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Reflections on…
SustainAbility
Martin Brühl FRICS
Chief Investment Officer
Union Investment Real Estate
Hamburg, 16 February 2017
Source: Drees & Sommer
"The concept of global warming was created by and for the Chinese in order to make U.S.
manufacturing non-competitive."
"It's really cold outside, they are calling it a major freeze, weeks ahead of normal. Man, we
could use a big fat dose of global warming!"
Donald J. Trump45th President of the
Divided States of America
How (not) to make friends with “The Donald” …
3
For my sins…
4
Source: Drees & Sommer
5
6
It's all about the money, stupid!
Future = the time
dimension: sustainable
income over an extended
economic life
The value of a real estate
asset is the sum of its
discounted expected
future returns.
Return = maximised net
operating income, therefore
minimised irrecoverables
Discount/Cap Rate = risk-free rate
less growth plus risk premium
(incl. functional obsolescence!)
Sustainability is an integral component of a modern asset manager’s real estate value-added chain…
screening of
certification options
green leases
service providers are
contractually bound to adhere
to Union Investment‘s
sustainability standards
identification of
optimisation potential
continuous
monitoring of
sustainability
aspects
sustainable increase
in asset value
7
MAGoal: A
sustainable
increase of the
assets‘ net
income
asset management
investment
asset strategy
letting
monitoring
service providers
sustainable investment
check
disinvestment
management and
supervision of
sustainability measures
…and is concurrently affected by a variety of its internal and external stakeholders
8
portfolio
asset
technical
installations
According to German Property Federation: Guideline to the implementation of sustainability measurement for the real estate portfolio
fund strategy
decision on optimising
installations
asset strategy
determines
determines
data
monitoring
portfolio
sustainability
management
fund
manager
property
manager / (facility
manager)
asset
manager / (property
manager)
retail/institutional investors sales forces/distribution channelsproduct /distribution
strategy
A Sustainable Investment Check is the starting point in both acquisition and ongoing asset management
9
measurement of
qualitative attri-
butes is based on
six different criteria:
● energy
● resources
● economy
● user comfort
● operation
● location
content*
SI-check
„Measuring the quality of
sustainability“
cost-effective tool for
identifying optimisation
potential of the assets
the aim is to raise the
overall asset quality
execution of SI-check goal
for existing assets:
• annual execution of SI-
check questionnaire
• contains input to current
and targeted qualities of
each asset
property manager
for investments:
• execution of the SI-
check as part of the
due diligence process
• if threshold levels aren‘t
reached, the correspon-
ding costs are budgeted
in the purchase price
investment manager
* content of SI-check is based on the specifications of international certification schemes (LEED, BREEAM, DGNB)
Green Due
Diligence (GDD)
Operation of
property
Usage of property Balanced Score-
card KPI: SustAbil
Assess building
potential: SI-Check
The sustainability toolbox available to today's responsible institutional asset managers
Feedback to fund and asset
managers through target-
group-specific reporting
Data collection &
sustainability
reportingEvaluation of potential with
rough costs and recommen-
dations from property
management
Assess sustainability
criteria,
indicating potential savings
and ROI
Ensure sustainable building
operation via property
manager / facility manager
Sustainable use of
properties
(e.g. ensured by green
leases)
A sustainability KPI has
been embedded in the
Balanced Scorecard as an
additional element
10
Reports at property and fund level to improve transparency and sustainability management
Fund reports:
• Results presented at fund level plus
property comparison overview
• Strategic recommendations for action
by fund management
Property reports:
• Detailed information on KPIs, SI score,
green leases, property certification
• Results presented over the course of
the year and compared with peer group
• Property-specific recommendations with
regard to KPIs and SI Check for asset
management and property management
11
Including tenants in sustainable use of buildings, e.g. by way of green leases – an ongoing challenge
Optimizing building use through shared objectives and
joint action
Sharing building data to establish transparency
around consumption
Preventative measures to aid health through rules on
ecological building materials to be used during fit-out
Raising tenant awareness of sustainability issues and
cost savings
Simplified certification using existing documents
Positive impact on fund ratings
2012
2015
12
Sustainability is an integral component of the organisation‘s entire real estate value-added chain…
screening of
certification options
green leases
service providers are
contractually bound to adhere
to Union Investment‘s
sustainability standards
identification of
optimisation potential
continuous
monitoring of
sustainability
aspects
sustainable increase
in asset value
13
MAGoal: A
sustainable
increase of the
assets‘ net
income
asset management
investment
asset strategy
letting
monitoring
service providers
sustainable investment
check
disinvestment
management and
supervision of
sustainability measures
Source: Drees & Sommer
14
15
Microsoft Deutschland, Quelle: Bilder Spiegel Online: http://www.spiegel.de/fotostrecke/neue-microsoft-zentrale-smarter-worken-
in-schwabing-fotostrecke-141722-10.html
“Robotics change task-orientation into agile knowledge-oriented millennium-friendly workspace experiences”
16
Philips Deutschland, Hamburg, Source: http://www.officelovin.com/2016/01/29/a-tour-of-philips-new-hamburg-headquarters/
What‘s true: Net utilisation of office space will increase, affecting demand for office space – how do we cope?
So, is this yet another workspace revolution?Or rather a gradual workspace evolution…
A 1990s hype revisited - How paperless and wireless are we today?
17
What does this mean for other unstoppable life-transforming mega-trends?
Let’s not hold all truths to be self-evident.
“Spatial” revolutions take time!
It’s all about the money, stupid!
19
So what’s gonna sustain Mother Earth?
20
E D U C A T I O N
21
E D U C A T I O N
Reflections on…
SustainAbility
Thank you
for your patience!Source: Drees & Sommer
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