DEMIRE Deutsche Mittelstand Real Estate : EPRA Sustainability Report 2023/24

SUSTAINABILITY REPORT ACCORDING TO EPRA

DEMIRE

23/24 EPRA sBPR REPORT

1

Key for navigating the report:

CONTENTS

Reference to table of contents

Reference to another page in the report

Reference to websites

	FOREWORD OF THE EXECUTIVE­	BOARD­	2
	INTRODUCTION			4
	SUSTAINABILITY STRATEGY			5
	METHODOLOGY			7
	EXPLANATORY INFORMATION
	ONTHEKEYFIGURES			10

EPRA SUSTAINABILITY ­INDICATORS	17
COMPANY'S OWN CARBONEMISSIONS	25
VERIFICATION NOTE	27
IMPRINT	28

DEMIRE

23/24 EPRA sBPR REPORT

2

FOREWORD OF THE EXECUTIVE­ BOARD­

FOREWORD OF THE
EXECUTIVEBOARD	2
INTRODUCTION	4
SUSTAINABILITY STRATEGY	5
METHODOLOGY	7
EXPLANATORY INFORMATION
ONTHEKEYFIGURES	10
EPRA SUSTAINABILITY
INDICATORS	17
COMPANY'S OWN
CARBONEMISSIONS	25
VERIFICATION NOTE	27
IMPRINT	28

Dear shareholders, dear readers,

The format of our third sustainability report should be familiar to you from last year. That was the first time we had evaluated the corporate emissions of DEMIRE. This year, we focused on qualitative progress in data collection and also added eight additional properties to the data pool. We were able to further increase the quality of the data that was collected, for example by also collecting tenant data at a notable scale.

After reporting on corporate emissions for the first time last year, for 2023 we set ourselves the goal of reducing emissions in this area as quickly as possible. A large number of individual measures and the dedication of our employees have contributed to palpable success here. Our corporate emissions have now decreased by 39% over the previous year to 59.5 t CO₂, even with increased office use and longer commutes. We achieved this through a significant reduction in the use of company cars on long-distance trips by prioritising environmentally friendly rail travel. Another important reduction measure for achieving these goals was the Deutschland Ticket, a travel ticket that was offered for free to employees. As a result, many ­employees switched from driving to public transportation for their commutes. We have been using green electricity in our offices since early 2023. Corporate emissions are fully compensated through atmosfair. We are aware that compensation is not a long-term solution for actual reduction of carbon emissions, which is why we continue to strive to reduce our corporate carbon emissions where possible.

The Executive Board of DEMIRE

Deutsche Mittelstand Real Estate AG:

Tim Brückner, Chief Financial Officer (left), Frank Nickel, Chief

­Executive Officer (centre) and Ralf Bongers (right)

At the same time, as part of our operational asset management strategy, we are working on reducing the emissions of our properties. In the 2023 financial year, we began switching general electricity in all properties to green electricity and increasing our efforts to move to energy-saving LED solutions. We were also able to adapt the heat generation in some properties to environmentally friendly options. In ad- dition, district heating connections were requested for two properties. Additional measures require comprehensive conceptual groundwork, with which we made good progress in the past year. We were, for example, able to analyse energy

consumption­data for the majority of properties and carry out property-specific carbon accounting for these. This was used to show which properties have the greatest savings potentials for carbon emissions. We will now prioritise determining ­measures to reduce their carbon emissions.

DEMIRE

23/24 EPRA sBPR REPORT

3

FOREWORD OF THE
EXECUTIVEBOARD	2
INTRODUCTION	4
SUSTAINABILITY STRATEGY	5
METHODOLOGY	7
EXPLANATORY INFORMATION
ONTHEKEYFIGURES	10

At present, we are creating a concept to adapt the metering systems to smart

metering­ . To do so, we are - in agreement with our tenants - gradually adding clauses to our rental contracts to conclude "green leases". In future, we also want to provide more EV charging stations for our tenants, and to do this we are creating an EV charging concept for each property. We have also analysed the use of roof spaces to install photovoltaic systems and will drive forward the expansion of this in the coming years. Through energy audits, we want to examine savings potentials for feasibility and prioritise these so that we can use our resources to achieve the ­greatest possible savings.

We hope you enjoy reading our Sustainability Report, and we look forward to ­discussing it with you.

