1. real estate

RPI Summary Report 2013
A wider view
The socio-economic benefits of responsible property investment
www.hermesfundmanagers.com
RPI Summary Report 2013
Report coverage
This is a summary of Hermes Real Estate’s 2013 Responsible Property
Investment report. The full report is available on-line. We explain our
RPI strategy and management approach for our portfolios, including our
directly managed assets and the indirect assets that we have influence
over. We include performance indicators only for our UK assets over
which we have management control. The report narrative covers the
period June 2012 to June 2013, while the performance data covers the
period January 2006 to December 2012.
For more details visit
www.hermes.co.uk/rpi_report_13
We believe our report to be in line with level C of GRI G3.
We benchmarked our RPI report against the Global Reporting Initiative
(GRI) Sustainability Reporting Guidelines G3. We have ensured that the
report follows the guidelines of the GRI Construction and Real Estate
Sector Supplement.
Advisor’s statement
Upstream Sustainability Services, part of Jones Lang LaSalle, have been
advising Hermes Real Estate on their Responsible Property Investment
programme for over 10 years. We advise and support Hermes Real
Estate to measure and monitor the environmental performance of
its portfolio and support the external property managers in meeting
the high standards required by Hermes Real Estate. During this time
we have seen real progress in Hermes Real Estate and the property
managers’ approach to performance measurement. As part of this
progress, Hermes continues to support the real estate sector’s best
practice reporting guidelines, evident in the adoption of GRI and EPRA’s
measures and recommendations included within this report and the
supporting documents.
In assisting Hermes Real Estate with this report we can confirm that all
has been done to ensure that the data and information contained within
it are correct at the time of publication. Whilst this report has not been
subject to a full and independent audit, we believe that the report is an
accurate representation of the team’s approach to Responsible Property
Investment, and its goal for continued improvement.
Nick Hogg
Senior Consultant
Upstream Sustainability Services
Jones Lang LaSalle
Cover image: ©John Sturrock.
King’s Cross Central is one of
Europe’s largest city centre brownfield
regeneration schemes, see the
socio-economic benefits that are
being delivered on page 8.
Inside front cover image:
St John’s Shopping Centre, Leeds.
2
Hermes Real Estate
Given the opportunity
to create social capital
alongside tangible financial
benefits, we firmly believe
the wider socio-economic
values associated with
the establishment of a
sustainable real estate
sector should be key
considerations for
assessing responsible
property investment.
Chris Taylor
Chief Executive Officer,
Hermes Real Estate
Contents
2 Our philosophy: deliver
investment excellence
3 Our view: responsible real
estate reaps wider benefits
6 Our strategy: integral to
investment management
8 Our actions: regeneration at
King’s Cross Central
10Our engagement: support
sector initiatives and public
policy
12Our actions: social engagement
in our retail assets
14Our performance: sustain
continuous improvement
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RPI Summary Report 2013
Our philosophy: deliver investment
excellence
Hermes Real Estate is part
of Hermes Fund Managers,
a global multi boutique
asset manager, leader in
responsible investing, with
expertise across multiple
investment strategies*.
Our responsible investment principles
We are committed to act consistently and clearly as stewards of
the assets in which we invest, with the aim to deliver investment
excellence. With a strong focus on income to deliver sustainable
returns and a disciplined approach to risk, we seek consistent outperformance on a risk adjusted basis to deliver robust and repeatable
performance in line with our fiduciary responsibility to our clients.
We have a clear vision of the drivers of future performance, including
an in-depth understanding of how occupiers assess real estate and
of the evolving regulatory framework. We comply with all current
legislation and demonstrate preparedness for forthcoming regulatory
requirements. We see environmental, social and governance risks
as business critical to our funds and we are committed, on a sound
commercial basis, to embed responsible investment principles across
our investment practices.
