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2018 Environmental, Social, and Governance Report

2018 Cerberus ESG Report | 1

Who We are Who We are

The paper used in this report is 100% post-consumer waste, FSC* certified, and made with wind power.* Forest Stewardship Council. FSC certification ensures that products come from

responsibly managed forests that provide environmental, social, and economic benefits.

Legal Statement This Report was created to summarize Cerberus’, and certain of its portfolio companies’, Environmental, Social, and Governance (“ESG”) program only. It is not intended to summarize or describe any investment performance of the Cerberus Funds and Accounts or individual investments. The information contained herein may contain “forward looking statements”. Such forward looking statements, which can sometimes be identified by the use of terminology such as “may”, “will”, “should”, “expect”, “anticipate”, “target”, “intend”, “believe”, “continue”, or other variations or comparable language, are subject to various risks and uncertainties and actual events or results may differ materially. As such, they should not be relied on in any manner. This Report is provided solely for informational purposes only. It is not intended to be, nor should it be construed or used as, an offer to sell or a solicitation or any offer to buy, an interest in any Cerberus Fund or Account.

Cerberus personnel generally adhere to the Cerberus ESG policy stated herein in connection with the exercise of their professional responsibilities, including their duty to manage various investments held by the Funds and Accounts. The ability and rights of Cerberus personnel to impose the Cerberus ESG policy on a portfolio company or other related investment is strictly limited to the rights such personnel may exercise (or elections they may make) as the representative of an investor, member or partner in the entity that owns such investment, subject to the organizational documents relating to such investment. Nothing herein shall imply (or be construed to suggest) that Cerberus (or any of its personnel or representatives) controls the management, policies, or actions of any other company (including portfolio companies) to any extent beyond that which may be expressly set forth in the organizational documents of such company. It is the policy of Cerberus to respect the corporate structure and to require that each of its affiliated companies (including portfolio companies) govern themselves in accordance with their respective organizational documents.

IntroductionAt Cerberus, we believe responsibly addressing certain environmental and social issues, as well as prudent governance, helps to mitigate risk and create more valuable companies and properties in the long run.

This perspective is reflected in our culture and approach to evaluating transactions and managing investments. Our focus on Environmental, Social, and Governance (ESG) risks and opportunities spans the entire investment lifecycle, from pre-investment diligence through acquisition, from F-100 (First 100 days of transition) through portfolio management, and, ultimately, exit.

This report is intended to demonstrate the history, depth, and breadth of ESG work at Cerberus, as well as our current ESG operating rhythm. It also describes our most recent efforts to measure and improve our performance with regard to ESG principles as applied to our portfolio of companies, investments, and properties around the world.

Through our ongoing commitment to ESG best practices, Cerberus has realized practical and tangible benefits for our investments and, ultimately, our investors.

Message from the ESG Committee Chairman 7

About Cerberus 8

Cerberus’ Proprietary Operating Capabilities 10

Glossary 60

Biographies of ESG Committee Members 61

Biographies of Other Cerberus ESG Resources 64

Looking Forward 56

The Evolution of Our ESG Program 14

Our ESG Journey 15

The Cerberus ESG Committee 16

The Cerberus ESG Policy 17

Comparison to Other ESG Principles 18

SGI Acquisition: The “Frontier Plus” Investment 20

The Cerberus ESG Formula 26

The Cerberus ESG Process 28

ESG Integration Throughout the Investment Lifecycle 29

Technology Resources Deployed in the ESG Program 30

The Cerberus ESG Evaluation Tool 31

Collaboration Throughout the Investment Lifecycle 32

Spectrum of Collaboration 33

Cerberus General Counsel Summit 2018 34

Commercial Value Through Consistency and Collaboration 36

Overview of Cerberus' ESG Activities 38

Case Studies 40

Cerberus ESG Incident Reporting Process 52

Contents

1

5

42

3

Who We are

Appendix

ConclusionESG within Cerberus

ESG in the Cerberus Portfolio

Cerberus is a global leader in alternative investing with industry-leading operating expertise. Founded in 1992 and headquartered in New York, with 18 offices worldwide, we have approximately $39 billion in assets under management across complimentary credit, private equity, and real estate strategies.

Who We Are

1


Message from the ESG Committee Chairman

Andrew KandelGlobal Chief Compliance Officer, Senior Legal Counsel, andSenior Managing Director, Cerberus Capital Management, L.P.

For over 26 years, Cerberus has been a trusted partner to many respected investors from around the world. Whether investing in private equity, real estate, or global credit, we have provided operating expertise, capital, and innovative solutions to improve performance and drive greater value for our funds’ investments. And we will continue to do so in the future. We believe that our team, our multi-disciplinary investment platforms, our vision, and our operating capabilities can generate strong risk-adjusted returns regardless of the marketplace. We also believe that our ESG initiatives have similarly improved performance and contributed to the returns of our investments.

2018 has been an exciting year for our ESG program. We have increased the size of our committee, engaged in new geographies, expanded the use of technology, and actively partnered with our professionals – both internally and at our portfolio companies. At the same time, we continued to build out our ESG capabilities for the future.

Before embarking on a recitation of our 2018 ESG accomplishments and reviewing our 2018 Annual Report, it is always worth remembering that our commitment to ESG as a driver of value goes back many years. We are not new to assessing and analyzing ESG matters – it is part of the Firm’s overall commitment to excellence and compliance. We were sensitive to environmental impact and sustainability long before others recognized the need to diligence and address these issues; we were concerned with factory safety, wage and labor issues, and supply chain touch points before many regulations were even imposed; and we have focused on corporate governance, compliance, culture, and responsibility since our inception in 1992.

This past year, our efforts intensified around consistency and collaboration in order to drive greater commercial value. From a consistency perspective, we continued to obtain better data and metrics in order to track meaningful and accurate information. From a collaborative perspective, we established key contacts at each investment and customized our ESG efforts and expectations to make them more practical and consequential according to specific needs and requirements.

In 2018, we also added several important members to our ESG Committee: Frank Bruno, the Co-CEO of Cerberus, Sheila Peluso, the Head of Human Resources; and Jayne Binzer, a Senior Operating Executive in Cerberus Operations and Advisory Company. Toward the end of the year, Cerberus Capital Management, L.P. made a strategic acquisition of SGI Frontier Capital (“SGI”), a leading private equity firm focused on frontier markets in Asia and Africa. SGI already has a robust ESG program and we look forward to merging our efforts and processes together and opening our aperture to include ESG issues in countries such as Ethiopia, Georgia, and Mongolia.

Finally, we remain committed not just to maintaining our excellent ESG program, but to proactively build upon it as we take our focus and initiatives into 2019 and beyond.


8 | 2018 Cerberus ESG Report

Who We Are

Cerberus is a global leader in alternative investing with expertise in credit, private equity, and real estate strategies, and industry-leading operating platforms.

We were founded in 1992 and today comprise over 750 employees in 18 locations globally.

Cerberus manages assets on behalf of many of the most respected institutional investors worldwide. Our investor base includes pension plans, insurance companies, endowments, foundations, and sovereign wealth funds.

About Cerberus

Global Credit Opportunities

Operational Private Equity

Real Estate

Multi-disciplinary platforms with expertise investing in:

» Corporate credit and distressed debt

» Mortgage securities and assets

» Middle-market direct lending

Global real estate platforms with the flexibility to invest across the capital structure in:

» Non-performing loans

» Commercial real estate

» Residential real estate

» Portfolios of real-estate backed securities

Value-driven investors in business worldwide, focused on:

» Businesses that can benefit from improved operations

» Complex corporate carve-outs and divestitures

» Private companies as platforms for growth

Cerberus Invests Across Three Complementary Platforms

1 2 3


New York

Sao Paolo

Chicago

Dublin

London

Baarn

Amsterdam

Frankfurt

Addis Ababa

TbilisiMadrid Beijing

Tokyo

Ulaanbaataar

Hong Kong

Singapore

Los Angeles

San Francisco

1992Founded

$39bnAUM

750Total Employees

18Global Offices

Portfolio Companies Real Estate Assets

$70 bn revenue

400,000 employees

4,000 buildings

$600 m energy spend

200 buildings

12,500 units

11.5 m square feet

$19 m energy spend

10 | 2018 Cerberus ESG Report 2018 Cerberus ESG Report | 11


Cerberus' Proprietary Operating Capabilities

Cerberus Operations and Advisory Company (COAC) is an industry-leading operations platform that is proprietary to Cerberus. COAC has operating executives and functional experts that work across Cerberus’ investment platforms to maximize financial and operating performance.

