting basis (by ERV as stated above). 96% have been reassessed to A-C rating, 4% D-E rating, and none

were F or G rated. We continue to use lease events, common area works and EPC renewals to implement improvement works with the overall aim of continually improving our EPC score and ensuring compliance with MEES. We note the UK Government will implement a tightening of the MEES rules to a minimum C rating by 2027 and B rating by 2030 and are implementing a strategy to ensure that all our assets are in line with the new regulations. Notwithstanding the legislative position we see alignment with MEES regulations as integral to our net zero pathway, occupier engagement strategy and environmental focus. We will continue to proactively manage the portfolio on this basis.

Retail, High Street Retail, Warehouse

0% 0% 0% 0% 0% 6%

Industrial, Business Parks Industrial, Distribution Warehouse

Hotel

42 New green lease clauses