PALADIN’S IMPACT COMMITMENT

OUR IMPACT PHILOSOPHY

At Paladin Realty Partners, we believe that driving social and environmental impact can and must co-exist alongside opportunistic financial returns for our investors. In executing the firm’s Latin American affordable housing strategy for more than twenty years, Paladin Realty has been a leading impact investor, supported by our institutional investors, including internationally recognized organizations such as the International Development Finance Corporation (“DFC”) and the International Finance Corp. ("IFC"). Paladin Realty has developed and implemented comprehensive policies for itself and its local operating partners with regard to environmental protection, life and fire safety, human resources, occupational health and safety, as well as policies to address potential community and employee grievances. Paladin Realty endeavors to operate its real estate investment management business in a manner that is aligned with the United Nations’ Sustainable Development Goals (UN-SDGs) and Principals for Responsible Investment (UN-PRI), driving meaningful social returns.

Paladin Realty’s Latin America investments are underwritten and managed to comply with rigorous environmental, social and governance (ESG) polices, including applicable codes of conduct and principles established by the PREA/NCREIF Real Estate Information Standards (REIS); the CFA Institute’s Global Investment Performance Standards (GIPS) and Asset Manager Code of Professional Conduct, INREV Guidelines; the United Nations’ Principles for Responsible Investing (UN PRI); the Institutional Limited Partners Association’s (ILPA) Private Equity Principles; California State Teachers Retirement System’s (CalSTRS) 21 Risk Factors; the International Development Finance Corporation (“DFC”); and the International Finance Corporation’s (IFC) Environmental, Health and Safety (EHS) Guidelines Section 3.3 regarding Life and Fire Safety.

The firm strives to be an industry leader in applying world-class ESG practices to the real estate investment and development business in emerging markets.

ALIGNMENT WITH U.N. SUSTAINABLE DEVELOPMENT GOALS

The following reflect certain important characteristics of Paladin Realty’s business in achieving its ESG goals:

Good Health & Well-Being

Paladin Realty strives to develop safe, clean, modern housing within communities that offer open space and amenities that promote well-being for residents of all ages.

Gender Equality

Paladin Realty’s Human Resources Policy provides a framework for local operating partners to conform to international best practices with regards to non-discrimination and equal opportunity.

Clean Water & Sanitation

Residents within Paladin’s housing developments benefit from modern, efficient water (potable where feasible) and sanitization systems.

Employment & Economic Growth

Paladin Realty’s hiring of local construction labor, in addition to the ancillary industries that benefit from housing development (e.g., concrete, lumber, fixtures, equipment, engineers, architects and other professionals etc.), helps to promote broad and resilient economic growth.

Industry, Innovation & Infrastructure

Where feasible, Paladin Realty takes advantage of new green building technology to produce sustainable residential and commercial developments.

Reduced Inequalities

Increasing homeownership in markets within Latin America enables local residents to accumulate equity, helping to reduce inequality.

Sustainable Cities & Communities

Paladin Realty strives to develop environmentally-friendly homes within communities that are safe, inclusive and sustainable.

Climate Action

Where feasible, certain of Paladin Realty’s real estate investments are developed according to IFC’s Excellence in Design for Great Efficiencies (EDGE) requirements for a 20% reduction in water usage, energy consumption, and embodied energy in materials, reducing communities’ carbon footprints.

Peace, Justice and Strong Institutions

Paladin Realty requires that local operating partners adhere to Paladin’s anti-corruption, bribery and money laundering policies as well as local law and regulations.

PALADIN AND IFC’S EDGE PROGRAM

Paladin endeavors to certify each one of its new projects with the IFC’s EDGE program (or local equivalent). As of June 2023, Paladin has certified or pre-certified 21 projects in Mexico, Colombia, Brazil, Costa Rica, and Peru. Together, these projects, totaling more than 6,500 units, expect to save approximately 3,400 tons of CO2 from entering the atmosphere each year.

Paladin was named as an EDGE Champion by the IFC in 2021 for its commitment to sustainable development.

PALADIN ENVIRONMENTAL SOCIAL GOVERNANCE MASTER PLAN

Paladin, in conjunction with international consultant ERM, created and adopted an Environmental, Social & Governance Master Plan (ESGMP) which is applied to all projects, partners and builders. The ESGMP consists of a variety of tests and checklists that ensure that a given investment’s stakeholders shall operate according to international best practices with regards to Human Resources Management, Operational Health & Safety on jobsites, and that neighboring communities and disgruntled workers shall have access to grievance mechanisms, among others. Any Paladin partner or builder that does not have written HR policies (which include provisions for non-discrimination, equal opportunity, and the other requirements of Paladin’s ESG Master Plan), shall adopt Paladin’s default version.

Prior to finalizing partnership agreements, “Partner Screening” checklists are completed, ensuring that a local partner is not in violation of any laws pertaining to the environment, health, safety, labor or public disclosure, that the company is not included on any black lists of slave labor or child labor, that the company has certain policies relating equal opportunity, anti-discrimination, etc. A “Project Screening” checklist will be completed before funding any project, which ensures that the project will not have any negative social or environmental impacts, and does not appear on any exclusion lists that Paladin has adopted, such as DFC’s “Illustrative List of Category A Investments”. Similarly, the Joint Venture will not be developing any projects which involve “Prohibited Activities”, which among others, includes the construction of infrastructure which could disrupt ecosystems, resettlement of indigenous populations, production of radioactive materials, impacting natural World Heritage Sites, etc. If any ESG-related risks are identified, and Paladin opts to move forward with the project, an Action Plan will be developed to ensure that identified risks are properly considered and mitigated; in reality, any project that poses any material ESG-related risks will be discarded.

Monitoring is an integral part of the ESGMP, where on an annual basis, information pertaining to accidents, incidents, inspections, grievances, violations, policies, and the like, are compiled for all Partners and Builders and are reviewed by Paladin’s ESG Committee. Such results are communicated to Paladin’s Investment Committee at quarterly Valuation Meetings, and any necessary action plans developed.