Cerberus Technology Solutions employs expert technologists that work closely with Cerberus investment and operating professionals to apply new technologies, realize new sources of revenue and value creation, and accelerate technological transformation and differentiation.

Headquartered in the United Kingdom with offices in London, Amsterdam, Dublin, and Madrid, Cerberus European Servicing (CES) is Cerberus’ proprietary asset management, property management, and loan servicing platform. As of June 2018, Cerberus has directly engaged CES on over 65 different loan portfolios and REO transactions spanning more than 40,000 loans and nearly 4,000 properties across Europe.

FirstKey Homes provides acquisition and property management services to a diverse portfolio of single-family rental homes across the United States. Services include leasing, rental collection, credit screening, repairs and maintenance, construction, renovation oversight services, and quality control.

FirstKey Mortgage is a real estate finance business that is a global leader in acquiring, securitizing, and managing residential mortgages and related assets. Operating capabilities include sourcing loan opportunities, managing and providing servicing oversight of assets, and facilitating certain structuring and servicing activities. An experienced team provides collateral management and innovative deal structuring. It also has a dedicated technology group of software engineers and business analysts that develop and deploy solutions for complex mortgage trading, securitizations, and portfolio management.

Cerberus Operations and Advisory Company (COAC)

Cerberus Technology Solutions

Cerberus European Servicing (CES)

FirstKey Homes

FirstKey Mortgage

Competitive Advantage

Cerberus believes that there are distinct competitive advantages to having a robust team of senior operating executives and functional experts in-house to work across our investment activities and throughout the lifecycle of an investment. COAC, our industry-leading operations platform, comprises over 110 experienced operators across a range of industries including manufacturing, aerospace, energy, healthcare, and financial services, among others.

Experts in Driving Transformation

COAC assists Cerberus in sourcing opportunities, conducting highly informed due diligences, executing acquisitions, and improving the performance of portfolio investments. COAC executives often hold senior leadership and director positions at Cerberus’ portfolio companies and its teams are regularly deployed to provide practical assistance to help drive operational and strategic transformations.

13 Years of ESG Experience

ESG is a core practice area within COAC that has deep involvement in transactions from the due diligence stage through ownership, and ultimately disposal. For over 13 years, Cerberus has been integrating ESG initiatives into our investment process as a proprietary operating capability to help improve performance and drive value.

About Cerberus Operations and Advisory Company (COAC)

Sustainable operating improvements and accretive strategic initiatives are at the core of every investment from start to finish:

Due Diligence or Sourcing GovernanceOperational

ExecutionExits /

Wind-Downs

Experienced Industry ExecutivesWe employ seasoned executives from top-tier companies to provide senior advice, supplement management teams, and serve on boards.

Functional ExpertsOur functional experts in operating areas such as manufacturing, supply chain, IT, human resources, treasury, and other business functions. work on interim and permanent bases wherever needed.

OperatingInitiatives GroupOur Operating Initiatives Group provides management with a pool of ready talent who knows the company and is ready to help drive initiatives.

Cerberus has been integrating ESG initiatives into our investment processes for over 13 years. Our ESG Committee oversees a comprehensive ESG policy that we integrate into every stage of our investments in portfolio companies and properties worldwide.

2ESG within CerberusCerberus has been integrating ESG initiatives into our investment processes for over 13 years. Our ESG Committee oversees a comprehensive ESG policy that we integrate into every stage of our investments in portfolio companies and properties worldwide.

2ESG within Cerberus


ESG within CerberusESG within Cerberus

The Evolution of Our ESG Program

Cerberus has focused on components of ESG since our formation and commencement of investment activities in the early 1990s. Over the past 13 years, Cerberus Operations and Advisory Company (COAC) has formalized and structured our focus on ESG through practice areas dedicated to Environmental, Safety, and Health (EHS), Human Resources, Legal, and Compliance.

Our Ongoing Commitment

We continue to focus on ESG because we see both commercial and more holistic benefits such as:

» Properly valuing the purchase price of an investment by considering remedial costs during diligence

» Increasing operating efficiencies through environmental and sustainability initiatives

» Increasing the competitiveness of our portfolio companies given customers’ and other stakeholders’ demand for sustainability metrics

» Avoiding safety, health, and labor-related issues

» Supporting more attractive exit valuations, and minimizing post exit indemnity obligations, with more credibility for all parties

» Preserving Cerberus’ reputation for investing with integrity and creating lasting value through our investment and operating expertise

» Anti-Corruption, Anti-Money Laundering, Sanctions

» Corporate Governance Structure

» Environmental

» Financial

» Human Resources

» Insurance Risk Management

» IT / Operations

» Regulatory and Legal

» Strategy and Commercial Due Diligence

» Supply Chain

» Tax

Going forward, we seek complete integration of ESG programs and best practices in all of our investment and operational workstreams:

ESG

Environmental Social Governance

Our ESG Journey

1990s - Early 2000s: Focused on due diligence and retained liabilities

Formalized our ESG policy and developed our first ESG due

diligence questionnaire for investors

Developed a technology round table to monitor significant developments driving ESG innovations

Mid-2000s: COAC employs ESG professionals to focus on due diligence

and portfolio company monitoring, eliminating third-party silos

Published our first ESG annual report

Developed a detailed ESG scoring and reporting framework

Added additional ESG resources to support the ESG accounting elements

Added three senior leaders to our ESG committee

Expanded use of technology to help manage our ESG program

Added internal ESG resources and updated ESG reporting

Formal ESG Committee established to provide oversight

for the Cerberus ESG program

Expanded from EHS, HR, Legal, and Compliance to more holistic Environmental, Social, and Governance issues

2018

2017

2015

2013

2000

2016

2014

2010

1990

ESG



» Monitoring and Oversight

» Identifying Industry Trends

» Tracking New and Pending Legislation

» Quarterly Meetings

» Annual Report

The Cerberus ESG Committee

Andrew KandelESG Committee ChairmanGlobal Chief Compliance Officer, Senior Legal Counsel, and Senior Managing Director

Frank BrunoCo-Chief Executive Officer and Senior Managing Director, Cerberus Capital Management, L.P.

Chan W. GalbatoChairman and Chief Executive Officer, Cerberus Operations and Advisory Company, LLC

Paul WarmusSenior Operating Executive, Cerberus Operations and Advisory Company, LLC

Pieter KortewegSenior Advisor and Vice Chairman, Cerberus Global Investment Advisors, LLC

Sheila PelusoHead of Human Resources and Managing Director, Cerberus Capital Management, L.P.

Christopher A. HoltGeneral Counsel and Legal Practice Leader, Cerberus Operations and Advisory Company, LLC

Jayne BinzerSenior Operating Executive, Cerberus Operations and Advisory Company, LLC

The Cerberus ESG Committee

In 2015, Cerberus established our ESG Committee to formalize the oversight of our ESG activities across Cerberus and provide insight into emerging ESG issues and guidance in reporting to our investors.

Each ESG Committee member is a statured, senior executive with numerous years of relevant, complementary business experience or subject matter expertise.

ESG Committee members serve on other Cerberus Committees. They also sit on some of the boards of Cerberus portfolio companies.

The Committee follows industry trends, reviews surveys and white papers, and participates in ESG conferences.

Committee members are deeply involved in portfolio company operations, which offers an important vantage point to closely monitor ESG programs and activities.

Key Responsibilities

The Committee continues to drive our ESG program, meeting quarterly to discuss a wide range of topics, and deriving effectiveness from the following attributes:

Integrated

Expertise

Embedded

Cerberus will pay proper regard to the informational needs of investors in its funds and accounts, and when appropriate communicate adequate information to them, including on Environmental, Social, and Corporate Governance (ESG) risks, in a way that is clear, fair, and not misleading.

Cerberus’ investment analyses include, when relevant, a review of ESG issues. The particular issues considered vary based on the underlying operating business and investment involved.

Cerberus ESG review includes the following topics where applicable:

» Environmental factors including the impact of actual and potential environmental costs.

» Social factors including human rights, relations with indigenous people, child labor, worker and consumer health and safety, and bribery and corruption.

» Governance issues including but not limited to, director qualifications and conflicts of interest, board structure, executive and director compensation, accounting and audit quality, code of ethics and business conduct, and capital structure.

» Cerberus evaluates ESG issues to determine their potential impact on investment performance.