Frankfurt am Main, Germany, June 2024

EPRA SUSTAINABILITY
INDICATORS	17
COMPANY'S OWN
CARBONEMISSIONS	25
VERIFICATION NOTE	27
IMPRINT	28

In line with the EU's Corporate Sustainability Reporting Directive (CSRD), by the end of 2024 we will create a new reporting system for sustainability reporting as part of our annual report. We will report in accordance with this from the 2025 financial year onwards.

At DEMIRE, we are committed to the climate targets set by the Paris Agreement and, in the long term, intend to bring our portfolio's carbon emissions in line with these reduction targets and to report on our path to achieving this in a transparent manner.

Frank Nickel (CEO)

Tim Brückner	Ralf Bongers
(CFO)	(Member of the Executive Board)

DEMIRE

23/24 EPRA sBPR REPORT

4

INTRODUCTION

FOREWORD OF THE

EXECUTIVEBOARD2

INTRODUCTION4

SUSTAINABILITY STRATEGY

5

METHODOLOGY7

EXPLANATORY INFORMATION

ONTHEKEYFIGURES10

EPRA SUSTAINABILITY

INDICATORS17

COMPANY'S OWN

CARBONEMISSIONS25

VERIFICATION NOTE

27

IMPRINT28

DEMIRE Deutsche Mittelstand Real Estate AG ("DEMIRE") acquires and holds commercial real estate in medium-sized cities and up-and-coming regions bordering metropolitan areas across Germany. It focuses on office properties, with retail and hotel properties also featured in the portfolio.

In focusing on this, the Company has come up with the ABBA approach. This ­approach states that DEMIRE will focus its investments on "A" locations in "B" cities and "B" locations in "A" cities. The portfolio has potential for real estate investments and is attractive both to international and regional tenants. DEMIRE's shareholders benefit from an attractive risk-return structure.

As at 31 December 2023, DEMIRE managed 59 properties with lettable floor space of around 860 thousand m² and a total market value of around EUR 1.1 billion. The Cielo property in Frankfurt is accounted for using the equity method, so is not ­included in the property-specific figures.

We offer our international and regional tenants state-of-the-art, functional properties for long-term use. Sustainability is part of DEMIRE's corporate strategy. The Company is committed to the climate goals of the Paris Agreement and is ­endeavouring to reduce the carbon emissions of its business activities as part of the Company's sustainable transformation.

DEMIRE has been reporting on sustainability in its reporting since the 2021 financial year. With this Report, the Company provides greater insight into its environmental, social and governance (ESG) activities in the 2023 financial year. On this basis, DEMIRE has defined steps to help it make progress in this area in the coming years, both holistically and strategically. This includes, among other things, continuing to increase the recording of consumer data in properties and developing specific plans of action for reducing CO₂ for each property on this basis.

For the third time, this Sustainability Report sees DEMIRE apply the Sustainability Best Practices Recommendations (sBPR) of the European Public Real Estate ­Association (EPRA), as the interest group representing Europe's listed real estate companies. Unless otherwise stated, the data and information provided refer to the reporting date of 31 December 2023 and the data available up to that date. The EPRA Report contains the recommendations as well as explanatory information on the indicators and tables containing the key sustainability figures.

DEMIRE

23/24 EPRA sBPR REPORT

5

SUSTAINABILITY STRATEGY

FOREWORD OF THE

EXECUTIVEBOARD2

INTRODUCTION4

SUSTAINABILITY STRATEGY

5

METHODOLOGY7

EXPLANATORY INFORMATION

ONTHEKEYFIGURES10

EPRA SUSTAINABILITY

INDICATORS17

COMPANY'S OWN

CARBONEMISSIONS25

VERIFICATION NOTE

27

IMPRINT28

Following the publication of the first sustainability report in summer 2022, including the first inventory of emissions, DEMIRE set up an interdepartmental working group overseen by the Executive Board in 2022 to incorporate environment-related sustainability into its business processes as a fixed component of the strategic corporate management. Discussions are based on an ESG project plan, which

describes­ the specific proposed measures along with the respective goals, ­responsibilities and the status quo. The various departments worked together to set a sustainability target with a package of measures which is gradually being implemented.

The sustainability target pursued by DEMIRE takes the form of a significant reduction in the emission of greenhouse gases for each individual property and for DEMIRE's business activities as a whole. It therefore aims to adhere to the Paris Agreement, which limits global warming to 1.5°C to 2°C.

