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PREI ® Prudential Real Estate Investors 2009 Sustainability Report

Prudential Real Estate Investors · 2 PRUDENTIAL REAL ESTATE INVESTORS – SUSTAINABILITY REPORT, 2009 Letter from the CEO With the extraordinary turmoil in the financial markets

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PREI®

Prudential Real Estate Investors 2009 Sustainability Report

2

PRUDENTIAL REAL ESTATE INVESTORS – SUSTAINABILITY REPORT, 2009 Letter from the CEO

With the extraordinary turmoil in the financial markets and economy over the past 18 months or so, some of the attention that had been focused on sustainability and energy efficiency in recent years, particularly during the spike in oil prices, has turned instead to the economic crisis and its aftermath. Given the severity of the events, this is understandable. Though questions remain about the timing and shape of the recovery, economic activity will claw its way back sooner or later, and the environmental challenges – from potentially damaging greenhouse gas emissions to resource scarcity – that pushed sustainability to the forefront before the onset of the ―Great Recession‖ will return to center stage. I am pleased to report that PREI’s commitment to sustainability not only remained

steadfast throughout the crisis, it has continued to grow as our knowledge base expands and our initiatives gain momentum. To ensure that we move forward with a systematic approach that keeps our investors’ interests at the forefront, we’ve added resources and expanded the network of employees and partners who are involved in our efforts worldwide. More than 50 employees from PREI offices in the US, Latin America, Asia and Europe are now engaged in some way or another in our sustainability initiative. It is a global effort, but one that must be executed region by region, asset by asset, tenant by tenant – small steps, big strides. In only its second year of existence, the Global Sustainability Committee (GSC) has made tremendous progress integrating sustainability into our business and culture, and assessing the opportunities and potential risks that climate change and sustainability-related issues present for our business and investment portfolios. Our 2009 Sustainability Report provides an update of our progress on some of the initiatives we announced in our inaugural report and highlights certain activities of our regional sustainability committees. As always, we welcome your feedback and look forward to keeping our stakeholders apprised of our progress and lessons learned. J. Allen Smith Chief Executive Officer, PREI

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EXECUTIVE SUMMARY We do not inherit the Earth from our Ancestors, we borrow it from our Children. - Native American Proverb Sustainability and environmental consciousness continue to penetrate more deeply and broadly into and across the commercial real estate industry. This is due in part to the evolving pro-green landscape in the larger community, demonstrated by the meeting of global leaders in Copenhagen to address climate change risk, the passage of the American Clean Energy and Security Act of 2009 (better known as the Waxman-Markey bill) in the US House of Representatives and new legislation around the world to curb greenhouse gas emissions. But it is also due to growing interest in sustainability issues generally and to increasing demand for thoughtful business practices and investment strategies that seek to minimize our impact on the environment. PREI’s Global Sustainability Committee (GSC) moved forward on many fronts in 2009, building on the insights and lessons learned during the Committee’s first year. As we noted in our inaugural 2008 report, and as the mixed results from the Copenhagen summit confirm, integrating sustainable practices and values throughout the company and, where appropriate, in our investments and portfolios is not something that can be done overnight – or even over a few years. Rather, it is a journey that requires an ongoing commitment, of time, resources and intellectual capital, to finding ways to green our portfolios and business while fulfilling our primary obligations as fiduciaries acting on behalf of our investors. Accordingly, the GSC set out in 2009 to create the global infrastructure, systems and tools necessary to navigate the path to a more sustainable future. We introduced five distinct subcommittees (Existing Buildings, Portfolio Liaisons, Climate Change Risk, Education and PREI Communications), and dedicated an employee to coordinate and manage our sustainability efforts across portfolios and regions. The GSC focused on improving communications and the flow of information – e.g., expanding efforts to collect and analyze data – and on developing educational opportunities for PREI investment professionals, partners, tenants and stakeholders. Although the initial payback from these efforts in terms of cost savings and reduced environmental impact may seem relatively small, particularly when compared with the formidable challenges we hope to address, the tools and procedures being developed and refined will provide the essential foundation on which we will build in the years ahead. In the pages that follow, we present highlights of five key initiatives undertaken in 2009, along with summaries of activities in each region. We recognize that we still have far to go. However, as you read our 2009 report, we hope you will appreciate our progress and our commitment to our mission.