» Cerberus considers certain environmental, public health, safety, and social issues associated with target investments when evaluating whether to invest in a particular company or entity, as well as during the period of ownership.

» Cerberus seeks to use governance structures that provide appropriate levels of oversight in the areas of audit, risk management, and potential conflicts of interest and to implement compensation and other policies that align the interests of owners and management.

» Cerberus is committed to compliance with applicable national, state, and local labor laws in the countries in which we invest.

» Cerberus respects the human rights of those affected by its investments.

» Cerberus, when appropriate, provides information to its limited partners on the matters addressed herein, and works to foster transparency about our activities.

To the extent possible, Cerberus encourages portfolio companies to advance these same principles in a way which is consistent with their fiduciary duties.

Cerberus strives to achieve best practices among alternative investment managers, particularly in the areas of governance, compliance, investor disclosure, valuation procedures, and risk management.

We have undertaken numerous efforts in this regard, including becoming a signatory to the Standards Board for Alternative Investments (formerly known as the Hedge Fund Standards Board). In addition, we have developed and implemented policies and procedures, employee trainings, and compliance certifications, and reporting, all of which are designed to ensure a strong culture of ethical behavior and compliance.

Beyond legal and regulatory compliance, we seek to implement and adhere to ESG best practices in our private investments in companies and properties worldwide.

ESG has been a focus for over 13 years through our industry leading operations platform. In 2013, Andrew Kandel, our Global Chief Compliance Officer and Senior Legal Counsel, took the lead in highlighting Cerberus’ focus on ESG with investors and formalized our ESG Policy, as well as our first ESG Due Diligence Questionnaire.

Our ESG efforts and interactions with our portfolio companies and properties will continually be refined to ensure we are focused on driving value for our investors.

The Cerberus ESG Policy

Cerberus ESG Policy Outline



Comparison to Other ESG Principles

A Responsible Investor

ESG issues can have significant impacts on the financial performance of our investments, as well as the communities in which Cerberus and our portfolio companies conduct business.

Over the years, a variety of ESG codes and standards have been put forth by governments and Non-Governmental Organizations (NGOs) to provide a framework for managing ESG concerns.

While developing our ESG policy, Cerberus has given consideration to a range of these codes and standards, including the United Nations Principles for Responsible Investment and the United Nations Global Compact. All components of our policy are fully aligned with each of the underlying principles found in these, and certain other, codes.

Our Investment Principles

In addition to our ESG principles, Cerberus’ investment strategies adhere to five inter-related principles:

» Flexibility

» Innovation

» Risk Management

» Discipline

» Transparency

cerberus.com

Find out more on our website

Aspect 1: Management

This aspect focuses on how the organization integrates ESG into its overall business strategy.

Aspect 2: Policy and DisclosureThe purpose of this section is to (1) describe the organization’s ESG policies and (2) understand how the organization communicates its ESG performance.

Aspect 3: Risks and OpportunitiesThis aspect investigates the steps undertaken by organizations to stay abreast of ESG related risks related to bribery and corruption, climate change, environmental legislation, market risks and other material ESG risks.

Aspect 4: Monitoring and EMSThis aspect describes the processes the entity uses to support ESG implementation and performance monitoring.

Aspect 5: Performance IndicatorsThis aspect collects performance data on energy and water consumption, GHG emissions and waste.

Aspect 6: Building CertificationsThis aspect focuses on how the organization integrates ESG into its overall business strategy.

Aspect 7: Stakeholder EngagementThis aspect focuses on how the organization integrates ESG into its overall business strategy.

Cerberus’ ESG program meets all seven of the GRESB sustainability aspects.

www.gresb.com

Cerberus monitors the following industry standards and incorporates key components as pertinent to the performance of our investments versus a generic "one size fits all" approach.

Environment

Principle 7Businesses should support a precautionary approach to environmental challenges;

Principle 8undertake initiatives to promote greater environmental responsibility; and

Principle 9encourage the development and diffusion of environmentally friendly technologies.

Anti-Corruption

Principle 10Businesses should work against corruption in all its forms, including extortion and bribery.

Principle 1We will incorporate ESG issues into investment analysis and decision-making processes.

Principle 2We will be active owners and incorporate ESG issues into our ownership policies and practices.

Principle 3We will seek appropriate disclosure on ESG issues by the entities in which we invest.

Cerberus’ ESG policy and practices meet all six of the Principles for Responsible Investment. The Cerberus focus on ESG issues has existed since before the PRI effort began.

www. unpri.org

www. unglobalcompact.org

Human Rights

Principle 1Businesses should support and respect the protection of internationally proclaimed human rights; and

Principle 2make sure that they are not complicit in human rights abuses.

Labour

Principle 3Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining;

Principle 4the elimination of all forms of forced and compulsory labour;

Principle 5the effective abolition of child labour; and

Principle 6 the elimination of discrimination in respect of employment and occupation.

Cerberus’ ESG policy and practices meet all 10 of the UN Global Compact Principles.

Principle 4We will promote acceptance and implementation of the principles within the investment industry.

Principle 5We will work together to enhance our effectiveness in implementing the principles.

Principle 6We will each report on our activities and progress towards implementing the principles.



In November 2018, Cerberus acquired SGI Frontier Capital, a leading

private equity firm focused on frontier markets in Asia and Africa.

Headquartered in Singapore with over 20 professionals across six

locations, SGI has an extensive track record of direct investment in

dynamic frontier markets, including Ethiopia, Georgia, and Mongolia.

Since its founding over 10 years ago, SGI has completed more than

30 transactions and currently manages a diversified portfolio of

investments in a variety of key sectors, including consumer goods,

clean energy, real estate, healthcare, and building materials.

SGI AcquisitionThe “Frontier Plus” Investment

SGI Investment Philosophy

SGI maintains a very focused approach to investing in frontier markets. These include:

» Maximizing Positive Impact Through the Choice of Target Country: SGI has proven that investing in highly promising markets that are generally overlooked by the international investment community will promote local economic development and a multitude of corresponding benefits.

» Deal Selection: Within most sectors, certain types of deals or deal structures can be prioritized in order to maximize potential financial and non-financial benefits. SGI will generally:

– Prioritize businesses that present the greatest potential to address the country’s most acute needs (education, healthcare, food security, etc.).

– Prioritize businesses owned and run by locals rather than foreigners.

– Prioritize women-owned businesses, which are often the best managed in the market.

– Prioritize investments structure so that SGI is a partner to the entrepreneur – rather than taking over the business.

» Proactive Implementation of ESG Improvements to Create Maximum Benefits. The general considerations post-investment are:

– Environmental: Enhance environmental protection and stewardship as a condition of investment. The companies are expected to go beyond compliance.

– Social: With the creation of new jobs as a result of the capital investment, SGI focuses on enhancing worker benefits such as healthcare and workplace safety.

– Governance: An enhancement of accountability and governance is always required. These include: financial management systems; human resource management practices; board operation and oversight; internal and external audit practices; and tax reporting and payment.

Combined firms have:

The Intersection of Two ESG Programs

» Well-established ESG programs within their respective marketplaces.

» An ESG focus of “beyond compliance” that yields commercial value.

» Tools and frameworks that identify potential risks, operational improvements, and opportunities to enhance commercial value.

» Insight into business and technical issues while staying abreast of emerging trends - with the ability to implement across multiple asset classes.

» In-house investment professionals who understand the benefits of ESG.

Cerberusfollows these standards and goals:

SGIfollows these standards and goals:



SGI Frontier Case StudiesImpact in Action

National Cement

$2,654Average wage

5x the national average wage

1,446Employees

Up from 360 at time of investment

Community InitiativesStreet lights, school fences,

clean drinking water, and educational materials for more than 250 children

Tree-planting InitiativeISO 14001 environmental certification; alternative energy sources to replace

coal as power source

Active health and safety InitiativesResulting in reduction of

serious incidents

SGI invested in a leading Ethiopian cement company

SGI Frontier utilizes the following standards and goals

SGI Frontier’s ESG program meets all eight of the IFC Performance Standards.

ifc.org

SGI Frontier’s ESG program measures progress against addressable UN Sustainable Development Goals.

sustainabledevelopment.un.org

SGI Frontier’s ESG program utilizes the SASB sector accounting principles to identify material aspects.

sasb.org

Caucasus Clean Energy Fund

SA-MED

A dedicated fund backed by the development banks of Austria and the Netherlands, as well as GEEREF, a clean energy fund of funds.