Established
Investing since 1983
Offering
Client-focused property investment solutions
Team
21 property professionals with 20 years
average industry experience
Assets under management
£5.9bn Gross Asset Value**
Segregated and unitised
solutions
BT Pension Scheme (BTPS) direct property
portfolio, Hermes Property Unit Trust
(HPUT), HUH US Real Estate income fund,
Argent market leading UK developer, MEPC
specialist investor in business estates
Geographical coverage
UK, Europe, Americas, Asia Pacific
* with AUM of £25.6bn (GAV) as at 31 March 2013. Owned by the BT Pension Scheme.
** Hermes Real Estate as at 31 March 2013, £5.2bn NAV.
2
Hermes Real Estate
Our view: responsible real estate
reaps wider benefits
Socio-economic benefits
The case for responsible investment in sustainable real estate
has traditionally been considered through the likely impact of
environmental legislation on investment performance. This case
is now widely accepted by leading real estate asset owners and
investment managers1, and has led to real estate investors
increasingly managing the risks through their responsible asset
management programmes. However, the wider socio-economic
benefits of a responsible real estate sector are also crucial
elements of the case for responsible property investment and have
regrettably become side-lined due to the financial and economic
crisis. We believe these key societal issues need to come back to
the fore and be part of the assessment of responsible property
investment. Here we discuss the socio-economic benefits to
investors and society and based on this appreciation we call for
a discussion on how best they can be supported through the
responsible property investment agenda.
Regeneration and quality housing
Responsible real estate is in our view about creating places which
encourage greater social cohesion. Urban regeneration projects
provide the ideal opportunity to enhance the urban fabric and create
integrated and innovative new places. They can act as incubator
zones for new business, innovation, and education, and ultimately
deliver inward investment and economic growth. Large regeneration
areas such as Kings Cross Central, the Olympic Park and Battersea
Nine Elms in London are rejuvenating brown field land to deliver
modern housing, integrated into sustainable urban places. Similarly,
office buildings in London and other large cities can provide readily
adaptable stock for healthy and good quality housing while increasing
the density of our cities and preserving green belt areas. Therefore,
we see the conversion of office space for residential use as a
responsible answer to the UK’s increasingly pressurised housing
stock. This is why we are investing in these areas and are seeing an
increased interest from other institutional investors.
Image: thecentre:mk, Queen’s Court
www.hermesfundmanagers.com | 3
RPI Summary Report 2013
+750,000
20%
jobs by 2020
energy efficiency
improvements
Creating jobs and sustaining the real estate market
Behind the ambitious drive towards new green buildings and the
sustainable refurbishment of existing stock2 lies an opportunity to
provide significant socio-economic benefits for society. Studies have
shown that improving the energy efficiency of new and refurbished
buildings in Europe by 20% could create over 750,000 jobs by 2020
for an investment of around €40 billion per year3. This represent an
important gain for society, not least in light of the prevailing levels
of unemployment, especially among the young. It would also help
stimulate the construction industry and support the real estate
market in the long term.
Improving wellbeing and productivity
With around 90% of our time spent indoors, the materials and air
quality of our homes, schools and offices represent a significant
contributor to good health. Green buildings with good air quality
and high levels of daylight have been shown to reduce absenteeism,
improve productivity and concentration, reduce stress levels and
achieve an overall increase in user wellbeing. Such improvements
Image: ©John Sturrock.
4
have been proven to translate into financial benefits. A European
study found that health benefits from energy efficiency improvements
in buildings could be worth €40-80bn a year3. A US study also found
the potential benefits of improved indoor air quality and healthier
workplaces to be worth US$17-30bn a year, with additional savings
of US$20-60bn from improved employee productivity4. For us,
investing in improving the performance of existing real estate
portfolios part and parcel of anticipating and providing space which
will meet the requirements of occupiers today and in the near future.
Saving energy for all
Greening our existing building stock represents an opportunity
for tangible financial savings waiting to be realised. Were Europe
to achieve its 20% energy efficiency target by 2020, this would
represent €50-75bn in potential annual financial savings from lower
energy bills3. Not small financial and energy security opportunities
considering Europe’s current energy dependency on fossil fuels
imports of well over €100bn a year and the social impact of
yearly energy price increases. In our experience at Hermes Real
Hermes Real Estate
€40-80bn
p.a. of health
benefits
€60bn
€50-75bn
p.a. investment
opportunity
p.a. of energy
savings
Estate, realising such potential would be possible but requires
actively measuring and managing properties’ energy and carbon
emission reductions and strategically identifying improvement
and refurbishment opportunities within the existing investment
life cycle of buildings. All which can be achieved by embedding
responsible investment principles in real estate asset and investment
management strategies.