In order to achieve climate targets, we consider every single property in our port­ folio individually to enable us to plan and implement effective, efficient measures. Since the last report, we have completed the initial inventory and data collection for a property-specific analysis of carbon emissions. The next step is for us to plan to define paths to decarbonisation for individual properties as part of energy ­audits. These should allow measures for energy efficiency to be developed, taking into consideration economic aspects, the state of the building and tenant needs.

We began in the 2023 financial year to switch the general electricity to green electricity as old electricity supply contracts ran out. We are also switching properties to district heating wherever possible. District heating is considered to be a heating option that is fit for the future as the suppliers are committed to an increasing share of renewable energies and thus decreasing carbon emissions. Our property in ­Freiburg, for example, will no longer be heated using oil but instead with district heating. The same applies to the property in Essen, which is to be connected to the district heating grid as part of the renovation measures for the State of North Rhine-Westphalia.

Some of our properties already have charging stations for tenants' electric vehicles. An agreement on the provision of charging infrastructure is already included in some new leases. For this reason, we have made the decision to develop a concept for the entire portfolio and will provide a larger offering of charging stations for our tenants.

Another key milestone in the collection of all consumption data for our properties is increasing the collection of data on the energy used directly by our tenants, such as electricity consumption in rental spaces. To enable us to record this consumption comprehensively in future, we have produced a "green lease", which forms the basis for all new leases and is included as a clause in our model leases. The quantity of consumption data collected will therefore increase significantly in future.

DEMIRE

23/24 EPRA sBPR REPORT

FOREWORD OF THE
EXECUTIVEBOARD	2
INTRODUCTION	4
SUSTAINABILITY STRATEGY	5
METHODOLOGY	7
EXPLANATORY INFORMATION
ONTHEKEYFIGURES	10
EPRA SUSTAINABILITY
INDICATORS	17
COMPANY'S OWN
CARBONEMISSIONS	25
VERIFICATION NOTE	27
IMPRINT	28

6

At the same time, we are currently working on the portfolio-wide implementation of electronic recording of consumption data using smart meters. These make it possible to record data digitally in short intervals without having to deploy staff for this purpose. They can also lead to optimisations in the systems and thus to further reduction opportunities in terms of cost and carbon emissions.

In the past year, we carried out an assessment of the company's own carbon emissions for the first time. As well as reducing our emissions as quickly as possible, our strategy was to ensure transparent data collection. To achieve this, since the last report we have switched our office over to environmentally friendly energy sources and have used rail travel whenever possible for commuting and business travel. Flights have been limited to the bare necessity. No further large-scale reductions in the company's emissions are to be expected in the short term, although we are continually examining additional opportunities to reduce CO₂. The measures that have been carried out so far have allowed us to reduce our carbon emissions by 39.0% over the previous year. Detailed information can be found in the "Environmental indicators - DEMIRE office spaces and carbon emissions" chapter.

In the first half of 2024, we carried out a materiality analysis in line with the requirements of the EU's Corporate Sustainability Reporting Directive (CSRD) in order to introduce integrated sustainability reporting into the annual report from the 2025 financial year. A gap analysis is currently being carried out, which will reveal current gaps in the reporting, which we aim to close in a gradual manner in the second half of 2024. We will thus increase the transparency of our sustainability reporting ­beyond the requirements of the EPRA and will report on our transition progress even more transparently.

DEMIRE

23/24 EPRA sBPR REPORT

7

METHODOLOGY

FOREWORD OF THE
EXECUTIVEBOARD	2
INTRODUCTION	4
SUSTAINABILITY STRATEGY	5
METHODOLOGY	7
EXPLANATORY INFORMATION
ONTHEKEYFIGURES	10
EPRA SUSTAINABILITY
INDICATORS	17
COMPANY'S OWN
CARBONEMISSIONS	25
VERIFICATION NOTE	27
IMPRINT	28

Scope

As at the reporting date of 31 December 2023, the Core Portfolio comprised ­59 commercial properties with a total lettable floor space of around 860 thousand m². This corresponds to 100% of the total portfolio. The market value of the properties totalled EUR 1,075.6 million (previous year: EUR 1,329.8 million).

Office­ properties accounted for the largest share of this portfolio in terms of market ­value, at around 59% (previous year: 62%). Retail properties account for approximately 26% (previous year: 24%). Around 15% of the portfolio is made up of ­logistics properties and other properties, including hotels (previous year: 14%).