SGI invested in a medical equipment company that manufactures locally in Ethiopia

» The fund backs clean energy projects that will cumulatively generate up to 1 TWh per annum

» The fund will aim to offset 400,000 tons of CO2 emissions per annum

» The fund will aim to supply an average of 150,000 households per annum with clean power

» Hundreds of jobs created during the construction process

» Impact on the development of the local rural communities in terms of improving their livelihoods and socio-economic needs

» Developments of infrastructure (roads, bridges) in the remote mountainous areas provide improved access for agriculture and farming

The first IV bag manufacturing company in East Africa

52%

Number of employees increased by 52% between 2014 and 2017

State of the art facilityProduction and assembly takes place under aseptic conditions

Strengthening the supply chain

for hospitals and clinics country-wide

Cerberus employs a rigorous and analytical approach to monitoring and managing ESG issues throughout the lifecycle of our investments in portfolio companies and properties.

ESG in the Cerberus Portfolio

3


ESG in the Cerberus PortfolioESG in the Cerberus PortfolioESG in the Cerberus Portfolio

We believe that the key to unlocking commercial value through an ESG program is to provide a consistent framework and tools, while at the same time collaborating with management teams as a true partner. We have adopted a collaborative and consultative approach with our portfolio companies and properties, helping them to achieve their ESG goals and commercial success according to their varying needs.

After more than 13 years of engaging with our portfolio companies and properties on ESG issues, Cerberus has developed a simple and effective approach, which we call the "Three C's formula: Consistency + Collaboration = Commercial Value."

The Cerberus ESG Formula

Consistency Collaboration

Commercial Value

We have developed an ESG evaluation and scoring process to systematically evaluate ESG performance on a consistent basis. This set of best practices and technological tools is a resource available to all our portfolio companies across industries and geographies and allows for a consistent approach to monitoring ESG issues. The analysis of the standardized data sets across our investments over time also allows cross-pollination of ideas and benchmarking.

We believe that when ESG is done consistently and collaboratively, it can unlock significant commercial value. ESG topics are becoming increasingly relevant in today’s world and companies who are best able to leverage ESG principles to expand their businesses through new product lines and improved brand equity – for example – can enjoy increased commercial success.

Even though all portfolio companies have access to the same tools, processes, and knowledge, we understand that each investment is different and requires bespoke treatment and customized solutions. We partner with our portfolio companies and allow each to set its own course, while being able to lean on us as a partner.


ESG in the Cerberus PortfolioESG in the Cerberus Portfolio

The Cerberus ESG ProcessWe deploy a consistent process to evaluate ESG performance across all of our portfolio companies and properties globally. Our consistent application of best practices and technological tools ensures consistency of data from deal to deal and from year to year, allowing us to accurately benchmark progress. It also allows us to work with our partners more effectively to create bespoke action plans.

Annual Evaluation

Process

Data Collection Data Analysis

Track and Monitor Implement

Col

labo

rate

Subsequent to due diligence, our ESG process starts by collecting data that we analyze with management in order to develop and implement impactful programs. We track and monitor progress over time and continuously refine programs to drive results.

1 2

3

4

5

Consistency

» Analyze Phase I reports and property condition assessments

» Characterize risks and opportunities

» Review compliance and sustainability programs

» Benchmark performance and establish F-100

» Conduct ESG evaluation in collaboration with management team

» Implement ESG programs and track progress over time

» Share leading practices and make refinements

» Monitor performance

» Prepare for Sale process IPO ESG disclosures, as applicable

» Respond to investor inquiries

» Communicate sustainable business value

ESG Integration Throughout the Investment LifecycleCerberus, with input from our proprietary platforms, has developed rigorous ESG processes and frameworks for each industry and scope area. As part of the way we do business, we evaluate ESG risks and seek opportunities for value creation. Years of experience have been distilled into best practices that are employed throughout the lifecycle of a Cerberus investment.

Due Diligence Portfolio Management Divestiture

84Total Projects

in 2018

ESG Performance is Considered Across All Cerberus Strategies

The Investment Lifecycle Phases and Activities

27

7

31

2

3

8

18

141

60Projects

19Projects

5Projects

Non-Performing Loans Real Estate Private Equity Direct Lending RMBS Corporate Credit

Due Diligence Portfolio Management Exit

Consistency



Technology Resources Deployed in the ESG Program

This cloud-based business intelligence platform has enabled us to be consistent in the collation and storage of mass data in the collection process, and generate in-depth interactive dashboard visuals to enable sophisticated data analysis and interpretation. This affords us global reach and access to procured data across portfolios and territories. It also ensures consistency in the metrics measured and data collected.

Drone technology has provided a new set of eyes that add significant value to the execution of our ESG program. We have deployed this technology at both the due-diligence and post-acquisition phases of deals and have been able to leverage it for ongoing data collection. The environmental applications of drone technology helps monitor pollution, emissions, natural disasters, and the maintenance of buildings at a fraction of the cost.

Consistency

Our ESG process utilizes best-in-class technological tools to provide consistent execution of programs that help our partners achieve their goals.

Power BI

Drone Technology

The Cerberus ESG Evaluation Tool

Quantitative and Qualitative Scoring of ESG Performance

We have developed a detailed ESG evaluation and scoring process that collects information critical to monitoring ESG performance across our investments. The data we analyze helps us prioritize actions to address and identify where best practices can drive impact.

Our evaluation tool allows for a collaborative approach with our portfolio companies / investments to discuss techniques that will reduce risk and operational expense and provide continuous improvement. In addition, we also challenge our portfolio companies / investments to consider ESG components in marketing to potentially impact revenue, such as gaining market share with a sustainable product or driving safety as a key metric for winning projects.

Our evaluation is driven by a series of qualitative questions and quantitative metrics that are industry-specific within each of the ESG categories. The results are captured in a dashboard for each investment, which enables our ESG professionals to quickly identify priority action items and to track the performance over time on a portfolio-level basis.

Cerberus ESG Evaluation ToolThe evaluation tool focuses on both operational improvements along with revenue impact. The following are a few examples of the focus of our evaluation tool:

Environmental

Operational improvements and risk / expense reduction

Commercial Value Creation

Social

Governance

Consistency

» Supply-side and demand-side energy management

» Waste management and recycling

» Water management

» Responsible sourcing

» GHG emissions

» Health and safety management

» Employee diversity

» Human rights and fair labor practices

» Corporate Social Responsibility (CSR)

» Employee code of conduct and ethics

» Enterprise risk management

» Anti-bribery and corruption (e.g., FCPA)

» Political contributions

» Sustainable products and services

» Customer satisfaction



Collaboration Throughout the Investment LifecycleWhile our ESG process and tools are consistent, the action plans we develop are bespoke to each company or property and the outcomes for each investment are unique.

This is achieved through collaborative engagement with our management teams through a two-way dialogue. We do not dictate how it needs to be done, but instead are a consultative partner who can be utilized to achieve success.

Our engagement throughout the lifecyle of an investment provides many interactions to partner with our portfolios companies and properties to provide bespoke input and assistance.

Collaboration

Relationship-building and collaboration starts right at the acquisition stage.

Portfolio companies and partners can deploy the many resources within Cerberus to execute their own ESG / CSR programs. Keeping lines of communication open with partners and providing whatever they require.

Working with partners to distribute ESG questionnaires and help them co-ordinate their data collection. Cerberus leverages its in-house operational expertise to identify areas for development.

Adopting a non-prescriptive, partnership approach enables us to position ourselves as a trusted business advisor and invites a two-way dialogue. This promotes buy-in from our partners and increases the chances of successful execution of agreed action plan.

Due Diligence / Acquisition

Ongoing Support in Execution of an ESG Action Plan

Data Collection / Data Analysis

Debrief: Co-Define ESG Action Plan

Provide resources and guidance

Example: Renovalia EnergyRenovalia Energy specializes in the production of renewable energy. The company was in the process of formalizing its ESG program and requested assistance from the Cerberus ESG team. We providedthe company with guidance and materials to develop a strategy, conduct a materiality assessment, and build a corporate responsibility report.

Supplement our portfolio companies to fill gap in resources

Example: ABC TechnologiesABC Technologies is a global Tier 1 supplier of automotive parts. The Cerberus ESG team assisted the company with the development of their 2018 Carbon Disclosure Program (CDP) response. The results of this questionnaire are scored by CDP and publicly released, which are reviewed by a variety of ABC Technologies’ stakeholders.

Cerberus takes a leadership role

Example: Isola Isola is a leading global material sciences company. The company was evaluating how to best expand its safety culture and improve performance. Cerberus led the effort to conduct a detailed process safety review, which resulted in developing a strategic work plan to improve performance.

