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AEW UK Real Estate Fund Annual Report and Financial Statements for the year ended 31 December 2019 AEW UK Core Property Fund AEW UK Real Return Fund 2019 AEW UK – Winner, UK Property Manager of the Year Pension Investment Provider Awards Contents Statement of Authorised Status of the Scheme 1 Basis of Reporting 1 Statement concerning the debts of the Company 1 Managing Director’s report 2-7 Role of the Authorised Corporate Director (ACD) 8-9 Report from the Chair of the Governance Committees 10-13 Assessment for Value report 14-17 Statement of the ACD’s Responsibilities 18 ACD’s Statement 18 Statement of Depositary’s Responsibilities 19 Report of the Depositary 19 Report of the Auditor 20-22 AEW UK Core Property Fund Fund Manager’s Report 24-35 Fund Objective 36 Investment Benchmark 36 Investment Policy 36 Investment Strategy 36 Investment Guidelines 37 Report of the Valuer 38-41 Portfolio Statement 42-44 Summary of Material Portfolio Changes 45 Fund Information 46-52 Statement of Total Return 53 Statement of Changes in Net Assets Attributable to Shareholders 53 Balance Sheet 54 Statement of Cash Flows 55 Notes to the Financial Statements 56-77 Distribution Tables 78-79 AEW UK Real Return Fund Fund Manager’s Report 81-90 Fund Objective 91 Reference Benchmark 91 Investment Policy 91 Investment Strategy 92 Investment Guidelines 92-94 Report of the Valuer 95-97 Portfolio Statement 98-100 Summary of Material Portfolio Changes 101 Fund Information 102-107 Statement of Total Return 108 Statement of Changes in Net Assets Attributable to Shareholders 108 Balance Sheet 109 Statement of Cash Flows 110 Notes to the Financial Statements 111-129 Distribution Tables 130-131 Depositary, ACD & Advisers 132 AEW UK Real Estate Fund • Annual Report and Financial Statements • 31 December 2019 AEW UK Real Estate Fund Statement of Authorised Status of the Scheme The AEW UK Real Estate Fund (the ‘Company’) is an open-ended investment company which is a Property Authorised Investment Fund (‘PAIF’) registered in England and Wales under registered number IC000974. The Company is a Qualified Investor Scheme (‘QIS’) that is open to Eligible Investors as defined in the Collective Investments Schemes sourcebook (the ‘COLL Rules’) issued by the FCA. The Company is incorporated in England and Wales and is authorised by the FCA. Basis of Reporting The Company is structured as an umbrella Company and has two sub-funds in issue, the AEW UK Core Property Fund and the AEW UK Real Return Fund. Statement concerning the debts of the Company The Company is an Investment Company with Variable Capital (‘ICVC’). Shareholders of the ICVC are not liable for the debts of the ICVC. Risk Warning Investors should be aware that there are risks inherent in the holding of investments. Past performance is no guide to the future. The value of shares, and any income from them, can go down as well as up, particularly in the short term, meaning that an investment may not be returned in full. The tax treatment of the Fund may change and such changes cannot be foreseen. Where regular investments are made with the intention of achieving a specific capital sum in the future, this will normally be subject to maintaining a specified level of investment. For further information, please refer to the Fund's prospectus and the risk management policies in the notes to the financial statements. AEW UK Real Estate Fund • Annual Report and Financial Statements • 31 December 2019 1 AEW UK Real Estate Fund Managing Director’s Report AEW UK was established as a joint venture between AEW in Europe and the AEW UK Management Team1, to focus on UK real estate. The AEW UK team has been providing solutions for institutional investors for over 20 years and has developed a range of funds and segregated accounts to meet their differing needs, from value add strategies to traditional core style total return, a real return strategy and latterly a long lease strategy. The management team have worked together for an average of 18 years and are 50% equity owners in the business. This ownership over investment process and decision-making, helps deliver a consistent approach through different cycles. The AEW UK Core Property Fund was launched in Q1 2012 and is the top performing fund in the MSCI/AREF UK Quarterly Property Fund Index – All Balanced Property Fund Index over 1, 3, 5 and 7 years as at December 2019. In 2014 we launched the AEW UK South East Office Fund, a value add strategy focused on delivering enhanced returns from the South East office market. During the year ended 31 December 2018, as part of the disposal strategy, the Fund sold the whole portfolio to a single investor and distributed the majority of the proceeds to investors. For defined contribution pension schemes and the increasing amount of Private Wealth money now classified as Retail, the AEW UK REIT was launched in May 2015, to effectively replicate the Core Fund strategy in a