A clear investment opportunity
Today, the environmental regulatory framework in Europe places
an obligation on investors to add value to their real estate portfolios
by improving their environmental performance. Achieving such
ambitious government objectives will require a major scaling up
of investments. It has been estimated that upgrading the existing
building stock to levels aligned with government energy efficiency
targets across Europe will require a cumulative investment of
about €850bn for the period 2011-2020, or around €60bn per
year1. Such levels of long term and low risk investments, with the
further potential of inflation linked models, offer good prospects for
institutional investors.
The arguments we present here highlight why investing in green
and socially sustainable buildings represent a unique opportunity
to simultaneously protect and improve returns for investors, meet
occupier requirements and contribute to improving society’s
wellbeing. Given their ability to create and sustain social capital
alongside tangible financial benefits, it is our view that these wider
socio-economic benefits will be increasingly recognised as important
considerations for assessing responsible property investment. It
is now time to revisit how the responsible investment and green
building agenda can be advanced to address these key societal issues
and for all to reap the wider benefits.
See page 10 & www.iigcc.org
http://ec.europa.eu/energy
3
www.renovate-europe.eu
4
www.annualreviews.org/doi/abs/10.1146/annurev.energy.25.1.537
1
2
www.hermesfundmanagers.com | 5
RPI Summary Report 2013
Our strategy: integral to investment
management
At Hermes Real Estate we are
committed to embed responsible
investment principles across our
investment practices.
Over the years we have developed
tools and best practice to implement
our principles, making them an integral
part of the way we manage real estate
investments. Our strategy focuses
on understanding occupiers evolving
requirements and the needs
of communities so that we are able
to deliver buildings which anticipate
and respond to market demands.
6
Key facts
RPI strategy at our
US based HUH fund
As part of our international portfolio we
have been supporting our joint venture
partner Hampshire, a US based
investment manager, in developing a
responsible property management
strategy for our joint US based HUH
fund. The retail fund’s RPI strategy
focuses on community engagement,
sustainable refurbishment, green leases
and engaging with occupiers. HUH and
all of our invested funds are also asked
to respond and share the results of the
Global Real Estate Sustainability
Benchmark, GRESB.
Hermes Real Estate
Every year we review our tools to ensure they are
continuously improved and aligned to the changing
regulatory environment and market requirements
from occupiers and investors.
Risk management
Regulatory risk assessment of our
portfolios against global, European
and UK medium and long term policy
requirements. Strategic and operational
sustainability benchmarking of our
funds to compare and assess
performance against the market.
Indirect and international
Acquisitions and transactions
Active engagement on
our indirect and international
investments focusing on
governance, alignment of
interests, fee structure, and
sustainability performance.
Sustainability due diligence for new
acquisitions, part of our ongoing
investment strategy that aims to
identify cost effective environmental
improvements to future proof the
value of our assets.
Dedicated tools
to embed our
RPI programme
Community
Refurbishments
Minimum sustainability
requirements for
refurbishments and
developments to improve
environmental and
health performance at
these crucial steps of the
building life cycle.
Community and
occupier engagement
programmes
and best practice
tools focused on
governance, skills
and employment,
health and well being,
safety and culture.
Risk & safety
Asset management
Stringent risk and safety
requirements and a
programme approved by
insurers including monthly
monitoring with property
managers.
Dedicated responsible property
management programme for
all our directly managed assets.
Active utilities and waste management
systems, including on-going monitoring
of performance with continuous
feedback between property managers,
asset managers and sustainability
experts.
