Integrating Responsible Property Investment

Transcription

1 Excellence. Responsibility. Innovation. Integrating Responsible Property Investment Hermes Real Estate Tatiana Bosteels, Head Responsible Property Investment April 2018 For professional investors only

2 Intentionality and Outcomes Responsible Investment at Hermes Real Estate Established: Investing since 1983 Offering: Client-focused property investment solutions Assets under management: 7.8bn gross asset value (GAV)* Team: 23 property professionals with 20 years average industry experience Investment style & philosophy: Hermes seek to deliver consistent outperformance on a riskadjusted basis. We embed responsible investment principles across our investment platforms Source: Hermes Real Estate as at 30 September bn Net Asset Value (NAV) bn Gross Asset Value (GAV). Responsible Property Investment

3 Integrating Responsible Property Investment A range of tools and procedures underpin our RPI programme Over the years focus on RPI has demanded fresh thinking and new ways of working. So we have created a range of dedicated tools and procedures that cover all aspects of our operations: Sustainability due diligence for new acquisitions Regulatory risk assessment of standing portfolio Active engagement on our indirect and international investments Minimum sustainability requirements for refurbishments and developments Dedicated responsible property management guidelines for our directly managed assets Strategic and operational sustainability benchmarking of our funds Active data management systems of utilities and waste On-going monitoring of performance with continuous feedback between property managers, asset managers and sustainability experts Stringent Risk and Safety requirements and supporting tools Community and occupier engagement programmes Hermes Real Estate responsible property investment process Embedded in our fund and asset management practices GOVERNANCE Set guiding principles MANAGEMENT & STRATEGY Strategic Decision making REAL ESTATE PORTFOLIOS Property selection INVESTMENT AND TRANSACTION MANAGEMENT Property management ASSET & PROPERTY MANAGEMENT Influence real estate market SECTOR & PUBLIC POLICY ENGAGEMENT Responsible Property Investment

4 Positive impact in Real Estate Investment Integrating positive impact in Real Estate investment processes Intentionality and Outcomes We believe that a Positive Impact Investing framework should be integrated to ESG Real Estate processes and be based on three key elements: 1) Intentionality the objectives in terms of real-world impacts, and the targets and indicators we will use to asses that 2) Measuring & Monitoring the net outcomes using the agreed indicators 3) Transparency & Trust, via verification and certification. While not labelling our real estate activities as impact investment, we are comfortable that we follow the three key principles in regards to our climate and energy efficiency investment practices. Responsible Property Investment 2018 CMxxxxxx 4

5 Positive impact in Real Estate Investment Theory of Change Responsible Property Investment 2018 CMxxxxxx 5

6 Smart building management CAPP + and Reset

7 CAPP, CAPP+ WELLBEING & RESET Best Environmental Sustainability Initiative This project aims to build on the initial CAPP designed to reduce energy use, costs and carbon emissions, and improve conditions for the wellbeing of occupiers of JLL s portfolio Key Achievements: Making CAPP a key part of JLL management Incorporation of wellbeing Implementation of the RESET Air Shell and Core certification Leading to: Better retention Good stakeholder engagement Enhanced staff productivity Responsible Property Investment 2018 CMxxxxxx 7

8 JLL: 8-10 GREAT GEORGE STREET Best RPI Property Delivery of environmental, stakeholder and risk improvements at 8-10 Great George Street Key Achievements: CAPP introduced in July 2016 with the aim to reduce energy costs and carbon emissions Optimisation of Building Management Systems (BMS) to identify opportunities to improve performance and implement recommendations Delivered social engagement initiatives to deliver CAPP objectives by working across stakeholder groups Strong performance and initiatives on risk management In 7 months the initiative saved: 115,860 kwh or 12,700 in electricity 36,100 kwh or 1,400 in natural gas Total reduction of 58 tonnes CO 2 Improvement on the REEB benchmark Year on Year Energy Reduction Electricity 12% Natural Gas 1% Responsible Property Investment 2018 CMxxxxxx 8

9 Energy Efficiency positive impacts Measuring and Monitoring outcomes across RE investments Responsible Property Investment 2018 CMxxxxxx 9

