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Letter from Stéphanie Lacroix
March 2021

Stéphanie Lacroix I wanted to give you an update on the real estate markets, the performance of our funds and the prospects we can outline, despite the unknowns, for the coming months and years.

The year 2020 was a full-scale "stress test" for our investment policies. Health risks, economic damage and changes in social norms have punctuated the last few months. Faced with this situation, I have already had the opportunity to describe to you the system put in place by Primonial REIM, which is based on proximity to our tenants, the responsiveness of our teams and transparency with regard to the shareholders of our SCPIs.

At the end of this particular year, it appears that Primonial REIM's strategic choices are validated by the current crisis. The acquisition of core assets rather than opportunistic ones; an allocation based on conviction rather than traditional diversification; the choice of a resolutely European investment universe and a strong positioning in "alternative" segments such as healthcare and residential real estate... have enabled our portfolios to weather the health crisis well so far.

Generally speaking, real estate appears to be the asset class least affected by this unprecedented situation. Unlike the financial crisis of 2008, massive stimulus measures were decided immediately after the arrival of the pandemic. The low interest rate environment naturally supported real estate prices. The generalization of short-time working allowed households to pay rents and businesses were affected in a very specific way: businesses declared "non-essential", tourist hotels, and in general businesses with weak cash flow. It is a marginal part of our rental stock that has given rise to rent adjustments.

2021 should be a year of transition to an economic recovery that will begin sooner or later depending on health developments. Our ambition is, at the very least, to maintain the performance levels of 2020. But we are fully aware that, for real estate too, "the world after" will not be quite the same as before. Thus, our management and acquisition policies are already incorporating the trends that have accelerated as a result of the crisis: the advent of a "hybrid" office that leaves room for telecommuting and third-party offices alongside the head office; the imperative of air quality and, more generally, the health of the users of our assets; the extreme agility of retailers who have been able to disrupt their traditional sales processes; and the massive needs for healthcare and housing real estate.

Finally, the future lies in socially responsible investment. A decisive step was taken in 2020 with the implementation of the real estate SRI* label, which Primonial REIM was one of the first managers to obtain for two of its funds. The focus on the environmental and social performance of our assets, the rationalization of energy consumption and carbon emissions**, the improvement of sanitary and service conditions of our properties, and the strengthened governance, all testify to our commitment to continuously improve the quality of our assets, for the benefit of our clients.  

I would like to assure you that all of Primonial REIM's teams remain fully mobilized to meet their commitments and achieve the objectives we have set for 2021.

Stéphanie Lacroix, Managing Director of Primonial REIM

*The Real Estate SRI label is a tool for choosing responsible and sustainable investments. Created and supported by the French Ministry of Finance, it aims to make socially responsible investment products more visible to savers in France and Europe.
** In accordance with the objectives of the tertiary decree and the national low carbon strategy.
Past performance is not indicative of future performance.