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RPI Summary Report 2013
Our actions: regeneration
at King’s Cross Central
With 67 acres of brown-field land next to the transport hub of
Kings Cross and St Pancras stations in central London, the
site presents unique regeneration opportunities. The systemic
development approach of Argent and its partners - London &
Continental Railways, DHL Supply Chain and Hermes Real Estate
for the BT Pension Scheme - focuses on people and delivering
major socio-economic benefits. This new piece of central London
is already contributing to sustainable economic growth through
social and cultural diversity, good quality and affordable housing,
a creative industry hub, green and attractive public spaces, and
progressive utility solutions.
More at:
www.kingscross.co.uk
8
Image: ©John Sturrock.
Hermes Real Estate
Education
Education is at the heart of Kings Cross regeneration.
The move by Central St Martin University of the Arts to
the refurbished Granary complex adds to the multicultural
fabric of the space. Already, 6000 students have brought a
new breath of life to the area. Catering for needs identified
by the local councils and communities, a new primary school,
a nursery and community centre will be built, and the Frank
Barnes school for deaf children will be relocated to this
education hub. The redevelopment and construction site
has also proven successful with local schools as a tool for
teaching geography, construction, enterprise and financial
literacy to children.
Jobs and skills
A dedicated “Construction skills centre”, based at York Way,
was established at the onset of the construction to ensure
all operators on site employed 5% local apprentices. Targets
have been met and full time jobs secured at the end of the
programme. Post construction a recruitment centre is due
to open in Autumn 2013, established in partnership with
Islington and Camden councils with companies to be located
on site including Waitrose, Kings Cross Estates Services and
Google. Today the team servicing the estate comprises 35%
local employment.
Housing and heritage
Applying principles of constructive conservation, numerous
heritage buildings dotted along the canal and newly created
public spaces have been retained and are used as shops
and restaurants to create an attractive, open and unique
place for all to enjoy. In line with London’s needs and urban
development plan the site will provide a mixed community
with integrated social housing. To date Rubicon Court and
Saxon Court already provide more than 300 social homes,
via One Housing Group.
Community engagement
With one thousand metres of canal side, two acres of
natural park, Camley Street Natural Park and various
new open spaces offering play, relaxation, public arts and
horticulture, Kings Cross has been designed as an open
and welcoming neighbourhood. A number of community
engagement and art initiatives are already in place, including
Global Generation’s Skip Gardens, the RELAY art programme
and other summertime events. The King’s Cross Business
Partnership is a network of local businesses such as The
Guardian, EC Harris, MacMillan Publishing, Eurostar and
High Speed 1 working together to improve the local
environment for residents, employees, customers and visitors.
Urban opportunities
like King’s Cross provide
a once in a generation
opportunity to create
a long term, sustainable
place supporting
economic growth
while respecting the
local environment and
creating a community
where social and
cultural diversity thrive.
David Partridge
Chief Executive Officer
Argent Group PLC
Key facts
2,000
new homes
300
social housing units
1
university of arts
2
primary schools
10
new public squares
20
new streets
45,000
people living, working
and studying
RPI Summary Report 2013
Our engagement: support sector
initiatives and public policy
The real estate industry
and institutional investors
can positively contribute
and take a pro-active role
in sector initiatives and
play a part in shaping public
policy developments, and
hence support the market
opportunities that lie in
socially and environmentally
sustainable buildings.
At Hermes Real Estate,
we have been early contributors
to the responsible investment
debate through our sector
engagement and publications,
and by sharing the experience
and evidence gained from our
responsible asset management
programmes.
10
Key facts
Investors should stay one
step ahead
“Energy and climate change regulatory
changes place the onus on investors to
understand shifting conditions so they
can put methods in place that mitigate
investment risks and preserve, or even
boost, the value of their real estate
assets.” Stephanie Pfeifer and Tatiana
Bosteels, Institutional Investors Group
on Climate Change.
Institutional Investors Group on Climate Change
PROTECTING VALUE
IN REAL ESTATE
Managing investment risks from climate change
Hermes Real Estate
We actively participate in the
following initiatives.