listed company, as an alternative to daily dealing open ended retail funds. At the start of 2016 the AEW UK Real Return Fund was launched largely as a secure income solution for the increasing number of defined benefit schemes needing higher yielding real returns to match their cash flow liabilities and help scheme sponsors plug any deficit in funding that may exist. In June 2017 AEW launched AEW UK Long Lease REIT, a long lease strategy with inflation linked growth, diversified across alternative property sectors in strong locations across the UK. With a focus on capital preservation; a minimum of 85% income to benefit from inflation linked growth and a minimum weighted average unexpected lease term (WAULT) of 18 years at acquisition. AEW2 is one of the world’s largest real estate asset managers. As at 31 December 2019, AEW has €69.5 billion in assets under management, with over €33.0bn managed in Europe. The chart on page 5 shows how the business is split in terms of assets under management across North America, Europe and Asia. The second chart on page 6 shows the assets under management breakdown by sector and vehicles for AEW Europe. Both charts show data as at 31 December 2019. AEW completed €6.0bn of transactions across Europe last year, of which €3.1bn were acquisitions. A total of 271 transactions were completed in 2019. Rob Wilkinson, European CEO said: “While there was some macroeconomic uncertainty throughout the year, 2019 was another year of growth for AEW with strong capital raising, prudent deployment of funds, as well as disciplined sales and, notably, in the UK, the implementation of successful asset management initiatives on behalf of clients, against a difficult Brexit backdrop. This momentum continued in to the first two months of 2020 when suddenly in March we found ourselves faced with the COVID-19 pandemic and an almost global lockdown. Our teams have adapted incredibly well to the new situation and remain busy as they settle into the working from home environment. AEW has a significant amount of capital to invest in real estate and, while it is currently impossible to predict how long the crisis will last or what the final repercussions of it will mean for both the economy and the real estate sector, we fully expect to be able adapt our business and continue to successfully investing and asset managing on behalf of clients. In the meantime our number one propriety remains the health and safety of all our staff, business partners and stakeholders.” 1. AEW UK Management Team comprises Richard Tanner, Rachel McIsaac and Nick Winsley. 2. AEW is a group of companies which includes AEW SA and its subsidiaries as well as affiliated company AEW Capital Management, L.P. in North America and its subsidiaries. AEW SA, together with its subsidiaries AEW Europe LLP. AEW Sarl and AEW Ciloger and a joint venture with AEW UK Investment Management LLP, is a European real estate investment manager with headquarter offices in Paris and London. AEW SA is owned by Natixis Investment Managers and La Banque Postale and AEW Capital Management is owned by Natixis Investment Managers. Natixis Investment Managers is an international asset management group based in Paris, France, that is principally owned by Natixis, a French investment banking and financial services firm. Natixis is principally owned by BPCE, France’s second largest banking group. 2 AEW UK Real Estate Fund • Annual Report and Financial Statements • 31 December 2019 AEW UK Real Estate Fund Managing Director’s Report (continued) UK Platform AEW SA and the AEW UK Management Team have created a joint venture vehicle, AEW UK Investment Management LLP, which is the Authorised Corporate Director (ACD) and the Authorised Fund Manager (the “Manager”) of the AEW UK Real Estate Fund. Its board members for the year were: Richard Tanner Managing Director, AEW UK Rachel McIsaac Managing Director, AEW UK Louise Staniforth Managing Director, AEW UK Jeff Furber Chairman, AEW Capital Management Rob Wilkinson Chief Executive Officer, AEW Europe LLP Russell Jewell Managing Director, AEW Europe LLP Alan Botterill Independent Non-Executive Alex Wilson Independent Non-Executive As a joint venture company with a large global, multi boutique, asset manager, it benefits from the global strength and resource and access to investors you might expect, together with the true autonomy and culture of an employee owned business. Ownership is spread through our staff partners and consultants. AEW UK: Funds and Separate Accounts Assets under management and capital raised Total Assets Under Management Institutional Funds Separate Accounts £1.9bn £790m £1.2bn EXPECTED RETURN/ VOLITILITY AEW Logistics UK • Build to core • Separate Account • Cornerstone investor c€290m AEW UK Core Property Fund AEW UK REIT • Open-ended • Listed on LSE • Diversified • Diversified • GAV £315m • GAV £204m • Distribution yield 5.4% • Dividend yield 8p/share p.a.

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