Spectrum of Collaboration

In executing ESG action plans, we offer several modes of engagement that are tailored to the specific resources and requirements of each portfolio company or property.

In situations where there are meaningful internal resources focused on ESG initiatives, Cerberus can engage as a business advisor providing high-level guidance and support. In other instances where the internal resources may be limited, we take a more active role to lead the planning and execution of ESG activities in partnership with a company’s management team.

IndependentHigh level of autonomy; Cerberus acts as a consultant and advisor

HybridA blend of Cerberus and internal resources

OutsourcedNo internal resources; Cerberus handling all functions

ESG Action Plan: Levels of Engagement

Collaboration



Collaboration in Action: Cerberus General Counsel Summit 2018

Cerberus has always had a strong focus on a myriad of governance issues as part of our ESG initiatives. Like other ESG considerations, identification, implementation, monitoring, and improvement of governance-related matters plays an important role in the entire lifecycle of an investment.

In continuation of our robust governance oversight, in 2018, Cerberus convened a General Counsel Summit. The purpose of the summit was to bring together the top legal officers of our portfolio companies and relevant investments with our in-house legal experts in order to discuss best practices involving corporate governance and other practice areas. In all, 17 portfolio company general counsels and 22 members of the Cerberus Legal Department attended the summit.

One main focus of the summit was to emphasize our belief that excellence in corporate governance must be a cornerstone in each and every investment. We expect our portfolio companies to develop policies, procedures and tools to achieve this excellence. The Cerberus Legal and Compliance Departments regularly assist in these efforts. We are also constantly evaluating our approach and looking for opportunities to improve.

While there is no “one size fits all” approach, there are common principles and practices that help ensure proper governance. For example, our focus on having a well-designed organizational structure with clearly delineated roles and responsibilities is a first step. At the summit, we discussed additional high-level general principles, including charter documents that establish the culture and tone at the top; procedures for Board orientation and continuing education; strong oversight and risk management; strategic plan review; and assessment of accountability.

We also discussed specific governance considerations, such as separating the offices of the Chairman and Chief Executive Officer where appropriate; the optimal size of a Board; the role of an Audit Committee; internal resources; and delegations of authority. Each company board is expected to have the proper composition and representation, as well as the appropriate skill sets and individual attributes for the needs of each company.

Additional topics discussed at the summit, and focused on throughout the year, include anti-corruption (e.g., the Foreign Corrupt Practices Act, UK Bribery Act, and local anti-corruption laws); anti-money laundering, sanctions, privacy, and data protection (including the EU General Data Protection Regulation (GDPR); litigation management; e-billing and law firm management; and attorney-client privilege.

General Counsel Summit Attendees: Portfolio Companies Represented

Collaboration

Another element of our governance initiative is our Board Governance Working Group (BGWG). Comprised of representatives from the Firm’s Legal and Compliance Departments as well as COAC personnel, the group was formed in 2007 and meets regularly. Among other things, the BGWG addresses changes in board structure and composition (including making recommendations for new or replacement directors), committee formation and charters, and the development and implementation of governance best practices. Topics planned for 2019 include a systemic approach to board education across the portfolio and a review of board effectiveness.

Like other elements of an ESG program, addressing governance issues can prevent problems from arising, mitigate any ramifications if a problem does occur, and can directly add to the value of an investment.

Board Governance Working Group: Board Mix / Composition

» Investment Professional

» Co-Investors

» Operations Team

» Diversity

» International

» Industry Knowledge

» SOX Financial Expert

» Public Company Experience

» Substantive Expertise (Marketing / Sales, Manufacturing, Turn Around Expert, Regulatory / Compliance)

» Financial Acumen

» Ability to Make Independent Analytical Inquiries

» Willingness / Ability to Devote Adequate Time and Effort

» Integrity

» Team Player

Representational Factors Skill Sets Individual Attributes



Commercial Value Generated Through Consistency and Collaboration

Valuable insights are derived by executing our ESG process year upon year. When coupled with our collaborative and interactive approach with our partners, this often leads to identification of several ESG-related growth levers. These levers can help unlock significant commercial value and contribute to a positive impact on the bottom line.

Here are some examples of how commercial value is created through this process.

ESG Growth Levers

Commercial Value

Increased Transparency and Accountability

The Cerberus ESG team worked with CTA Acoustics, a manufacturer of acoustical and thermal fiberglass insulated products, to assemble its first CSR report and proactively communicate its progress on key sustainability topics.

The development of a CSR report can help cultivate a company’s relationship with their customers, build trust in the marketplace, and increase brand equity.

Development of Sustainable Products and Services

As one of the largest food and drug retailers in the United States, Albertsons Companies carries over 2,000 SKUs of sustainability themed products to capture consumer trends and stakeholder interest. This includes its private label product line, O Organics, which consists of USDA certified organic, non-GMO products. O Organics was launched with a mission to make a wide variety of certified organic products available to more people at a great value.

Sales of Albertson’s O Organics line grew by 15% in 2017 with total revenue surpassing $1 billion for the first time. The Company added 200 new products in 2017 and announced plans to introduce 500 or more new items, as organic foods continue to be a significant contributor to revenue growth.

Meeting Customer’s ESG Expectations

Automotive manufacturers are increasingly focused on ESG performance as part of supplier selection. Some manufacturers now require suppliers to achieve minimum performance levels on their ESG scorecard in order to be eligible to compete for contracts. We have worked with ABC Technologies, a global Tier 1 supplier of automotive parts, to formalize its CSR program, thereby improving its score on supplier scorecards.

Meeting and exceeding customer ESG expectations can help ABC Technologies stay competitive against peers, protect current market share, and drive increased sales.

High Performance Building Certifications

1000 Wilshire Blvd. is a 476,000 sq. ft. office building located in Los Angeles, CA. The building is LEED Gold certified and has an Energy Star rating of 91 out of 100. Significant sustainable attributes include LED lighting in common areas and parking areas, water efficient landscaping, and recycling programs.

LEED and Energy Star certified buildings tend to have higher occupancy rates, larger rental premiums, lower building maintenance costs, and higher sales prices per square foot – all of which contribute to increased bottom line results.

Detail Commercial Value Created



Overview of Cerberus’ ESG Activities

Cerberus’ 2018 ESG Dashboard provides a sample of results from our ongoing ESG evaluations. Overall, the performance of our investments are increasing across all four categories, which indicates the success of our collaborative engagements.

Following the ESG Dashboard are a set of case studies that provide an in-depth look at some of our collaborations with selected investments.

A robust program that is systematically integrated throughout the investment’s strategy and operations with targeted opportunities for improvement

Implemented several programs and / or initiatives with broad opportunities to increase scale and depth

Substantial opportunities to expand program

Company Environmental Social Governance Commercial Value Creation CSR Report

2018 YoY Change 2018 YoY Change 2018 YoY Change 2018 YoY Change

Manufacturing, Industrial, Automotive

Company 1 • • • • In progress





Travel and Leisure


Consumer and Retail

Company 1 • • • • Published




Financial Services






Healthcare


Government Services


Energy and Natural Resources




The ESG Dashboard

Continuous monitoring coupled with collaboration yields continuous improvements and commercial value.Paul Warmus, Senior Operating Executive, Cerberus Operations and Advisory Company, LLC

A robust program that is systematically integrated throughout the investment’s strategy and operations with targeted opportunities for improvement

Implemented several programs and / or initiatives with broad opportunities to increase scale and depth

Substantial opportunities to expand program

Company Environmental Social Governance Commercial Value Creation CSR Report

2018 YoY Change 2018 YoY Change 2018 YoY Change 2018 YoY Change

Real Estate




Real Estate Portfolio

Portfolio 1 • • • • Published

Portfolio 2 • • • • -
















The ESG Dashboard (Continued)

The following pages provides case studies that highlight examples of noteworthy ESG accomplishments in our portfolio during 2018.



Project RubiconDue diligence

In 2018, Cerberus conducted a comprehensive due diligence of a multi-national alternative energy company. A major focus was on the potential liabilities associated with current and historical environmental issues.

The diligence assessment evaluated environmental performance at each step in the operational lifecycle

Project Rubicon

Investment Phase

Diligence Ownership Exit

ESG Issues Identified

In 2018, Cerberus completed pre-acquisition due diligence of an alternative energy company with a successful 100+ year history. The company reported legacy environmental issues that required remedial activities. These legacy issues required a detailed analysis of decommissioning, demolition, environmental remediation, and waste management. Additional ESG areas of focus included health and safety, supply chain, human resources, governance, and procurement.