■■ Engaging
with institutional investors and EU institutions by chairing
the property programme of the Institutional Investors Group on
Climate Change
■■ Working
in cooperation with the UNEP Finance Initiative Property
Group to analyse and propose solutions to scale up financing for
sustainable buildings
■■ Supporting
the Urban Land Institute to foster new policies and
solutions addressing global climate change which are both feasible
and effective
■■ Contributing
to the British Property Federation’s policy and
sustainability committees to assess and manage the risks
associated with existing and future regulations
■■ Disseminating
practical toolkits and knowledge with the Better
Buildings Partnership
■■ Promoting
and IPD.
the uptake of sustainability benchmarks with GRESB
Key facts
RICS sustainability inspection
checklists and IPD EcoPAS
environmental risk benchmark
Built by investors and valuers for investors
and valuers the sustainability inspection
checklists is designed to be used in standard
valuation practice. The associated EcoPAS
benchmark analyses environmental variables
likely to impact asset and portfolio values,
as well as performance, and demonstrates
the extent to which a fund faces greater or
lesser risks than other competitors.
Better Buildings Partnership’s
transactional agents toolkit
Real estate agents can, and inevitably do,
influence the finer details of what occupiers
will request and what owners provide.
Knowledge of the sustainable aspects of a
building and how this can influence costs,
comforts and desires of occupiers has not
typically been within the remit of agents, this
is now changing. The BBP has developed
a practical reference guide to support
their understanding of the sustainability
characteristics of building elements.
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RPI Summary Report 2013
Our actions: social engagement
in our retail assets
Map. Number of visitors by retail assets.
9.5m
1.3m
St John’s Shopping
Centre
Freeport Fleetwood
13.3m
Castle Court
Shopping Centre
2m
8
Christopher Place
2
13.2m
6
Crystal Peaks
Shopping Centre
2.6m
Freeport Braintree
23m
thecentre:mk
5
1
4.6m
9
4
7
3
10.4m
Royal Victoria Place
Clarks Village
For more details visit:
www.hermes.co.uk/rpi_report_13
1
3
thecentre:mk,
Milton Keynes
Freeport Fleetwood,
Fleetwood
Clarks Village,
Street
Retail skills centre
A founding member of the National
Skills Academy for Retail, enrolling over
8000 learners, it provides high quality
training courses and advice to gain retail
qualifications.
Recruitment & Training
Centre working with specialised agencies
provide tools to retailers to improve the
training and recruitment of staff.
‘Get into Retail’
Free retail training to unemployed, with
certificate of completion recognised as a
qualification by retailers at the centre.
Pop Up Shop School Project
Final year Business students at Cardinal
Allen High School to build pop up shops
business cases within vacant premises.
Street football club
Centre sponsors the Street Football Club
and supports police with Friday night
Youth Football.
‘FREEsPORT’ Youth engagement
Successful initiative offering centre’s
car park as space for sports and music
based activities to local teenagers as
positive alternatives to anti-social activities,
leading to 65% youth crime reduction
on Friday evenings.
Raising Aspirations
37 volunteers from local businesses and
members of the community of Street and
Glastonbury mentoring young people from
local Crispin School.
Safety partnership
Member of Partners against Crime,
Community Safety Partnership and ‘Bar
Watch’, working towards greater safety
for the local community.
Community Zone
Dedicated public arts and charity zone
with over £25,000 raised in the last 4 years,
complementing special community activities
such as Link2Health, Young Enterprise,
Summer Beach and Christmas Show.
12
2
Street against business crime
Initiative provides a secure website to share
information regarding local offenders.
Hermes Real Estate
4
5
6
Freeport,
Braintree
St John’s Shopping Centre,
Leeds
Crystal Peaks Shopping Centre,
Sheffield
North Essex Skills Shop
Offers retail skills training and pathways
to employment services, continuing
professional development and young
apprenticeship placements.
Mencap work placement
Helps people with learning disabilities to
take part in an employability programme
and secure full time employment.
Yorkshire business market
Offers local independent businesses access
to trade and promotion at the centre at very
low cost.
Modern Apprentice
Young job seekers brought in to support
centre’s marketing efforts, resulting in full
time positions in retail.