10 Real Assets carbon risk assessment & disclosure Real estate carbon benchmark - GRESB CMxxxxxx 10

11 Positive impact and place making Responsible Property Investment

12 How: Kings Cross regenerated inner London Since 2008 we have led the transformation of the former railway lands into one of London s great Estates with global reach The 67-acre site provides a rich mosaic of heritage, culture, technology, education, public realm, retail, residential and mixed commercial uses supported by world class public infrastructure which in turn delivers strong investment returns as well as broader socioeconomic benefits Strong financial returns 21% pa over 5 years the whole is more valuable than the sum of the parts + Societal benefits 1,900 new homes (35% affordable); Frank Barnes school for deaf children; 5,000 creative students at St Martin s University of Arts; local jobs created including 400 NVQ achievers and home to Google s London HQ + Environmental benefits 26 acres of new parks and open spaces; 79% of power demand off-set by CHP engines; 9,000 sqm of green roofs Responsible Property Investment 2018 CMxxxxxx

13 Kings Cross measured positive impacts Source: Regeneris Consulting 2017 The Economic Story of Kings Cross 13 Responsible Property Investment 2018 CMxxxxxx

14 A NEW DESTINATION KINGS CROSS REGENT S CANAL AND THE GRANARY

15 Hermes Real Estate

16 Hermes Real Estate Overview Global coverage with a UK focus Sector split by NAV 1 Americas 0.62bn The UK accounts for 85% of global real estate investments Americas: 9% Asia Pacific: 3% Europe: 3% UK 6.1bn Europe 0.20bn Asia and Australasia Other 0.24bn 0.02bn Platform split by GAV 2 3% 9% 19% 17% 41% 30% 0.1% Real estate debt vehicles 4% 10% 0.3bn Fund of funds 1.5bn 19% Separate accounts 3.8bn 48% Retail 2.3bn Office 3.2bn Industrial 0.7bn Residential 0.25bn Other 1.3bn Listed 1.5bn Joint ventures (excluding separate accounts) 0.8bn) Others (cash) 0.01bn Source: Hermes Real Estate as at 30 September bn Net Asset Value (NAV) bn Gross Asset Value (GAV). Introduction to Hermes Real Estate Q BD

17 Hermes Real Estate Segregated and unitised solutions HPUT Exempt Unauthorised UK Property Unit Trust Appointed as Manager in 2001 Strong long-term track record Balanced UK portfolio Approx. 113 investors: UK local authority, corporate pension funds and charities Gross Asset Valuation: 1.5bn Net Asset Value: 1.5bn BTR Platform Pan UK residential investment vehicle Target initial capital raising of 0.25bn, with objective to grow to 1bn over medium term Target distributable cash yield of 5% Focus on regional towns and cities with strong underlying economics Predominantly modern purpose built stock, or forward commitments with no planning and construction risk Target maximum Greater London exposure of 30% Regeneration Central London Market leading UK regeneration 67 acre Kings Cross redevelopment. One of the largest mixed use urban regeneration projects in Europe Anticipated End Gross Asset Value 2.5bn JV with Canada Pension Plan Investment Board Focus on core plus and value add central London offices Current portfolio of 7 assets totalling 0.9bn Target portfolio size of 0.9bn Real Estate Debt Investment in UK commercial mortgages Target floating-rate LIBOR plus margin returns Focus on senior loans across real estate sub-sectors Ability to cherry-pick transactions with strong borrowers and attractive long-term real estate fundamentals Strong focus on bilateral loans provides maximum lender control in both loan negotiations and ongoing management More than 300m capital drawn from cornerstone investor In-depth risk assessment of underlying real estate fundamentals by HREIM team MEPC Specialist investment into commanding mixed use business estates Acquired in million sq ft mixed office/industrial and production space Gross Asset Valuation 0.5bn Net Asset Value 0.4bn HUH Specialist investment into US real estate JV with Hampshire and UOB Established 2011 Focus on East Coast income-producing assets Strong pipeline of assets Initial commitments from partners of 125m (US$200m) with $101.8m committed by third party investors Source: Hermes Real Estate as at 30 September 2017, unless otherwise specified. Introduction to Hermes Real Estate Q BD