Actions Taken

To diligence the environmental reserves, Cerberus performed site visits across the Rubicon portfolio to characterize the

reserve estimation process. In several instances, the process revealed the remedial project life was underestimated, resulting in an increase to the reserve by a factor of two. During the site visits, the health and safety program was also characterized and found to be above industry standards in most cases.

Value Added

The detailed diligence of the environmental reserves was appropriately factored into the deal considerations. Although the Cerberus bid was ultimately not selected, the accurate assessment of the environmental liability was vital to appropriately evaluating the viability of the deal and ensuring the future success of the investment had the outcome been different.

Numerous site visits performed across operational footprint

» Health and safety » Compliance » Reserves

» Financial assurance » Health and safety

» Project life » Financial assurance » Health and safety » Remedial technologies

» Risk-based End-of-Life assessment

» Financial assurance

Decommissioning / DemolitionManufacturing Remediation Waste Management



CanyonDiligence

In mid 2018, Cerberus acquired a 14-building, 874,000 sq. ft. office campus in Orem, UT. Prior to the acquisition, both environmental and technical due diligence were performed.

Canyon


As part of the technical due diligence, a Property Condition Assessment (PCA) was completed. The PCA focused on all building components condition and remaining useful life. The mechanical systems on all buildings were the original equipment dating back to the late 1980’s. Most other building components were recently refurbished with a more energy

efficient replacement.

Actions Taken

In addition to an $8 million cosmetic upgrade of the facility, new mechanical systems for each building are scheduled for replacement over the investment period (approximately a $4 million investment). Energy costs will be monitored on a regular basis to characterize the impacts of the upgrade. As part of the regular utility review, Cerberus ESG team may also recommend additional actions to aid in the eco-efficiency

of the property.

Value Added

Along with the cosmetic upgrades, the change in mechanical systems are anticipated to increase property value by reducing energy costs for all tenants and attracting tenants that desire more eco-efficiency buildings.

Investment Phase




CTA AcousticsBuilding commercial value through balanced ESG performance

Since 2001, CTA Acoustics has made substantial strides across its operations to improve its ESG performance.

201720162015

0

10

20

30

40

50

Recordable Incidents

Lost Time Incidents

TRIR DART

9

6

10

1.013.21

4.77

0.672.573.124

25

29

reduction over 3 years

69%

reduction over 3 years

79%

CTA Acoustics


CTA Acoustics has been a manufacturer of high-quality acoustical and thermal fiberglass insulated products since 1972. Recently, the company recognized the increasing importance of systematically addressing a wide range of topics that fall under the ESG umbrella, such as product sustainability features, employee engagement, and strong management oversight. This is in part due to many of the company’s customers adjudicating it’s ESG performance via an annual supplier scorecard, which factors into the broader relationship and can influence terms and commitments.

Actions Taken

CTA Acoustics identified key portions of its operations that fall under ESG and implemented initiatives to improve performance, such as:

» Environmental compliance and continuous improvement: Recertified September 2016 to the ISO 140001:2015

» Environmental footprint reduction: Installed a water recirculation project which has reduced annual consumption by 70%

» Sustainable products: Purchases recycled glass and recycled polyester as inputs for production

» Supplier sustainability performance: Developed a supplier handbook that outlines required policies and performance expectations

Value Added

The company’s balanced commitment to ESG has yielded a variety of benefits, including recognition from one of its top customers, General Motors, which awarded the company with its supplier of the year award in 2017.

Number of Recordable Incidents (2015-2016)

70%Annual reduction in water consumption from a recirculation project

GM 2017SUPPLIEROF THE YEAR

Investment Phase




RenovaliaFormalizing a CSR Program

By building out and formalizing its ESG program, Renovalia will use ESG to improve financial performance.


Renovalia Energy specializes in the production of renewable energy. Its customers have been increasingly assessing its internal ESG performance on topics like community engagement and employee relations. A structured and well communicated ESG program can become a catalyst for value creation by facilitating strategic growth and strengthening brand image. Although the company had a variety of ESG related policies and actions in place, it lacked a defined CSR program to enable

central alignment and strategic focus.

Actions Taken

The company, with help from Cerberus, is in the process of developing a CSR program that is integrated into the general strategy of the company and aligned with

shareholders. The three main pillars of the program are environment (commitment to environment respect), social (investing in the community), and people (development of people and social integration). Several tools, including a materiality assessment, impact matrix, and stakeholder mapping, have been utilized to help develop the program and

achieve maximum impact potential.

Value Added

Developing a structured CSR program has enabled Renovalia to pursue and communicate activities that support its broader organizational strategy. Additionally, the program has enhanced the company’s brand image and reputation in the marketplace and enabled market share growth by better aligning with

customer expectations.

Key Highlights

805MW in operation and under construction between 17 wind farms and 11 solar photovoltaic plants

1,113,295Tons of CO2 avoided each year as a result of Renovalia projects

17Number of water wells constructed for regional farmers as part of a community engagement program with the Union Hidalgo community

Investment Phase


Renovalia Energy

CO2



Steward Health CareImplementing a Strategic Energy Management Program

With operations spanning nine states, Steward Health Care developed a best-in-class energy management program that significantly reduced annual energy costs.

0.1 0.27

1.19

2.62

4.68

Cumulative Savings

6.69

0

1

2

3

4

5

6

7

2012 2013 2014 2015 2016 2017

Carney

Good Samaritan

Holy Family

Morton

Norwood

St Annes

St Elizabeth’s

Hospital

Steward Health Care


Steward Health Care is the largest physician-led, private health care network in the United States — annually caring for 2.2 million people during more than 12 million physician and hospital visits. It has a significant operational footprint with 18 hospitals that occupy millions of square feet. Hospitals are typically large consumers of energy because of how they are run (open 24 hours a day, 7 days a week) and the large number of people they serve. Steward recognized there were significant potential annual savings that could be unlocked through implementing a systematic and comprehensive approach to

energy management.

Actions Taken

The company has implemented a multi-faceted energy optimization program that consists of a supply-side procurement plan, an energy efficiency strategy, and a deferred capital replacement strategy. Key initiatives included:

» Implementing a strategic energy program

» Identifying improvements to limit and reduce energy utilization

» Developing a system-wide approach for campus energy management

» Reducing and stabilizing supply-side energy costs by decreasing utilization and locking-in lowest possible rates

» Identifying utility rebates and tax incentives

to increase speed to payback

Value Added

The company achieved significant benefits as a result of the energy optimization program, including annual savings of $1.9 million, avoiding 37,545 tons of CO2 emissions, and reaching an energy intensity performance

that is better than 65% of all U.S. hospitals.

Key Highlights

The program has generated $6.7m cumulative savings-to-date

17%Total Annual Energy Savings

322.1Total Annual Energy Saved (kBtu / ft2)

Investment Phase




Max MaximSelecting partners with shared ESG objectives

The Max Maxim investment began as an NPL, but was later converted to an REO. While the initial portfolio consisted of 11 commercial properties in a business park, nine have been sold and only two remain.

Max Maxim


Real estate investments have increasingly been scrutinized on their ESG performance, which has been brought on by a wide range of factors including new regulations and stakeholder interest. Environmental issues are frequently most emphasized because buildings account for more than one third of global greenhouse

gas emissions and energy consumption.

Actions Taken

When selecting a partner, Cerberus looks for a company that can provide a suite of value-added services, including ESG-related programs which are aligned with our own interests and mutually beneficial. Broadoak Asset Management helps oversee a comprehensive sustainability strategy at this investment, which includes a set of operating principles along with a detailed action plan. The company works with the property manager to engage the tenants on key issues through a range of methods including a monthly sustainability dashboard that describes key performance metrics.

Value Added

Broadoak's sustainability strategy and subsequent initiatives have yielded a long list of achievements including BREEAM excellent rating, “B” EPC rating, system wide upgrade to LED lighting, ISO 140001 certification, and zero waste to landfill. These accomplishments have helped to optimize building performance, attract and retain top-tenants, and increase overall

market value.

ISO 14001 Certification

BREEAM Excellent Rating

“B” EPC Rating

A B C D E F G

Zero Waste to Landfill

Investment Phase


Key Highlights



Our monitoring approach uses formal and informal methods to keep track of ESG events across the portfolio. ESG events have the potential to materially impact a company’s financial performance and / or reputation in the marketplace. The formal method consists of our ESG evaluation, which enables us to collect and track relevant ESG data for each investment. The informal method requires the ESG point of contact at each investment to immediately notify members of the Committee in the event of a significant ESG-related incident.