Students’ retail venture
Students from Sheffield College gain insight
into customer services and retail operations
by designing and promoting their ventures
in the centre’s prime space.
Braintree Security
Part of Braintree Against Retail Crime,
Neighbourhood Action Plan and Essex
County Council 'Be Safe' initiatives.
Security Operation Crystal
Problem solving partnership to assist
South Yorkshire Police to the policing of
the Centre. Leading to over 56% reduction
in crime.
Partnership with Hedingham school
Organising school visits and talks about
the property.
Culture and sport
Supports the Braintree District Arts F7
annual festival. Provides on site children’s
playground with Liam Bugg and supports
Nike football tournament.
7
8
9
Royal Victoria Place,
Tunbridge Wells
Castle Court Shopping Centre,
Belfast
Christopher Place,
St Albans
Fashion education
Partnership with Hill View Girls School to
deliver fashion design courses and learning
projects, mentoring, shop windows design,
recycling, fashion show.
Skills and Employment
Initiatives to maximise employment
opportunities and to enhance the skills and
educational attainment levels of the local
community.
Kids Club and PlayWorld
‘Kids Club’ and PlayWorld soft play area and
wall mounted sensory panels available for
kids and parents to play.
Kids Club and PlayWorld
‘Kids Club’ and PlayWorld soft play area and
wall mounted sensory panels available for
kids and parents to play.
Community and culture
Provides dedicated stand space for local
schools, animal and wild life charities to
speak at the centre. Welcomes fund raisers
to promote their initiatives. Supports the
Hertfordshire Art Society to organise events
in the centre.
Free mobility
Wheelchairs and mobility scooters available
to hire free of charge.
Sports and youth football club
Sponsors the local youth football club and
organises sporting shows and practice
demonstrations.
Safety in the community
Contributes to local safety schemes
including SaBac and Pub Watch.
www.hermesfundmanagers.com | 13
RPI Summary Report 2013
Our performance: sustain continuous improvement
We have made good progress with our sustainability
and risk performance over the last seven years. As
the portfolio structure changes to reflect market
demand we address the challenge of maintaining
our continuous improvement targets year on year*.
* Where we have the ability to delineate between owner and occupier’s areas, we report on owner data only, where this is not possible we have included occupier’s data.
Our targets
100%
risk and safety
improvements
requirements
completed on time
20%
water consumption
reduction by 2020
compared to 2006
5%
reduction in CO2
emissions intensity
of standing portfolio
per year
80%
on and off site
waste recycling
by 2013
40%
reduction in
absolute CO2
emissions of
standing portfolio
by 2020 compared
to 2006
14
5%
reduction in
absolute CO2
emissions per year
Hermes Real Estate
Financial savings. Delivered by our responsible property management
program in 2012.
Risk and safety. Performance in implementing improvement requirements.
£411k
99.4%
£336k
averted direct
landfill tax in 2012
energy savings
in 2012
Completed on
time in 2012
CO2 emissions. Annual changes in absolute carbon emissions and energy consumption on like for like basis, adjusted for weather (tonnes of CO2e).
16%
15
10
8
5
0.8
0
-5 -3
-10
-6
-4
-5
-8
-5
-7
-15
-11
-8
-5
-2
-3.7
-6.3
-18
-20
-25
reduction between
2011 and 2012
-16
-21.9
2006
to 2007
Electricity
2007
to 2008
Natural gas
2008
to 2009
CO2e
2009
to 2010
2010
to 2011
2011
to 2012
Much of the reduction has
been achieved through
continued energy monitoring
and management practices at
individual properties. However,
this trend has also, in part, been
influenced by 7 offices able to
sub-meter occupier consumption
in 2012 that could not in 2011.
Assets, not-affected by submetering, have delivered good
improvement: Wimbledon Bridge
House (18%), following gas boiler
replacement and installation of
PIRs and LEDs in common areas,
and thecentre:mk significantly
reduced gas consumption (41%)
by reviewing the approach to
conditioning air in the mall areas.
www.hermesfundmanagers.com | 15
RPI Summary Report 2013
CO2 emissions. Changes in absolute carbon emissions and energy consumption of standing portfolio year on year (tonnes of CO2e) between 2006 and 2012.