The report for 2023 relates to 31 properties with a market value of EUR 736.8 million (previous year: 28 properties with a market value of EUR 699.5 million) for a portfolio which is consistent as at 31 December 2023 and for which complete data is available for the four-year period (2020 to 2023). The reported portfolio decreased by three properties year-on-year as a result of the sale of the properties in Apolda, Bad Oeynhausen and Ulm. At the same time, six properties were added to the report, meaning that the figures from the previous year's report cannot be compared directly. Under consideration of the market value, data was collected for 68.5% of the portfolio (previous year: 52.6%). The data will gradually be enhanced to include figures for the rest of the portfolio in the coming years. This data will be included in subsequent reports once the data set is complete for a period of two consecutive years.

Property acquisitions mean that there have been changes in the property port­ folio for the years from 2021 to 2023, on which the analysis is based, so the floor space of the examined portfolio has also changed. This means that there are also differences between the "absolute" and the "like-for-like" figures in this report.

The social indicators are based on the data of 33 employees who worked at DEMIRE in 2023 (previous year: 33). In line with IFRS reporting standards, the term

"employees" includes all members of staff, not including students, apprentices, interns and members of the Executive Board (CEO, CFO, CIO).

Collection of data on landlord consumption values

All consumption data for the properties for 2021, 2022 and 2023 is based on statements or data provided (annual consumption tables, load profiles, etc.) which DEMIRE has received from the utility companies/network operators or from verified meter readings taken by Property Managers.

DEMIRE does not have direct access to consumption data for single-tenant properties or operator-run properties. The data provided by tenants/operators is used in this case.

DEMIRE has opted to use actual values in the analyses where possible. Estimates of consumer data are therefore only made to a limited extent. This affects the energy consumption (Elec-Abs,Elec-LfL) in the properties in Lohfelden and Langenfeld in particular. Data on waste disposal (Waste-Abs,Waste-LfL) - especially for communal disposal companies - is calculated using the volume of the waste bins and disposal schedules. As a result, average values are provided.

Limits of our reporting

Landlord and tenant consumption data

Only property data over which DEMIRE has full operational control as a company has been included in the report.

DEMIRE

23/24 EPRA sBPR REPORT

8

FOREWORD OF THE
EXECUTIVEBOARD	2
INTRODUCTION	4
SUSTAINABILITY STRATEGY	5
METHODOLOGY	7

The consumption data shown only includes the utilities (energy, water and waste) that DEMIRE, as the landlord, had purchased as at the reporting date of 31 December 2023. The energy and water consumption relates, in each case, to the entire building and includes use by tenants where appropriate. The waste data refers to tenant and landlord waste, as DEMIRE as the landlord is generally responsible for disposing of waste for the property as a whole.

"per lettable space". The main denominator for indicators of building intensity is "per rental space".

The denominator for consumption in respect of office spaces used by DEMIRE is "per total number of employees" for the reporting period. The denominator for greenhouse gas emissions (GHG) is also "per total number of employees". Likewise, the denominator for social data is "per total/average number of employees".

EXPLANATORY INFORMATION
ONTHEKEYFIGURES	10
EPRA SUSTAINABILITY
INDICATORS	17
COMPANY'S OWN
CARBONEMISSIONS	25
VERIFICATION NOTE	27
IMPRINT	28

EPRA terminology

Absolute key performance indicators (Abs)

Absolute key performance indicators (Abs) for environmental data consist of the total consumption attributed to the building portfolio for the entire reporting ­period. The absolute KPIs for social data also include the total number of employees for the entire reporting period.

Like-for-like (LfL) key performance indicators

Like-for-like (LfL) key performance indicators complement the absolute KPIs. They make it easier to compare the consumption data for a portfolio of the same size from the last two reporting periods. Reporting on a like-for-like basis is a more ­effective way of demonstrating a change in performance which is not influenced by the size of a portfolio (through acquisitions, sales and renovations). Like-for-like KPIs are not used for social indicators; for better comparability, the absolute figures from the last two reporting periods are provided instead.

Intensity indicators (Int)

Analysis - Data normalisation

The intensity ratios (Energy-Int,GHG-Int and Water-Int) are calculated based on the underlying lettable space (m²). Using lettable space as a reference value ensures that the development of consumption data is calculated per unit of area, ensuring that the data allows for comparability.