In the event of an incident, the information is immediately discussed with the Committee Chairman and, if necessary, a Committee meeting is scheduled. Notifications to appropriate stakeholders are then performed along with any corrective actions.

Cerberus ESG Incident Reporting Process

Incident Reporting Process

Formal reporting process

Informal reporting process ESG contact

notifies committee

ESG evaluation

Incidents reported to ESG Chairman

ESG Committee Chairman notified

ESG Committee meeting scheduled

Report Action

Notification of stakeholders

Stakeholder

Stakeholder

Stakeholder

0Negative

ESG incidents reported in 2018

Notify

We will continue to work with our portfolio companies and properties, as well as our executive leadership team, to broaden and deepen our ESG programs at Cerberus.

Conclusion

4


ConclusionConclusion

Looking Forward

An Ongoing Commitment to our Portfolio Companies, Properties, and Investors

Issues that fall underneath the ESG umbrella continue to be omnipresent in today’s business landscape. History has continued to demonstrate that investment managers who proactively identify and manage these issues are best positioned to deliver strong risk-adjusted returns. As such, the Cerberus ESG program will continue to move the needle on ESG performance in our portfolio by using our consistent processes coupled with our collaborative approach.

We will continue to be a trusted partner for our investments through targeted involvement that includes the use of our tools, resources, and expertise. We recognize that the ESG landscape is evolving quickly and we will continue to monitor industry developments and integrate what we think is best suited for supporting an investment thesis and driving results. This includes keeping abreast of ESG related groups and frameworks, such as GRESB, GRI, PRI, SASB, and the United Nation’s SDGs, and being cognizant of current and proposed ESG related rules and regulations around the world. Additionally, we will continue building out our capabilities to improve the efficiency and effectiveness of our program, such as deployment of technology applications to improve data gathering and reporting. Our commitment to excellence is unwavering and we believe our ESG program is a key instrument to provide that result now and into the future.

Appendix

5


AppendixAppendix

Glossary

BREEAM Building Research Establishment Environmental Assessment MethodCES Cerberus European ServicingCO2 Carbon Dioxide EmissionsCDP Carbon Disclosure ProjectCSR Corporate Social ResponsibilityCTS Cerberus Technology SolutionsCOAC Cerberus Operations and Advisory CompanyDART Days Away, Restrictions, and TransfersEH&S Environmental, Health, & SafetyEPC Energy Performance CertificateESG Environmental, Social, GovernanceF100 First 100 days of transitionFCPA Foreign Corrupt Practices ActFSC Forest Stewardship CouncilGEEREF Global Energy Efficiency and Renewable Energy FundGHG Greenhouse GasGRESB Global Real Estate Sustainability BenchmarkGRI Global Reporting InitiativeHR Human ResourcesIFC International Finance CorporationISO International Organization for StandardizationIPO Initial Public OfferingKPI Key Performance IndicatorLED Light Emitting DiodeLEED Leadership in Energy and Environmental DesignNASD National Association of Securities DealersNGOs Non-governmental OrganizationsNYSE New York Stock ExchangeOIG Operating Initiatives GroupPRI Principles for Responsible InvestmentSASB Sustainability Accounting Standards BoardSEC Securities and Exchange CommissionSDGs Sustainable Development GoalsSKU Stock Keeping UnitTRIR Total Recordable Injury RateUSDA United States Department of AgricultureYoY Year Over Year

Biographies of ESG Committee Members

Andrew I. KandelGlobal Chief Compliance Officer, Senior Legal Counsel, and Senior Managing Director, Cerberus Capital Management, L.P.

Mr. Kandel joined Cerberus in 2007 and oversees compliance for Cerberus and its global operations. Mr. Kandel is a member of the Compliance and Risk Management, Allocation, Brokerage Selection, and Financial Risk Management Committees. He is also the Chairman of the firm’s Environmental, Social, and Governance (ESG) Committee. As Chief Compliance Officer, Mr. Kandel works with the firm’s business units and its professionals worldwide to ensure Cerberus is maintaining the highest standard of compliance and ethical behavior. He has been instrumental in integrating best practices into the firm’s day-to-day operations, including through the development of a robust compliance program that, among other things, regularly monitors activities and conducts trainings to ensure the safeguarding of the firm’s integrity and reputation. In addition, Mr. Kandel leads Cerberus’ ESG efforts and is a key driver in incorporating ESG into the activities of the firm, its portfolio companies, and investments. Prior to joining Cerberus, Mr. Kandel was First Vice President and Assistant General Counsel at Merrill Lynch, where he was in charge of state regulation, legislation and government relations and also handled various SEC, NYSE, NASD, and compliance-related matters. From 1995 to 1998, Mr. Kandel was the Chief of the Investor Protection & Securities Bureau at the New York State Attorney General’s Office, where he also served as Assistant Deputy Attorney General, assisting in oversight of the Antitrust, Charities, Consumer Fraud, Civil Rights, Environmental, and Real Estate Finance Bureaus. From 1993 to 1995, he was Senior Special Counsel, then Trial Counsel, at the Enforcement Division of the New York Stock Exchange. He was also an Assistant District Attorney in Manhattan for seven years. Mr. Kandel is a graduate of the University of Pennsylvania and received his J.D. from the University of Pennsylvania Law School. He is a Lecturer and Adjunct Professor at the University of Pennsylvania Law School.

Frank BrunoCo-Chief Executive Officer and Senior Managing Director, Cerberus Capital Management, L.P.

As Co-Chief Executive Officer of Cerberus Capital Management, Mr. Bruno is responsible for leading the firm’s global investment activities across credit, private equity, and real estate strategies, working closely with Co-CEO and CIO Steve Feinberg and the rest of the firm’s long-tenured leadership team. Prior to this role, Mr. Bruno was President of Cerberus Global Investments, where he was responsible for leading the firm’s European, Asia, and Latin American businesses. Since joining Cerberus in 1998, Mr. Bruno has overseen the investment of more than US$32 billion in equity capital in Asia and Europe, alone. Under his leadership, Cerberus expanded its international presence significantly, opening global advisory offices across Asia, including Beijing, Hong Kong, and Tokyo; and across Europe, including Baarn, Belfast, Dublin, Frankfurt, London, and Madrid. Mr. Bruno is a graduate of Cornell University and received an M.B.A. from the Wharton School at the University of Pennsylvania. He currently serves on the Wharton School’s Graduate Advisory Board and the Cornell University ILR School Advisory Board. He is an active supporter of Hire Heroes, a U.S. military veteran transition resources organization and Save the Children. Mr. Bruno is a member of numerous Cerberus committees, including the Cerberus Capital Management Operating / Management Advisory Committee, Private Equity Investment Committee, Real Estate Committee, Valuation Committee, and NPL Committee.


AppendixAppendix

Biographies of ESG Committee Members (continued)

Chan W. GalbatoChief Executive Officer, Cerberus Operations and Advisory Company, LLC

Mr. Galbato joined Cerberus in 2009. He serves as Chairman of Avon Products, Inc., Chairman of YP Holdings, LLC, Director of New Avon, Director of Blue Bird Corporation and Director of DynCorp International, and as a director on the Executive Committee of Steward Health Care, LLC. Previously, Mr. Galbato served as a director of the publicly-traded Brady Corporation for seven years, including as Lead Director. He also served as Chairman to North American Bus Industries, Inc. and Guilford Mills until their sales in 2013 and 2012 respectively, and as director of Tower International, Inc. until Cerberus’ exit in 2014. Prior to joining Cerberus, Galbato was President and CEO of the Controls Group of businesses for Invensys PLC and President of Services and of the commercial distribution arm of companies for The Home Depot. Mr. Galbato also served previously as President and Chief Executive Officer of Armstrong Floor products and Chief Executive Officer of Choice Parts, a joint-venture start-up. He spent 14 years with General Electric Company, holding several operating and GE Finance leadership positions within their various industrial divisions (including Transportation (Locomotive) Systems, Aircraft Engines, Medical Systems and Appliances), as well as holding the role of President and CEO, Coregis, a G.E. Capital company. Before beginning his business career he played professional baseball with the Montreal Expos in their minor league system. Mr. Galbato holds a Master degree in Business Administration from the University of Chicago and a Bachelor of Arts in Economics from the State University of New York. Mr. Galbato is a member of the Cerberus Capital Management Operating / Management Advisory Committee, Private Equity Investment Committee, and Environmental, Social and Governance Committee.