35,000
30,000
35%
44%
53%
reduction overall
across all portfolios
25,000
27% reduction
20,000
15,000
35% reduction
44% increase
53% reduction
10,000
increase in shopping
centres
5,000
0
27%
2006
2007
2008
2009
2010
2011
2012
49
75
69
76
83
75
75
properties properties properties properties properties properties properties
All properties (incl. R. Warehouse, Industrial, R. Units)
Offices - consumption (incl. occupier)
Offices - Landlord controlled (excl. occupier if submetered)
Shopping Centres
The sharp emissions increase
in shopping centres between
2006 and 2012 is explained by
the acquisition and management
control of 3 high energy intensive
enclosed shopping centres
in 2012 - Castle Court, The
Friary and Royal Victoria Place,
representing an additional 19%
floor area. However improvements
have been achieved between 2006
and 2012 in a number of assets:
Clarks Village (27%), Junction
32 (49%), Talk Village (41%),
Fleetwood Village (19%).
reductions in offices
including tenants’
emissions
reduction in offices’
owner controlled
areas
The reduction can be attributed
both to the implementation of
best practice asset management,
new acquisitions and sales
within the portfolio, and the
ability for offices to differentiate
owner-controlled and occupier
consumption through submetering. This represents a shift
in accountable emissions from
owners to occupiers, from 3
assets in 2009 up to 12 in 2012.
CO2 emissions. Changes in carbon emissions intensity and energy consumption intensity of standing portfolio year on year (tonnes of CO2e/m2) from 2006 to 2012.
5%
180
160
reduction in
shopping centres
between 2006/12
140
120
100
80
51% reduction
60
65% reduction
40
5% reduction
20
0
2006
2007
2008
2009
2010
2011
2012
37
44
37
39
33
35
44
properties properties properties properties properties properties properties
Offices - consumption (incl. occupier)
Offices - Landlord controlled (excl. occupier if submetered)
Shopping Centres
16
While we maintain a 5% reduction
since 2006, the sharp increase
between 2011 and 2012 (71%)
is explained by the acquisition
of 3 higher energy intensive
enclosed shopping centres setting
a new challenge for our RPM
programme in coming years.
51%
reduction in offices
including tenants’
emissions
65%
reduction in offices’
owner controlled
areas
The changes are through
a combination of efficiency
improvements at existing
properties, the acquisition and
sale of offices during that period
and a change in the ability to
sub-meter and exclude occupier
consumption. Progressively
introduced since 2009, by 2012
34% of total office electricity was
excluded through sub-metering.
Nonetheless, between 2011/12
offices achieved a reduction of
30%, e.g. Nations House (25%)
and Cheapside House (25%)
following active management and
replacement of HVAC systems.
Hermes Real Estate
Waste. Proportion of waste by disposal route of standing portfolio measuring waste by weight year on year (%).
100
90
80
70
60
50
40
30
20
10
0
76%
on and off-site
recycling in 2012
2006
2007
2008
2009
2010
2011
2012
Direct-to-landfill or incineration without energy recovery
Direct-to-landfill averted (incl. incineration w/energy recovery and MRF
where recovery not known)
Offsite recovery (at MRF)
Segregated onsite for recycling, reuse or composting
We aim to report on and off site
waste recovery, and made good
progress with 25 of the 35 sites
that sent waste to an MRF in
2012, or 86% floor area, able to
report material recovery facilities
(MRF) recycling performance.
Good progress across our whole
portfolio. Freeport Fleetwood, for
example, achieved a recycling
rate of 74%, through increased
recycling awareness and retailer
liaison, incentivising the cleaning
team and engagement with
shopper.
Water. Changes in relative water consumption of standing portfolio between 2006 and 2012 (m3/m2).
