Budapesti Ingatlan Hasznosítási es Fejlesztesi : BIF Non-financial Report - Simplified ESG Report 2023

NON-FINANCIAL REPORT SIMPLIFIED ESG REPORT 2023

Budapesti Ingatlan Hasznosítási és Fejlesztési Nyrt.

Simplified ESG Report 2023
Table of contents
Executive greeting	2
I.	About the company	3
1.	Real estate portfolio	4
2.	Ownership background	6
3.	Organisational structure	7
4.	Board of directors	8
5.	Chief Executive Officers	8
6.	Employees	8
II.	Stakeholders	9
III.	Corporate values	9
IV.	Policies ensuring transparent operation	10
V.	Key risks and their management	10
VI.	Environmental topics	10
1.	Developing corporate ESG competence	10
2.	Sustainable properties	10
3.	Supporting sustainable mobility	11
VII.	Social and employment issues	12
1.	Social and charitable activities	12
2.	Customer satisfaction	12
3.	Employee satisfaction	12
4.	Employee programmes	13
5.	Provision of free parking	13
VIII.	Future plans	13
1.	Transparent communication	13
2.	Employee well-being	13
3.	Flórián Udvar office building development	13
4.	Energy efficiency improvements	13
5.	Development of automobile fleet	14
6.	ESG strategy	14
IX.	Awards and acknowledgements	14
Annex	15

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Simplified ESG Report 2023

Executive greeting

Dear Reader,

In recent years, there has been increasing talk of a new acronym, ESG, combining the first character of the English words 'environmental', 'social' and governance.

The emergence of the ESG approach and its integration into common talk are a manifestation of the growing requirement that companies should take into account not only financial but also natural and social, i.e., sustainability, aspects in their daily operations and future plans.

Although the widespread use of the term ESG is only derived from a 2004 UN study, we at Budapesti Ingatlan Nyrt. (BIF), being a responsible company, have been paying special attention to sustainability since our establishment in 1995 and have in fact been operating along the principles defined by the ESG framework ('E' for environmental protection, 'S' for social responsibility, 'G' for responsible corporate governance) since then.

Environmental protection

• Throughout our almost 3 decades of existence of BIF, we have always kept in mind all aspects of sustainability in our real estate developments and the operation of existing properties, and we constantly strive to apply modern, long-term sustainable, efficient and environmentally friendly technical solutions in our real estate portfolio.

Social responsibility

• BIF has been in contact with the Hungarian Interchurch Aid for many years, supporting its institutions and programs that provide assistance to disadvantaged and multiply disadvantaged families. In 2023, we welcomed Tábitha Children's Hospice House as a new supported partner.

Responsible corporate governance

• Compliance with the requirements of the regulators and investors and transparent corporate governance have also accompanied BIF throughout its nearly three decades of operation, as the Company has been listed on the Budapest Stock Exchange for 26 years and was among the first in Hungary to obtain the status of a Regulated Real Estate Investment Company (REIC).

Please find details of our activities for sustainable development and operations in the Non-Financial Report - Simplified ESG Report of Budapesti Ingatlan Nyrt.

Budapest, 24 April, 2024

Dr. Ungár Anna

President of the Board of Directors and CEO

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Simplified ESG Report 2023

1. About the company

Budapesti Ingatlan Hasznosítási és Fejlesztési Nyrt. (hereinafter referred to as "Budapesti Ingatlan Nyrt.", or "BIF" or "Company") has been a major player in the Budapest real estate market since 1995. In the course of its operations, it was one of the first to obtain the Regulated Real Estate Investment Company (REIC) status. The Company has been listed on the Budapest Stock Exchange since 1998 as a property development and management company, with its shares traded in the premium category since October 2018.

The Company, as regards its business, is engaged in the leasing and development of its own real estate and the sale and utilisation of its construction sites. BIF's real estate portfolio has undergone great diversity in the past nearly 30 years. The developments have created a unique, strategic real estate portfolio that defines the skyline of Budapest, and which is operated and managed consistently. During the development, special attention is paid to the neighborhood of the buildings and proper location, hence the buildings are located in the most prominent nodes of the capital. Its developer's portfolio includes office buildings, parking garages, listed buildings, exclusive residential properties and a hotel.

BIF's strategy is to maximise the potential of its existing real estate portfolio, operate its buildings in the most efficient way and seek acquisition opportunities that will further strengthen its market position. The Company pays particular attention to value retention in its developments, which is also an advantage when it comes to their utilisation. While focusing on excellence, BIF strives to meet the needs and interests of its business partners, tenants and, last but not least, its shareholders. To this end, the leasing, operation and sales activities are carried out directly within the Company, allowing an overview of all processes, the continuous improvement and perfection of which are essential tasks.