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2009 INITIATIVES AND ACCOMPLISHMENTS Empower Regional Sustainability Committees One of the first and most important initiatives undertaken in 2009 was to continue building the ―human infrastructure‖ essential to promoting sustainability globally. Specifically, to involve each global region in firm-wide strategic decisions, PREI created Regional Sustainability Committees (RSCs) in Asia, Europe, Latin America and the United States. These committees are charged with identifying regional-specific needs and challenges on sustainability-related issues, recommending appropriate actions and procedures and measuring PREI’s progress toward meeting the demands posed by each region. The decision to create RSCs was logical and reflects one of the key lessons the GSC learned during its first year, namely that there is no broad-brush approach to dealing with sustainability. In Europe, for example, governments have implemented a host of regulations to curb greenhouse gases and promote energy efficiency, while in Latin America changes are more market-driven. Recognizing these differences, we have given each regional committee the flexibility to address the environmental impacts of our business in a manner that is consistent with what is important in the region. The RSCs also give PREI an effective way to share best practices across the globe. With different management practices, government policies, technologies and business environments in each region, expanding the GSC’s global platform with dedicated regional capabilities enables us to navigate potential issues with a wide range of perspectives and expertise. Through the RSCs, PREI employees can benefit from the collective experience of their peers.

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Create Tools for Asset and Property Managers to Improve Environmental Performance After completing our 2008 pilot benchmarking study of the energy and water usage and waste production for a sample of properties in PREI portfolios, it was apparent that finding the most effective and cost-efficient ways to improve environmental performance across our global portfolio would require standardized tools and procedures. Standard tools and processes would allow management teams to systematically measure a given property’s environmental impact and identify a range of solutions to improve performance at the asset level, and allow PREI to identify improvements that will yield a financial benefit to our investors, while reducing resource consumption. Using data and information collected in the pilot program, which involved detailed assessments of 59 properties with more than 200 buildings, PREI’s GSC created a proprietary manual of Sustainable Standard Operating Guidelines© (SSOGs) to be used in our US properties and adapted for use in other regions. These guidelines take a bottom-line approach to identify efficient solutions for lighting, water, temperature settings, management of vacant space and self-assessments for potential environmental certifications. The guidelines enable property management teams to quickly identify cost-effective methods to reduce each property’s environmental impact without performing detailed costly analyses. The SSOGs have been distributed to asset and property managers responsible for more than 200 buildings in the US and to each of PREI’s RSCs for use in their local efforts. In the US, the guidelines are being used in the budgeting process to identify capital improvements that will have a positive return on investment and to minimize our reliance on consultants in the environmental certification process, in each case saving money for our investors. In other global regions, PREI’s RSCs are adapting the SSOGs to the practices in each region, including changing the recommended technologies to alternative products often more readily available in their respective parts of the world. Expand Energy Monitoring Capabilities and Performance Benchmarking PREI made significant progress during 2009 in monitoring the energy and water consumption of properties in its portfolios. Although the Committee is exploring a range of tools to track and manage utility consumption at the property level, we have already begun to collect and monitor data using the US Environmental Protection Agency’s (EPA) ENERGY STAR® Portfolio Manager, an interactive energy monitoring tool used to track a building’s energy consumption. Buildings that meet the Portfolio Manager’s criteria are assigned a numerical rating from one to 100 (from least to most efficient) indicating a building’s energy performance as compared to other like-kind buildings.1 As of year-end 2009, more than 150 office buildings across PREI’s global investment portfolios have Portfolio Manager accounts, maintained monthly by each property management team. Of these, 99 buildings met all the criteria of Portfolio Manager and were able to achieve ratings. Notably, the average rating for the 99 buildings that were able to achieve an ENERGY STAR rating was 67.8.2 While the relatively high average rating for our US office portfolio shows we have many high-performing buildings, the

1 Please refer to the ENERGY STAR website (http://www.energystar.gov/index.cfm?c=evaluate_performance.bus_portfoliomanager) for more

information on the criteria of Portfolio Manager 2 Weighted average based on square footage