13%
0.80
0.70
0.60
13% reduction
0.50
37% increase
0.40
0.30
0.20
0.10
0
2006
2007
2008
2009
2010
2011
2012
40
31
30
24
25
35
31
properties properties properties properties properties properties properties
offices reduction
Improvements in efficiency
as well as change in the
portfolio in the last 24 months
have contributed to long term
reductions in intensity, with a
small 1% reduction in absolute
consumption. Office consumption
is for the whole building which
makes performance heavily
dependent on occupier demand.
37%
shopping centres
increase
Shopping centres overall have
significantly increased both
relative (37%) and absolute (67%)
consumption due to both the
acquisition of 3 higher consuming
enclosed shopping centres in
2012 as well as increases in some
existing centres. A difficult utility
to control, some good work has
however been achieved to reduce
mains water dependency, such as
at thecentre:mk shopping centre.
Offices - Landlord controlled (excl. occupier if submetered)
Shopping Centres
www.hermesfundmanagers.com | 17
Excellence. Responsibility. Innovation.
Hermes Fund Managers
Hermes Fund Managers is a multi-boutique asset manager with
a growing global presence. Our pursuit of excellence is defined by
a commitment to deliver innovative investment solutions through
a responsible asset management approach. We offer investment
solutions across alternatives, fixed income and specialist equity
products, as well as being one of the market leaders in responsible
investment advisory services.
Why Hermes Real Estate?
Hermes Real Estate is one of the largest real estate investment
managers in the UK, with over £5.9billion GAV1 of assets under
management in both UK and International portfolios. It offers
client-focused, property investment solutions through segregated
and pooled structures.
1
Hermes Real Estate as at 31 March 2013, £5.2bn NAV.
Our investment solutions include:
Alternatives
Commodities, Hedge Fund Solutions, Infrastructure, Private Equity
and Real Estate
Equities
Asia, Emerging Markets, Europe, Global, Japan, Quantitative
and Small & Mid Cap
Fixed Income
Global High Yield Bonds, Investment Grade Credit, UK & Global
Government Bonds and UK & Global Inflation-Linked Bonds
Responsible Investment Advisory Services
Corporate Engagement, Intelligent Voting, Public Policy Engagement
and UNPRI compliance
Extel SRI
& Sustainability
Survey ‘Asset
Manager of the Year
2012’ Award winner
Offices
London | Boston | New York | Singapore | Sydney
Contact information
Hermes Real Estate
Tatiana Bosteels, Head of Responsible Property Investment
+44 (0)20 7680 2811
t.bosteels@hermes.co.uk
+1 617 892 8914
Asia Pacific +61 (0)2 8079 8215
Business Development
United Kingdom +44 (0)20 7680 2121
Canada
Europe
+44 (0)20 7680 2121
Middle East +44 (0)20 7680 3726
United States
+1 617 892 8914
Africa
Enquiries
marketing@hermesfundmanagers.com
Australia
+61 (0)2 8079 2901
+44 (0)20 7680 3726
Disclaimer. This document is for Professional Investors only.
This document has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient. This document is published solely for informational
purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Prospective investors must rely on their own examination
of the legal, taxation, financial and other consequences of an investment in the funds, including the merits of investing and the risks involved. Prospective investors should not treat the
contents of this document as advice relating to legal, taxation or investment matters. Before entering into an agreement in respect of an investment referred to in this document, you
should consult your own professional and/or investment advisors as to its suitability for you and should understand that statements regarding future prospects may not be realised.
Past performance is not a reliable indicator of future results. No action should be taken or omitted to be taken in reliance upon information in this document. Figures, unless otherwise
indicated, are sourced from Hermes. Hermes Real Estate Investment Management Limited has its registered office at Lloyds Chambers, 1 Portsoken Street, London E1 8HZ. This
document may include a list of Hermes Real Estate Investment Management Limited clients. Please note that inclusion on this list should not be construed as an endorsement of
Hermes Real Estate Investment Management Limited services. Issued and approved by Hermes Investment Management Limited (“HIML”) which is authorised and regulated by the
Financial Conduct Authority. Registered address: Lloyds Chambers, 1 Portsoken Street, London E1 8HZ. HIML currently carries on all regulated activities associated with Hermes Real
Estate Investment Management Limited (“HREIML”). CM148599
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