Development strategy and objectives

• To identify office and other buildings that fit into the Company's existing portfolio of income- producing properties and arrange acquisitions.
• To maximise the revenue-generating potential of the existing real estate portfolio and optimise the operation of office buildings.
• To ensure optimum utilisation of the Harsánylejtő development site in District III, Budapest, owned by the Company.

The Company currently has one wholly owned subsidiary, Harsánylejtő Kft. Given the fact that the subsidiary's business development and strategic decisions are made by BIF as the parent company, the administrative, legal and management tasks related to the operation of Harsánylejtő Kft., engineering and technical consultancy are performed by BIF's specialised departments in the framework of dual employment; they are not covered by this report.

Based on the above, the financial data presented in the report reflects the performance of BIF as the parent company.

Net sales amounted to approximately HUF 8,093 million in 2023 compared to approximately HUF 10,290 million in 2022. The main factor behind the negative trend is that the revenue from the sale of land under the Harsánylejtő Project (HUF 3,219 million) significantly increased the revenue in the base period, while no land sales were made in 2023. Adjusted for land sales, sales revenue increased by approximately HUF 1,022 million (+14%) in the period under review from HUF 7,071 million in 2022.

In 2023, the profit after tax increased by approximately HUF 533 million to HUF 10,545 million compared to the base year.

Evolution of net sales

Based on audited Individual IFRS Annual Financial Statements

			2023	2022	2021
	thousand forint		8 092 506	10 289 516	4 513 015
	Evolution of after-tax profit
	Based on audited Individual IFRS Annual Financial Statements
			2023	2022	2021
	thousand forint		10 544 829	10 012 333	8 171 169

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Simplified ESG Report 2023

1. Real estate portfolio

Budapesti Ingatlan Nyrt. has a diverse real estate portfolio to meet the needs of tenants throughout Budapest, whether they are renting office space, providing parking or accommodation. At the end of the year 2023, the BIF had a total of 271 tenants.

1.1. Office buildings

Major Udvar (1122 Budapest, Városmajor utca 12-14.)

The repositioning of an office building located in the most dynamically developing part of District XII, near the Déli railway station, has resulted in 8,630 sqm of category "A" office development. Completed in Q3 2022, the centrally located office building, features an exclusive, green- certified office space with 81 parking spaces and a landscaped courtyard. The three contiguous wings can be accessed from a stylish lobby on Városmajor utca.

Major Park (1122 Budapest, Városmajor utca 35.)

Located within walking distance from Széll Kálmán tér, the office building currently offers around 15,000 sqm of renovated offices, customer service and logistics space to its current tenants.

The building will undergo a complete renovation in the near future. In the first phase, the facade of the building will be renovated. Then, the passageway connecting Városmajor utca and Maros utca will be renewed and a multi-storeyparking garage and office building will be built. The development will result in a modern "A" class office complex, providing services for the convenience of both tenants and neighborhood residents.

Flórián Udvar (1033 Budapest, Polgár utca 8-10.)

The Flórián Udvar office and parking building is an 11,300 sqm class "A" office with 233 parking spaces, an interior restaurant and café with a garden terrace, and a landscaped courtyard of almost 2,000 sqm. We are focused on the continuous modernisation of the office building and the continuous improvement of its services. In 2023, we started the refurbishment of the office building's restaurant and the development of a functional gym that can be used free of charge by the building's tenants. The new facilities were/are due to be delivered in the first half of 2024.

BIF LOFT Irodaház (Office Building) (1101 Budapest, Üllői út 114-116.)

As a result of the complete renovation and modernisation of the building, more than 2,500 sqm of loft- like offices and open office areas with an industrial feel have been created.

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Simplified ESG Report 2023

Bajcsy Irodaház (Office Building) (1065 Budapest, Bajcsy-Zsilinszky út 57.)

This is a "B" category office building offering office spaces of 40-1,500 sqm with high ceilings and 24- hour reception service in the heart of the city centre. The office building offers 53 parking spaces for the convenience of its tenants.

Bihari Irodaház (Office Building) (1101 Budapest, Üllői út 114-116.)

The office building offers "B" category office spaces of 20-180 sqm on 6 floors, with 400 sqm of floor space per floor. Surface parking possibility is available for its tenants.

Vigadó Palota (Palace) (1052 Budapest, Apáczai Csere János utca 9.)

A fully renovated and modernised building offering 13,000 sqm of office space in a prime location, with the Aranykéz Parking Garage just a few steps away, providing an excellent synergy for the parking needs of office tenants.

