Ensuring sustainable investment
Sustainability starts with our investment decisions, ensuring that we consider the sustainability risk and performance of a potential acquisition and our ability to reposition it.
We recognise the importance of including sustainability within our investment decisions; it affects operating costs, the speed of letting and the longer-term value of our buildings.
Our investment team ensures that key sustainability information related to the management of the building is collected through a sustainability checklist. This checklist is provided to the asset management team prior to completion on the building.
- The building’s Energy Performance Certificate rating and metering strategy
- Potential to improve resource consumption at the property
- Whether it is included in the Carbon Reduction Commitment Energy Efficiency Scheme
As part of our strategy to reposition unloved buildings in prime locations, we often purchase properties with lower rated EPCs, which can be improved through refurbishment or development.
Where EPC ratings are below an E rating, consideration is given to the level of further investment required to improve the EPC. Costs related to introducing energy efficiencies are included within our refurbishment plans. We use BREEAM for all developments and major refurbishments to provide a framework for sustainable development.
Sometimes following purchase, the scope of a planned refurbishment is less extensive and BREEAM is not appropriate for the size and scope of the works. For these properties, we use the SKA Ratings system to provide a framework for our contractors to ensure that sustainability requirements are included within the refurbishment.
Minimum Energy Efficiency Standards and EPCs
In March 2015, the UK Government introduced the long anticipated Minimum Energy Efficiency Standards (MEES). These regulations make it illegal to let property with an Energy Performance Certificate rating (EPC) of F or G to new occupiers from April 2018.
There are significant challenges ahead for the industry with the implementation of these regulations, not least due to the varying quality of EPCs undertaken since they were introduced in 2008.
In anticipation of MEES we have operated a watch list of properties with an E, F or G rating for the last three years. A key aspect of our business is to purchase unloved assets in strong locations and this can often lead to properties being purchased with lower rated EPCs, which are then improved once they enter our development programme.
All EPC recommendations are included within our asset Energy Action Plans to ensure that these are considered as our properties are refurbished, as occupiers vacate and when properties are redeveloped. Where we believe that original EPCs may require review due to assumptions made in 2008, we have engaged consultants to undertake this work.
In April 2018 we achieved an 'A' rated Energy Performance Certificate for one of our recently completed developments at 160 Old Street.
31/32 Alfred Place
Purchased in March 2015, 31/32 Alfred Place, W1 was an unloved building with an EPC rating of F. By refurbishing the building, we achieved a SKA silver rating and an EPC rating of C. Pre-let to a publishing company, the property will benefit from heat recovery air-conditioning, new LED lighting with presence detectors and a best practice metering system.
Communicating our commitment to sustainability
To help our stakeholders understand our performance, we take part in the Global Real Estate Sustainability Benchmark (GRESB), Carbon Disclosure Project (CDP) and FTSE4Good Index. We also align our reporting with EPRA Sustainability Best Practice Reporting Guidelines.
We have been successful in retaining an EPRA gold award for Sustainability Best Practice reporting and were awarded a GRESB five-star rating in September 2017.
We regularly meet with our investors and offer to engage with our top 30 investors on sustainability on an annual basis.
Our plans for the future
We will continue to build our sustainability requirements into the acquisition and disposal process, with valuable feedback from investors being reflected in our long term strategy and public reporting.