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results leave little doubt that there is considerable room for improvement, particularly with respect to the buildings that achieved ratings below 50. For 2010, PREI will work toward improving the performance of each building that has already been benchmarked, while continuing to benchmark other buildings in PREI’s investment portfolios worldwide. Additionally, while we will continue to expand our use of Portfolio Manager, the Committee is in the pilot stage of testing advanced metering systems, which provide more granular feedback to the property manager about a property’s utility consumption at the system level (e.g., HVAC, lighting). We expect to have feedback on this technology from asset and property managers by mid-2010. Address Climate Change Risk While improving energy efficiency and reducing PREI’s impact on the environment are obviously important elements of our sustainability initiative, managing risk is a core value in everything we do and a key area of focus for the GSC. As an investor in real assets located in markets around the globe, we recognize the importance of understanding the potential impacts of climate change in terms of geographic natural hazards, political and regulatory pressures and potential issues surrounding resource scarcity. Because climate change is a complex issue with many dimensions, the GSC believes that the best approach for understanding and addressing the associated risks is to separate the potential impacts into two broad categories. First are those that can be mitigated through insurance, such as hurricanes, hail, and floods. The second category cannot, such as rising sea levels, regulatory changes and long-term utility price increases. To ensure that PREI has the tools and information to assess our exposure to both categories of risks, the GSC launched three key projects that are being integrated into PREI’s risk management process:

Mapping PREI property locations with overlays of natural hazards. The GSC engaged PREI’s global research team in 2009 to create a series of maps showing the location of PREI properties in Europe and the US and, to the extent possible, the natural risks that exist in different regions. The maps provide a qualitative tool for portfolio managers to use when considering geographic diversification and concentration risk at the portfolio level and exposure to natural risks at the asset level.

Exploring potential legislation regarding energy efficiency and its impact on the commercial real estate industry. The GSC has made a concerted effort to maintain an open dialogue with firms involved in federal, state and local initiatives to address energy conservation and resource consumption in commercial buildings.

ENERGY STAR Ratings by Building (US Office Properties)

PREI® (as of year-end 2009)

0

10

20

30

40

50

60

70

80

90

100

1 8 15 22 29 36 43 50 57 64 71 78 85 92 99

EN

ER

GY

ST

AR

Rat

ing

Property # (of 99)

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Compiling underwriting criteria to assist our acquisition professionals in assessing potential geographic, regulatory and resource risks associated with acquisition targets. Working with members from our legal and transactions teams, the GSC is creating a climate risk underwriting worksheet outlining potential physical and other risks (e.g., resource availability and cost, political and regulatory risks), to help determine whether the potential risks associated with an acquisition are acceptable to the acquiring portfolio.

Given the changing regulatory and political landscape and attitudes toward climate change risk, we expect this will be an ever-evolving area of practice and will require that we continually refine the various ways we address climate change risk.

PREI/Partner Education Since the GSC’s first meeting in 2008, education has proved to be the biggest challenge and opportunity as we promote sustainability in our investment activities, the workplace and outside the office. Education poses a formidable challenge because, as we alluded to in our report last year, while sustainability is a relatively simple idea, it is still the exception rather than the rule for businesses (or individuals) to explicitly consider sustainability-related issues when making strategic or tactical decisions. Education presents an opportunity to engage all stakeholders in our efforts to reduce the environmental impact of our business and investments because even the smallest changes in behavior can have a meaningful impact overall. By encouraging PREI’s management teams, employees and partners to think proactively about sustainability, PREI will not only reduce its impact on the environment, but our business and investors will also be well-positioned to realize the financial benefits achievable through reduced utility expenses, prolonged system lifetimes, and differentiation in the marketplace for tenants and potential investors. To help streamline the education process and to ensure that information is disseminated throughout the organization and to third-party stakeholders, we created the Education Subcommittee to identify ways to share best practices within and between groups through a variety of educational forums. The Education Subcommittee organized educational seminars for PREI employees and third-party stakeholders, and encouraged professional development through organizations such as the Green Building Institute’s (GBI) LEED Accredited Professional and Green Associate programs. In addition, PREI has joined several organizations that focus on environmental awareness, including the US Green Building Council (USGBC), ENERGY STAR®, the UN-backed Principles for Responsible Investment and the Greenprint Foundation. Our participation in these organizations has enabled us to interact with other groups participating in the greening of their investment portfolios, allowing us to learn from their experiences and solicit feedback on our efforts to address the same issues.