Victor Hugo Irodaház (Office Building) (1136 Budapest, Victor Hugo utca 18-22.)

The category "B" office building offers 20-100 sqm of offices with street view. It has a traditional layout with an elevator and operates a 24-hour reception. The building is secured by a CCTV system and offers 62 surface parking spaces for rent.

BIF Tower (1101 Budapest, Üllői út 114-116.)

One of the iconic buildings of the South Pest region, which has 13 floors and more than 80 parking spaces. Visible from afar, this impressive property has undergone a complete renovation and change of function. Adapted to the requirements of the 21st century, it is being revitalised as a modern class "A" office building with exciting interior design solutions, taking advantage of the building's unique features.

1.2. Parking garage

Aranykéz Parkolóház (Parking Garage) (1052 Budapest, Aranykéz utca 4-6.)

The building has 5 levels and capacity for 470 cars, and is open 24 hours a day. It offers hourly parking payment, short and long-term rental options, electric car charging and restaurant services.

Flórián Udvar Parkolóház (Parking Garage) (1033 Budapest, Polgár utca 8-10.)

The 5-storey parking garage has a modern access system, offers 233 parking spaces 24 hours a day for the tenants and their visitors, as well as for the residents of the neighbourhood in the centre of Óbuda, next to Flórián tér.

1.3. Building plots and residential properties

Harsánylejtő Project

In the framework of the Harsánylejtő Kertváros (District III of Budapest) project, the Company has launched a development project on an area of approximately 39 hectares in several phases over the past years. The project involved land development, residential development and plots suitable for the construction of commercial units and other functions have been developed and partially sold.

Attila99loft (1012 Budapest, Attila út 99.)

Attila99Loft was the winner of the Real Estate Awards "Residential Property Development of the Year 2021". The property includes 16 exclusive apartments, a 22-space robotic parking system, a restaurant and a bakery. Over and above its location in the Castle District and the unique style of the apartments, the uniqueness of the building, based on the "New York" model, is ensured by the exclusive services available in it. The apartments and commercial premises developed are utilised by the Company through rental.

Andrássy 80+82 (1062 Budapest, Andrássy út 80-82.)

One of the most prominent properties in the Company's portfolio is part of the World Heritage and is located at Andrássy út 80-82., District VI of Budapest. On a plot of more than 1,400 sqm, the Company prefers the possibility of residential development by building high- end apartments and services while taking into account the changing market needs and the district building regulations.

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Simplified ESG Report 2023

1.4. Hotel, Hostel

Madách Hotel (1075 Budapest, Madách Imre tér 3.)

With one of the most prominent downtown locations in terms of tourism, the property at Madách Square was home to a 4-star hotel and two independent restaurants on the street front of the property. The hotel part was taken back from the operator at the end of October 2023. The Company is currently considering improvements that would modernise the property, taking into account the new tenant needs as well.

BIF Hostel (1101 Budapest, Üllői út 114-116.)

The 6-storey BIF HOSTEL has 82 rooms. On the ground floor there is a reception, a lounge, a dining room and a buffet, while on the upper floors there are rooms with 2-3 beds. The building is operated within the framework of a lease agreement.

2. Ownership background

As of 31 December 2023, Budapesti Ingatlan Nyrt. had three shareholders with an ownership share exceeding 5%. The largest shareholders were PIÓ-21 Kft. and MBH Bank Nyrt., in addition, BIF held 7.84% of treasury shares and the free float was 14.44% at the end of 2023.

Name	Ownership share (%)	Number of shares
PIÓ-21 Kft.	67.73*	194 389 885
MBH Bank Nyrt.	9.99	28 702 440
Treasury shares	7.84	22 514 206

• Of which an indirect share of 0.57% through the Company's subsidiary, BFIN Asset Management AG

Ownership share (%)

Free float

14.44%

Treasury shares

7.84%

MBH Bank Nyrt.

9.99%

PIÓ-21 Kft.

67.73%

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Simplified ESG Report 2023

3. Organisational structure

In 2023, Budapesti Ingatlan Nyrt. operated based on the organisational structure shown in the diagram below, with a management level and eight departments performing different functions. The percentage of women in mid- and senior management positions in the organisation is 38%.

The distribution of Budapesti Ingatlan Nyrt.'s employees is shown in the chart below. The majority of the Company's employees (approximately 58%) work in the Property Management Department.