Pieter KortewegVice Chairman and Senior Advisor, Cerberus Global Investment Advisors, LLC

Dr. Korteweg joined Cerberus in 2002. Prior to joining Cerberus, Dr. Korteweg was Chairman and CEO of Robeco Group from 1986 to 2001. From 1981 to 1986 he served as Treasurer General for the Dutch Treasury, and from 1971 to 1981 as Professor of Economics at Erasmus University in Rotterdam and Carnegie-Mellon University from 1973 to 1974. He currently serves as Chairman of the Board of Directors of AerCap Holdings NV (Amsterdam), as Member of the Board of Showa Jisho Co. Ltd. (Tokyo), as Member of the Supervisory Board of BawagPSK Bank (Vienna) and as Non-Executive Member of the Board of Lucida plc., all of which are Cerberus portfolio companies. Dr. Korteweg also serves as Member of the Supervisory Board of Mercedes-Benz Nederland B.V. and as a Senior Advisor to Anthos Amsterdam. Dr. Korteweg served as Vice Chairman of the Supervisory Board of the Dutch Central Bank, Chairman of the Supervisory Board of the Netherlands Pension and Insurance Authority, and Chairman of the Dutch Central Bureau of Statistics. Dr. Korteweg also served as Member of the Board of Directors of SSA Global Technologies, Inc. (Chicago), non-executive Member of the Board of Aozora Bank Ltd. (Tokyo), and Member of the Governing Board of SONA, the Development Fund of the Netherlands Antilles. Mr. Korteweg has been a director of the Cerberus affiliates in the Netherlands since 2001. Mr. Korteweg received a Ph.D. (cum laude) in Economics from Erasmus University Rotterdam. Mr. Korteweg is a member of the Cerberus Capital Management Environmental, Social and Governance Committee.

Paul J. Warmus P.GSenior Operating Executive, Cerberus Operations and Advisory Company, LLC

Mr. Warmus joined Cerberus in 2007 and is the COAC Environmental, Health, and Safety (EH&S) Practice leader. In the 22 years prior to joining Cerberus, Mr. Warmus worked in the environmental and engineering consulting industry working for international consulting firms. In his last position, Mr. Warmus was a Principle and Senior Vice President at ATC Associates where he was responsible for environmental remedial programs. Mr. Warmus has worked with various industries and governmental agencies developing EH&S management / compliance programs, assessing / remediation soil and groundwater, and providing consulting services with respect to water resources. His clients include companies in the oil, automotive, pharmaceutical, transportation, manufacturing, paper, retail, industries as well as the Department of Defense and Department of Energy. Mr. Warmus is a graduate of the University of Wisconsin Oshkosh and is a registered professional geologist in multiple states. Mr. Warmus is a member of the Cerberus Capital Management Environmental, Social, and Governance Committee and a board member of FirstKey Homes.

Sheila PelusoHead of Human Resources, Senior Legal Officer, and Managing Director, Cerberus Capital Management, L.P.

Ms. Peluso joined Cerberus in 2005. From 2001 to 2005, Ms. Peluso was an Associate with Chadbourne & Parke LLP in New York where her practice focused on representing private equity clients in M&A and securities and general corporate matters. Ms. Peluso is a graduate of Binghamton University and Cornell Law School. Ms. Peluso is a member of the Cerberus Capital Management Securities Compliance Committee.

Christopher A. HoltGeneral Counsel and Legal Practice Leader, Cerberus Operations and Advisory Company, LLC

Mr. Holt joined Cerberus in 2006 and is a member of the firm’s Office of the General Counsel. In his capacity as General Counsel of COAC, Mr. Holt serves as a senior legal advisor to the firm on a broad array of matters involving the acquisition, oversight and monetization of companies in the Cerberus private equity, lending, distressed debt and other investment portfolios. He also supports the legal needs of COAC and its operations executives and handles special projects for Cerberus portfolio companies. Prior to Cerberus, Mr. Holt held executive leadership positions as the chief legal officer, corporate secretary, and senior vice president of regulatory and external affairs at several public and private companies, including a Cerberus portfolio company. Before that, he practiced law for nine years at two highly rated law firms in Washington, D.C. Mr. Holt is a graduate of Drew University in Madison, N.J. and earned his law degree from The Columbus School of Law at Catholic University, Washington, D.C.

Jayne BinzerSenior Operating Executive and Head of Strategic Initiatives, Cerberus Operations and Advisory Company, LLC

Ms. Binzer joined Cerberus Operations and Advisory Company, LLC in 2004. During her tenure she has participated in numerous transactions and turnarounds, focusing on human capital and social issues. Prior to joining Cerberus, Jayne was a Principal and East End Consulting Partners, LLC. She spent her early career in positions of increasing responsibility at Bloomingdale’s where her last role was a VP of Human Resources. She sits on the Boards of New Avon LLC, and New Avon Canada, as well as Friends of the East River Esplanade, where she is Treasurer and a member of the Executive Committee. Jayne is a graduate of Hofstra University.

Biographies of ESG Committee Members (continued)


AppendixAppendix

Steven K. HatfieldSenior Associate, Cerberus Operations and Advisory Company, LLC

Mr. Hatfield joined COAC in 2017. He specializes in ESG including due diligence, strategy, operations, and reporting. Prior to joining COAC, Mr. Hatfield was an ESG Consultant at PwC where he advised his clients, including many F500 companies, to drive total business value through ESG initiatives that mitigate risks, reduce costs, and grow revenue. Mr. Hatfield holds a Masters of Business Administration in Renewable Energy from Marylhurst University and a Bachelors of Business Administration in Accounting from James Madison University. He is a licensed CPA in Maryland and Virginia and holds several ESG related certifications including LEED GA, SASB FSA, and GHG-IQ. He has co-authored several sustainability related white papers including “Considering Sustainability Disclosures in an IPO” and “Environmental Implications of e-Waste Management Practices.”

Jan MageeAssociate, Cerberus Operations and Advisory Company, LLC

Ms. Magee joined Cerberus in 2009. Prior to joining Cerberus, Ms. Magee worked as a senior head hunter with Wilton & Bain and went on to set up and run her own executive search business in the City of London for five years, recruiting senior executives within the strategy consulting sector for blue chip companies. In 2009, Ms. Magee joined the London office of Cerberus, supporting the European Head of Real Estate. She has been working on the Firm’s ESG program since 2017 and transitioned to a dedicated role in 2019. A graduate of the University of St. Andrews, Scotland (2002) with a Joint Honours Masters in English Literature and French, Ms. Magee speaks fluent French.

Kevin J. RooneyManaging Director, Senior Compliance Officer, and Associate General Counsel, Cerberus Capital Management, L.P.

Mr. Rooney joined Cerberus in 2008. From 2005 to 2011, he also served as an Assistant Professor at Fordham University’s Graduate School of Business and College of Business Administration. From 2003 to 2008, Mr. Rooney served in various legal and compliance roles including: Global Anti-Corruption Officer for American International Group, Inc., Global Head of Bank Anti-Corruption Compliance for Credit Suisse, and Director and Senior Counsel in the Government & Regulatory Compliance Group at Merrill Lynch. Prior to that, Mr. Rooney was a litigation associate at the law firm of Condon & Forsyth in New York. Prior to joining Condon & Forsyth, Mr. Rooney served as an Assistant District Attorney in the Trial Division of the Manhattan District Attorney’s Office from 1996 to 2000. Mr. Rooney is a graduate of Fordham College and received his J.D. from Fordham Law School.

Richard AlexanderChief Technology Officer and Managing Director, Cerberus Capital Management, L.P.

Mr. Alexander joined Cerberus in 2008 as a member of the Operations and Advisory Company, which focused on driving value across Portfolio Companies. In 2010, Mr. Alexander became Head of Technology, Facilities, and General Services for Cerberus Capital Management. Prior to joining Cerberus, Mr. Alexander spent 12 years at GE. He is a former Chief Information Officer and Quality Leader within GE Commercial Finance where he became certified in Six Sigma and Operational Excellence. Prior to joining GE, Mr. Alexander held various IT and Operator roles within the U.S. State Department and UST, Inc. Mr. Alexander is a graduate of Loyola University Maryland and has taken technology courses at MIT.

Biographies of Other Cerberus ESG Resources

Published March 2019

66 | 2018 Cerberus ESG Report

Appendix

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