100 Park Avenue New York, NY LEED Existing Building, Silver

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Regional Sustainability Committees One of the keys to expanding PREI’s sustainability initiative was the creation of regional committees to focus on the aspects most important to each global region. Although many of the principles and goals of sustainability are universal, approaches to cost-effectively improving environmental performance while delivering favorable risk-adjusted returns to our investors can differ substantially from region to region. Set forth below are the highlights of activities from each of the regions in which PREI does business: United States Sustainability Committee (USSC) PREI’s sustainability efforts in the US were advanced significantly in 2009. With staff now dedicated to overseeing and managing the various initiatives in our US portfolios and coordinating the activities of RSCs outside the US, our efforts to address the potential risks and opportunities surrounding environmental awareness and climate change gained considerable momentum. Through the development of PREI’s Sustainable Standard Operating Guidelines© and the identification of products and programs that are accretive to existing investments, PREI’s domestic funds have begun integrating sustainable practices into our portfolios. Additionally, as part of our increased focus on the potential impacts of climate change, we have produced criteria for addressing sustainability both in the transaction process and in the ongoing management of assets in our existing investment portfolios. Following are some highlights of our efforts and progress in various initiatives in the US: Sustainable Standard Operating Guidelines© PREI’s focus on educating all stakeholders has made the creation of tools to simplify the process a necessity. To facilitate this need, the USSC and GSC jointly developed proprietary Sustainable Standard Operating Guidelines©, which present financially beneficial opportunities identified in a user-friendly format illustrating the up-front economic benefit of certain building improvements. This bottom-line focused set of guidelines has enabled management teams to identify and implement recommendations without having to perform extensive cost-benefit analyses on each project. This has facilitated rapid implementation of improvements of certain properties, allowing us to realize immediate cost-saving opportunities. PREI’s SSOGs cover five core concepts:

Guidance for Lighting

Operational Guidance for Temperature Settings and HVAC

Management of Vacant and Unoccupied Space

Operational Guidance for Water Efficiency and Water Heating

Achieving Environmental Certifications

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Environmental Certifications EPA ENERGY STAR® Portfolio Manager. Buildings that achieve an ENERGY STAR rating of 75 or higher are eligible for the EPA’s ―ENERGY STAR‖ label. As of year-end 2009, 23 of the 41 US office buildings that meet this standard have been awarded the ENERGY STAR label. These properties represent 6.8 million square feet and more than $3.5 billion in gross asset value. US Green Building Council (USGBC) – Leadership in Energy and Environmental Design (LEED). PREI has encouraged certification of our investments under the USGBC LEED certification program, where feasible, to help gain a market advantage through building differentiation in the leasing process. As of Dec. 31, 2009, PREI has 5.9 million square feet of LEED certified space in the US, representing more than $1.4 billion in gross market value. This reflects more than 6% of PREI’s US investments (based on gross market value). PREI is currently pursuing LEED certification for 34 buildings across the US, and has made a commitment to increase the number of investments in our investment portfolios that achieve the USGBC LEED certification. The chart below summarizes certification levels achieved to date along with projects that we anticipate will achieve certification over the next few years. Summary Distribution of ENERGY STAR Ratings PREI® LEED Certified Properties

PREI® (US properties only, as of year-end 2009) PREI® (US properties only, as of year-end 2009)

16 17

25

41

0

5

10

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20

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35

40

45

0-24 25-49 50-74 75+

# o

f bu

ildin

gs

ENERGY STAR Rating

Certified

In Process -

2010 Completion

Pursuing -

2011+ Completion

# of Properties 17 17 17

GMV (US$ mil) $1,451 $1,675 $1,434

$0

$300

$600

$900

$1,200

$1,500

$1,800

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Efficiency Projects Advanced Energy Monitoring. PREI is working with several groups to identify solutions that enable our property management teams to better control building operations and track utility consumption. Advanced metering systems will allow us to streamline the assessment and reporting of energy efficiency and consumption data. This pilot program should help identify the potential financial benefits of advanced metering to determine whether to apply similar systems across PREI’s investment portfolios, where practical. Energy Procurement. While individual property managers have previously engaged in forward power purchase transactions to reduce costs, the USSC has launched an energy procurement program that encompasses geographic regions in an effort to realize economies of scale for electricity procurement for our buildings, including on behalf of some of our tenants. Phase 1 of a pilot portfolio of multi-family properties in New Jersey is underway and are currently expanding this program to aggregate more than 50 buildings to gain leverage in negotiating electricity pricing. Initial indications suggest potential savings of 5% or greater through a ―bulk purchase‖ strategy. Should this effort prove successful, we will explore opportunities in other deregulated utility markets across the country. In addition to the potential cost savings, energy procurement would enhance PREI’s control of the power we purchase, which could eventually be used to purchase a higher proportion of power generated through renewable energy sources, above the existing renewable portfolio standards. Renewable Energy. PREI is exploring renewable energy options for properties across its US portfolios. Since energy regulations and incentive programs vary greatly by state and, to a lesser extent, by municipality, we are focusing initially on markets where incentive programs are robust enough to create attractive investment returns and in areas where tenant demands require adoption. In both of these scenarios we are contemplating either making this investment directly, or leasing properties to third-party investors in renewable energy.