Distribution of Budapesti Ingatlan Nyrt.'s employees

(31 December 2023)

	Sales and Marketing	Real Estate Development and
CAPEX and Fitout	Department	Construction Department
6%	6%
Department
	Legal Department
5%
	5%
		Management
		5%
		Secretariat
		3%
		Controlling
		Department
		5%
		Finance and
		Accounting
		Department
		6%
		HR Department
Property Management		1%
Department
58%

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Simplified ESG Report 2023

4. Board of directors

The Board of Directors of Budapesti Ingatlan Nyrt. consists of five members. The position of Chairman of the Board of Directors has been filled by Dr. Anna Ungár since August 2017.

• Dr. Anna Ungár
  President of the Board of Directors, CEO
• Kristóf Berecz
  Vice-President of the Board of Directors, CEO
• Julian Tzvetkov
  Member of the Board of Directors and of the Audit Committee
• Dr. Frigyes Hárshegyi
  Member of the Board of Directors and of the Audit Committee
• Miklós Vaszily
  Member of the Board of Directors and of the Audit Committee

The Board of Directors is the managing body of the Company and is responsible for representing BIF before the courts and other authorities and as well as against third parties.

The Board of Directors is assisted by the Audit Committee in its work of monitoring the financial reporting system.

The functions and powers of the Board of Directors and the Audit Committee are set out in the Statutes.

5. Chief Executive Officers

In 2023, the Company has two chief executive officers. The competence between the chief executive officers is divided according to the functional areas of the departments: one chief executive officer is responsible for property development and construction, marketing and legal, while the other chief executive officer is responsible for the business areas (finance and accounting, and controlling), human resources, sales, property management, CAPEX and Fit-out, as well as the secretariat.

6. Employees

Of the 65 employees of Budapesti Ingatlan Nyrt. registered in 2023 (headcount on 31 December 2023), 38 were male and 27 were female.

58%42%

Only 5 of the employees worked part-time and 1 as a temporary employee, while the others supported BIF in full time. The employees' fluctuation at the Company was 30% in 2023.

The table below supports and describes the above information.

Breakdown of employees by gender (in 2023)

		Female			Male			Other			None			Total
								specified
Number of employees	27		38			0			0			65
Permanent employees	27		38			0			0			65
Temporary employees	1		0			0			0			1
Full-time employees	24		36			0			0			60
Part-time employees	3		2			0			0			5

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Simplified ESG Report 2023

1. Stakeholders

In the course of its operations, Budapesti Ingatlan Nyrt. encounters with a wide and diverse range of stakeholders. In order to properly assess the interaction with them, the impact exercised on them and the influence of the stakeholders on the company's operations, the Company has first mapped the stakeholders that can be relevant.

In the future, BIF would like to consult with the identified stakeholders to better understand the Company's ESG-related impacts. During the survey, the following stakeholders were identified:

• Owners
• Clients
• • Office space tenants
  • Users of parking garages
  • Tenants of residential properties
  • Hotel management organization
• Public utility providers
• Financial partners
• People living and working around the properties
• Organisations supporting the operation
• • Cleaners
  • Maintenance
  • Security surveillance
• Employees
• Suppliers
• Authorities, legislative bodies
• Companies carrying out construction work
• Design companies

III. Corporate values

In its investments, the Budapesti Ingatlan Nyrt. seeks long-termopportunities and, therefore, it is important that any development undertaken can stand the test of time. Outstanding quality is essential to achieve this, so only those properties can be added to the Company's portfolio that - following the developments or renovations - will provide high-quality environment to the tenants in the long term.

BIF's properties will thus continue to play a key role in shaping the image of the city on the long run. Therefore, the choice of aesthetic, iconic solutions is an essential element in the revitalisation and design of the environment. Preserving the historic significance and character of the prime properties during their renovation means protecting Budapest's valuable architectural past as well.

In its development activities, Budapesti Ingatlan Nyrt. is able to create value not only for the direct users of the properties. Façade renovations and constructions also provide a fresh aesthetic renewal for the people living close to the property. However, improving the architectural environment is not just about evolving the visual impact on the quality of life for those using the area neighbouring the property. The greening and landscaping of the previously disused or construction sites have a number of positive effects, while the benches and waste bins, for example, expand the functionalities of the property's surroundings. The regeneration of the image of the properties and the revitalisation of their surroundings can also create spill-over urban development potential.

BIF's key slogan is "location", which is one of the fundamental values of the Company. In real estate developments, the search for unique locations is essential. It is important to ensure equal access for all when setting up the offices. For this reason, accessibility by public transport for the users of the building plays a key role.

To follow the guidelines and values set for the implementation of developments, BIF continuously monitors the latest developments. It selects the most effective and applicable technologies from the options identified and tests their usability in its own environment before full implementation, whether it is a building management or a workforce management solution.

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