Accounting for greenhouse gas emissions

In accordance with the operational approach taken in the GHG Protocol standards, we divide our carbon emissions into three categories:

Scope 1 emissions: Direct emissions (Dir) resulting from our Company's vehicles and gas heating in our business premises.

Scope 2 emissions: Indirect emissions (Indir) resulting from electricity consumption in the communal areas of our multi-tenant buildings as well as from electricity and heating consumption in our Company's offices.

Intensity indicators (Int) for environmental data indicate the level of consumption per unit of a suitable denominator. The typical denominator for office buildings is

Scope 3 emissions: Indirect emissions (Indir) resulting from business trips, ­employee commutes, construction work and energy consumption in tenant areas.

DEMIRE

23/24 EPRA sBPR REPORT

9

FOREWORD OF THE
EXECUTIVEBOARD	2
INTRODUCTION	4
SUSTAINABILITY STRATEGY	5
METHODOLOGY	7
EXPLANATORY INFORMATION
ONTHEKEYFIGURES	10
EPRA SUSTAINABILITY
INDICATORS	17
COMPANY'S OWN
CARBONEMISSIONS	25
VERIFICATION NOTE	27
IMPRINT	28

Indirect emissions (Indir) resulting from business trips, employee commutes, ­onstruction work and energy consumption in tenant areas.

There are two available methods for calculating Scope 2 and 3 emissions. In the location-based method, data on the average emission factor of the electricity grid is mainly used, while in the market-based method, electricity which the Company has made a conscious decision to purchase is used (e.g. procurement of renewable energy).

For our GHG accounting for 2023, we used the latest available conversion factor from the German Environment Agency, "Climate Change | 15/2022" ("Klimawandel | 15/2022"), published in May 2022, and "German Environment Agency - Carbon Dioxide Emission Factors for German Reporting on Atmospheric Emissions" ("Umweltbundesamt - Kohlendioxid-Emissionsfaktoren für die deutsche Bericht­ erstattung atmosphärischer Emissionen"), published in March 2020. Emissions from the German electricity mix are based on "German Environment Agency, Development of Specific Greenhouse Gas Emissions from the German Electricity Mix from 1990 to 2022" ("Umweltbundesamt, Entwicklung der spezifischen Treibhausgas-­ Emissionen des deutschen Strommix in den Jahren 1990-2022"). Due to a lack of current emissions data, the figures from 2022 were used for the 2023 reporting year. For emissions from transport, we used the online CO₂ calculator provided by the ­German Environment Agency. The conversion factors used are as follows:

• Electricity grid mix, Germany - 2021: 0.410 kg/kWh; 2022: 0.434 kg/kWh; 2023:
  0.434 kg/kWh (change: 0.0%/no new data available)
• Natural heating gas mix, Germany - 2021: 0.241 kg/kWh; 2022: 0.241 kg/kWh;
  2023: 0.241 kg/kWh (change: 0.0%/no new data available)
• Heating with light heating oil, Germany - 2021: 0.313 kg/kWh; 2022: 0.313 kg/
  kWh; 2023: 0.313 kg/kWh (change: 0.0%/no new data available)
• District heating mix, Germany - 2021: 0.299 kg/kWh; 2022: 0.299 kg/kWh; 2023:
  0.299 kg/kWh (change: 0.0%/no new data available)

The key figures on health and safety at work are calculated using the following formulas:

• Injury rate = number of reportable injuries/total number of hours worked
• Lost day rate = number of days lost due to injury at work (three days or more)/ total number of hours worked
• Absentee rate = number of absence days due to illness/total number of days worked

Analysis - segment reporting

The segment analysis was performed based on the Company's various asset ­classes: office, retail, logistics and other. Due to the size of the portfolio and because DEMIRE's real estate portfolio is located exclusively in Germany, no geographical segmentation has been performed.

The environmental figures for office spaces used by the Company are listed sepa- rately. As DEMIRE rents an office in its own portfolio, the consumption is also included in the portfolio data, which means that the environmental indicators for the ­Company's own offices should be seen as part of the property portfolio.

Review by third parties

The sustainability data set out in this EPRA Report was collected by external service providers, including quality assurance, and was checked by DEMIRE for consistency (dual control principle). In addition, as in the previous year, the data from the 2023 reporting period was subjected to third-party assurance. Ernst & Young Real Estate was engaged for this task.