40 Sylvan Road Waltham, MA LEED Core &Shell, Platinum

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European Sustainability Committee (ESC) In recognition of the often substantial differences in the regulatory environment and general attitudes toward environmental issues that exist between geographic regions, PREI created the ESC with representatives from a broad spectrum of business units (including transactions, asset management, legal, compliance, and research). While the goals of the ESC are consistent with those of the USSC, the initiatives they have undertaken focus, on our European-based portfolios and the issues they face. Most notably perhaps, the ESC takes a much more focused approach for regulatory risks since the political environment in Europe is moving more quickly than in the United States. Among the ESC’s notable accomplishments in 2009 was the repositioning of the TMW Immobilien Weltfonds (―World Fund―) as the first German open-ended fund with a commitment to be a leader in sustainability. For its efforts in developing a set of guiding principles to ensure a steady transition toward a ―best-in-class‖ fund on green issues, the World Fund was awarded the ―SCOPE 2009 Special Award for Innovation,‖ by the rating agency SCOPE for the concept and strategic shift toward sustainability. The fund managers will seek to achieve LEED Silver certification (or the local equivalent) for 50% of its portfolio by 2012 and 75% by 2015. With the ESC in place, PREI began pursuing environmental certifications for several buildings in Europe during 2009. These include:

Daseinstein, a 24,000 square meter mixed-use property in Munich, Germany, that is being

redeveloped in a manner that will enhance its environmental performance. Primary energy

consumption is expected to be more than 40% below the regulatory cap set by the German energy

savings order (ENEV), while transmission heat losses should be 38% below the ENEV threshold.

Daseinstein is currently pursuing LEED certification.

―Sumatrakontor,‖ a 36,500 square meter mixed-use development located in the new ―Hafen City‖

submarket of Hamburg, Germany. Is being built using resource-conserving, sustainable

construction materials and a concrete slab heating/cooling system that should provide a superior

indoor climate and low operating costs. In cooperation with DGNB (German Society for sustainable

buildings) the city of Hamburg developed its own certification standard (HCH) for the inner city

development area. According to this standard, the property is expected to receive a silver HCH

certification, which is roughly equivalent to the USGBC’s LEED Gold certification.

Tour Gallieni, a 25-story, 26,600 square meter office building in Paris, France that is under

renovation. The building is located near a public metro station and bus lines that provide

convenient access to the suburbs. The project is being completed in accordance with the ―NF

Batiments Tertiares – Démarche HQE®,‖ a certificate awarded by the French government for high

environmental standards.

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Asian Sustainability Committee (ASC) As in other regions, the ASC was formed with representatives from all business units and all locations within the region, including representatives from our Singapore, Hong Kong and Japan offices. Key initiatives undertaken by the ASC during 2009 included:

Using the Sustainable Standard Operating Guidelines© (SSOGs) developed for the US, the ASC is

studying ways to adapt the guidelines to local market standards that can be applied to the

operation of PREI’s various properties across Asia. For example, whereas LEED certification is

considered the standard for US properties, the BCA Green Mark is generally viewed as the

standard in Singapore.

To identify a benchmark for ongoing monitoring of energy and water consumption at our properties,

the ASC began collecting data on utility consumption for most properties in their region.

The ASC initiated a host of sustainability measures in our corporate offices, from configuring printer

default settings to print double-sided documents to paper recycling programs and simple reminders

to encourage employees to switch off the lights after use.

Perhaps the most ambitious project launched in 2009 involved collaborating with the National

Environment Agency and National University of Singapore on food-waste recycling at the Century

Square Mall in Singapore. This pilot program is exploring whether food-waste can be converted

into products such as compost and methane gas for other uses.

PREI is also pursuing environmental performance designations, where feasible, for properties in the region:

PREI is working to obtain the BCA Green Mark Gold Standard for a shopping mall called ―nex‖

currently under development in Singapore. Green features include landscaped roof and sky

terraces for enhanced thermal insulation; energy efficient mechanical and electrical systems;

energy saving light fittings; efficient water distribution system with sensor taps, water saving

appliances and leak detection devices; CO2 sensors, and low-energy glass for the external façade.

Having obtained the Energy Smart Retail Mall label for Liang Court in Singapore, the ASC is

working on the possibility of securing this label for the other retail malls PREI manages in

Singapore.

Similarly, after receiving the CASBEE (Comprehensive Assessment System for Built Environment

Efficiency) ―Excellent (S)‖ award for the Minami Azabu Building in Japan, the ASC is working on

the feasibility of obtaining similar awards for other properties in Japan.

While many of the sustainability initiatives mentioned above are relatively new, PREI’s investment strategy in Asia has focused for years on assets located in close proximity to mass transit systems, providing accessibility for shoppers and other users of the properties. Examples include Jurong Point 2, a mixed shopping and residential development, Tiong Bahru Plaza and Hougang Mall in Singapore; PCCW Tower in Hong Kong; Asia One Building in Seoul, South Korea; and Ginza Namiki Building in Tokyo, Japan.

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Latin American Sustainability Committee (LASC) PREI Latin America’s sustainability efforts began with an educational campaign for employees, who learned how to conserve resources by applying sustainable practices such as reusing, recycling and segregating waste, saving water and turning off lights and electronics. The region also launched a sustainability ―best practices‖ program designed to improve the environmental and economic efficiency of each asset as well as help our partners and tenants minimize their impact on the environment. The program included:

Training sessions with Latin America-based portfolio managers, property managers and partners to

educate them on PREI´s sustainability initiative, and the environmental risks to which the portfolios

are exposed and how to minimize them.

Developing guidelines to promote best practices for sustainable property management, designed to

help our partners and tenants reduce the environmental impact of PREI’s properties.

Implementing an ―Environmental Tenant Inspection Procedure,‖ designed to reduce the risk of

environmental contamination for each asset.

Launching a bi-monthly sustainability newsletter, ―ECO-PRU,‖ to keep PREI LA employees

informed of goals, news and progress of the LASC.

Initiating pilot projects focused on improving energy and water efficiency.

The National Certification of Integral Sustainable Urban Developments (DUIS, by its acronym in Spanish) recognized PREI´s two largest housing projects in Latin America (Valle de las Palmas and Rehilete) as the first DUIS certified projects in Mexico. The projects are regional urban sustainable development catalysts, in which infrastructure, services, equipment, retail, education, health and industry support the development of low-income residential projects that generate economic, environmental and social growth.

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SUSTAINABILITY CASE STUDY

Building Description The Emerald Office Building is located in the Pitjänmäki district of Helsinki, approximately 7.5 km north of downtown. The district, in close proximity to Helsinki’s excellent public transportation network, is one of the newest office markets in the Finnish capital, home to well-known tenants such as Nokia, ABB and Stockmann. The six-story office building has a glass, natural stone and aluminum façade, offering tenants modern, yet inviting and flexible office space. Emerald is fully occupied, with Valitut Palat Oy, G4S Security Services Oy and SATS Finland Oy as the largest tenants. The property is the first new office building to achieve the Silver LEED Certificate in all of Northern Europe. Because the certificate is given specifically to newly constructed buildings, the site, construction techniques, public transportation access and energy efficient HVAC were all carefully considered in the certification process. The building’s structural and operational features include:

High-density development, both on the site and in the surrounding area (infill development)

Efficient land use, which included an underground parking deck and zero lot lines

Redevelopment of a brownfield site

Preferred parking for low-emission, high-efficiency vehicles

Pedestrian-oriented green areas on the property (on top of the yard deck) for occupancy comfort

Close proximity to public transportation

Use of RECS (Renewable Energy Certificate System) certified green electricity produced with renewable energy sources

High level of indoor environmental quality, including individual thermal controls

Extensive use of natural lightning

Water efficient solutions (e.g., low flow, high-efficient fixtures & fittings)

Use of low-emitting materials to ensure the best indoor air quality for tenants

Sustainable design with flexible options Helsinki-based Leopold Asset Management and Corbel Oy, the building’s asset and property managers, are continually looking for new methods to reduce the property’s impact on the environment. PREI and its partners plan to continue improving the building’s operating and energy efficiency through further educational programs designed for both tenants and building staff.

Emerald Office Building Helsinki, Finland

Fund: TMW Immobilien Weltfonds Property Management: Corbel Oy Year Built: 2009 Gross Square Footage: 168,509 sq ft Number of Tenants: 6 Occupancy: 100% Certification: LEED Silver

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Notable Awards 2009 EPA Phoenix Award. The US Environmental Protection Agency honored Annapolis Town Center, a Greenberg Gibbons and Prudential Real Estate Investors joint venture development, with the prestigious ―Phoenix Award‖ for our work in remediating and redeveloping the site. The mixed-use brownfield redevelopment encompasses more than one million square feet of residential, retail, and office space. The EPA gives this award annually to the most innovative brownfield remediation projects in the country. Energy Smart Award. Liang Court, in PREI’s Asian Retail Mall Fund, was awarded Singapore’s National Environment Agency’s ―Energy Smart‖ designation for the implementation of energy saving measures to improve energy efficiency and reduce operating costs. The improvements have helped Liang Court reduce its electricity consumption by 500MWh per year. Innovation Award. For its efforts in developing a set of guiding principles to ensure a steady transition toward a ―best-in-class‖ fund on green issues, the TMW Immobilien Weltfonds (―World Fund―) was awarded the ―SCOPE 2009 Special Award for Innovation‖ by rating agency SCOPE for the concept and strategic shift toward sustainability. The fund managers will seek to achieve LEED Silver or the local equivalent environmental certification for 50% of its portfolio by 2012 and 75% by 2015. PREI Member Organizations United Nations-Backed Principles for Responsible Investment (UN PRI). PREI became a signatory in 2009 to the UN-backed Principles for Responsible Investment. We believe that the principles strengthen our commitment to incorporate environmental, social and governance criteria into our investment practices, while continuing to meet obligations to provide favorable investment returns to investors. Ultimately, we will reduce our operational footprint, aiding in the preservation of the environment for future generations and building a more stable, sustainable and inclusive global economy. Investor Network on Climate Risk (INCR). Prudential Investment Management, the asset management business of Prudential Financial, Inc., joined the Investor Network on Climate Risk ("INCR") early in 2009. INCR, an $8 trillion network of investors that includes asset managers, state and city treasurers and comptrollers, public and labor pension funds, foundations, and other institutional investors, seeks to promote a better understanding of the financial risks and opportunities posed by climate change. PREI is the real estate investment advisory business of Prudential Investment Management. Greenprint Foundation. In 2009, PREI joined Greenprint, an industry association whose mission is to reduce the carbon footprint of the commercial real estate industry in an economically feasible manner. The mission is consistent with the goal of the Intergovernmental Panel on Climate Change (IPCC) to stabilize global greenhouse gases by 2050. Greenprint’s core members are primarily major worldwide real estate investors who face similar challenges in greening their global portfolios while measuring the progress in a globally consistent manner. Greenprint has a strong commitment to measurable progress, and, to that end, it will create a uniform data collection and management tool that fulfills both benchmarking and reporting needs for energy performance and carbon emissions. This matches PREI’s goal of adding portfolio value through reduced operating costs, energy efficiency and increasing long-term capital value.

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US Green Building Council (USGBC). The Washington, DC-based US Green Building Council is a 501(c)(3) non-profit organization committed to a sustainable future through cost-efficient and energy-saving green buildings. The organization encompasses 78 local affiliates, more than 20,000 member companies and organizations, and more than 100,000 LEED Accredited Professionals. The USGBC leads a diverse constituency that includes builders, environmentalists, corporations, nonprofit organizations, elected officials, teachers and students. ENERGY STAR®. PREI became a voluntary partner with the US EPA’s ENERGY STAR® Program in 2009. The program, a joint effort of the US Environmental Protection Agency and the US Department of Energy, seeks to help protect the environment through energy efficient products and practices. With the help of ENERGY STAR, Americans saved enough energy in 2008 alone to avoid greenhouse gas emissions equivalent to those from 29 million cars — all while saving $19 billion on their utility bills. ENERGY STAR offers an energy management strategy that helps to measure energy performance, set goals, track savings, and rewards improvements. The EPA provides an energy performance rating system, Portfolio Manager, which has been used at more than 96,000 buildings in the US, and recognizes top-performing buildings (those that achieve a rating of 75 or higher) with the ENERGY STAR designation.

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PRUDENTIAL REAL ESTATE INVESTORS SUSTAINABILITY STRATEGY STATEMENT Vision

Prudential Real Estate Investors is committed to championing efforts to provide environmentally sustainable real estate investments worldwide to its investor base while operating its business in a sustainable manner. To that end, we will proactively explore ways to cost-effectively ―green‖ our portfolio while delivering favorable risk adjusted returns to our investors. The values of sustainability, resource conservation, and climate change mitigation will be integrated throughout our business, supported by the following objectives, goals, and strategies. Guiding Principles

Recognize that it will take a sustained commitment to integrate the values of sustainability and

resource conservation into PREI’s corporate culture and the operation and management of

properties.

Balance our efforts to improve the environmental footprint of our portfolio with our obligations as

fiduciaries to enhance property performance for our investors.

Objectives

Reduce our portfolio’s environmental impact.

Continue to improve the financial performance of our client’s funds by reducing operating expenses

and increasing asset values through strategic energy and resource management.

Continue to enhance the well-being of our tenants, residents, and employees by providing greener

places to work and live.

Educate our partners, employees and vendors as to the benefits of sustainability efforts.

Communicate the results of our efforts to our investors and their consultants.

Goals

Wherever practicable and cost-effective:

Benchmark the portfolio’s energy and water consumption, and waste production.

Reduce the energy intensity of existing buildings.

Reduce the water consumption of existing buildings.

Reduce the non-recycled waste output of existing buildings.

Incorporate sustainable design and construction in new investments being considered for the

portfolios.

Specify the use of environmentally preferred materials and products where appropriate.

Use clean energy.

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Strategies

PREI’s Business and All Properties

Identify and join appropriate organizations and forums to familiarize PREI management with

current sustainability thinking as it relates to the real estate investment management industry.

Encourage our employees to develop sustainability expertise, including the pursuit of education

and the US Green Building Council designated LEED Professional Accreditation.

Leverage field talent, collaborating with third-party property managers for on-the-ground expertise

and tangible results.

Conduct training for PREI staff, third-party property managers, and other groups that can influence

the success of the sustainability initiative.

Identify and pursue appropriate certifications, awards, and other recognition opportunities.

Create capital expenditure review criteria that consider that lifecycle costs and energy use are

included in equipment purchasing decisions.

Consider and evaluate the mitigation of climate change risks as they evolve.

Work with our landlords to ―green‖ the spaces in which our employees work.

Existing Properties

Implement on a multi-year basis the use of existing and customized tracking tools to establish

accurate baselines of environmental performance and monitor changes over time.

Over time, identify no- and low-cost energy and water efficiency improvements to implement.

New Properties

Address sustainability considerations in decision-making regarding acquisitions and dispositions.

Where appropriate, design and construct new buildings to achieve the equivalent of LEED®-NC

certification or better, featuring energy performance that exceeds the requirements of local codes.

Where LEED certification or equivalent is not feasible, look to incorporate other sustainable design

and construction techniques in new buildings.

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Resources Dedicated to PREI Sustainability Since the inception of PREI’s Sustainability Initiative in 2008, our focus has been to continually increase environmental awareness and to ensure we are protecting and maximizing the value of each investment through energy and resource conservation. As this initiative has confirmed that sustainability can also provide a financial benefit to our investments, PREI has allocated additional resources to these efforts. In April, 2009, PREI asked Brett Levy, a member of the GSC, to take on the responsibility of coordinating the GSC’s efforts surrounding the identification of opportunities for improving energy efficiency and for implementation at the property level. To facilitate the work of the GSC, PREI created a network of subcommittees comprised of more than 50 employees across the globe focused on different components of addressing sustainability. The subcommittees have proven to be a valuable resource for management teams and property managers. Some of the opportunities that have been identified and communicated by these subcommittees include: enhanced understanding of energy procurement, which produced reduced electricity prices for some properties; up-to-date information on state/local financial incentive programs, which have reduced the cost of installing energy efficient technologies at PREI properties; and a better understanding of the different environmental certifications and where it makes financial sense to allocate resources towards pursuing these certifications.

If you have any questions about PREI’s sustainability efforts, please contact either: Catherine Verhoff Chief Legal Officer / GSC Chair (973) 734-1417 [email protected]

Brett Levy Sustainable Initiatives (973) 734-1438 [email protected]

Climate Change

RiskExisting Buildings EducationPortfolio Liaisons

PREI

Communications

PREI Global Sustainability

Committee

US Sustainability

Committee

European

Sustainability

Committee

Asian

Sustainability

Committee

Latin American

Sustainability

Committee

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