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Responsible Property InvestingWHAT THE LEADERS ARE DOING

UNEP Finance Initiative Property Working Group

Mission:

To encourage property investment and management practices that achieve the best possible environmental, social and financial goals, as consistent with fiduciary responsibilities.

UNEP FI Property Working Group

We sought examples of “investment or management strategies that go beyond compliance with minimum legal requirements to address environmental, social, or governance issues”.

We completed 15 Briefs on Energy, Fair Labor, Safety, Water, Community Development, Trees, Parks, Solid Waste, Urban Regeneration, Historic Preservation, Transit, Green Building, Design Quality, & Governance

Each Brief covers Materiality, Public Interest, Economic Research and Illustrative Cases submitted by members

Responsible Property Investing Briefs

CEO Briefing: Responsible Property Investing

Key Findings Lenders, owners, asset managers, property

managers and developers can all incorporate RPI strategies into their own activities.

There are two types of financially sound RPI strategies: no cost and value added approaches.

More research needs to be carried out to understand the economic impacts of some harder to quantify strategies.

Brief Snapshots

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UNEP Finance Initiative

Energy Conservation Better lighting, boilers, AC and office equipment and recommissioning are nearly always cost-effective.

Investa saved AUS$30,000 and 363 tonnes of CO2 per year in Parramatta offices at “minimal or no cost”.

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UNEP Finance Initiative

Community Development Education, crime prevention and homeownership programs cuts losses & improve income.

Learning Links Centers have increased net income by 26% through educational programming.

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UNEP Finance Initiative

Green Power •15% premiums•A willingness to pay•Cost may be offset with conservation or bulk buying

PRUPIM is saving £15,000 per annum (7%), taxes and CO2 via bulk purchasing for 240 properties.

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UNEP Finance Initiative

Properties near transit reduce driving and appreciate faster than other investments.

Mockingbird Station, Dallas - “very successful” and attracting rents with a 40% above-market premium.

Transit Oriented

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UNEP Finance Initiative

Water Conservation Savings of 20-30% are cost-effective based on payback rates

Hermes is saving £9,300 per year after spending £3,510 to install waterless urinal systems in London’s tallest office tower.

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UNEP Finance Initiative

Fair LaborFair wages and benefits require 2.5% higher rents. But they improve service by 25% and increase rental income by 7% . General Growth Properties has promised janitors at its 194 regional shopping centers access to affordable health insurance, market-based wage rates, complaint resolution procedures, and green cleaning products.

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Certified Green BuildingPromises lower running costs, greater productivity, and lower risk at little to no added cost.

ICADE/EMPG ‘s green building in Paris has 20% lower than average running costs without a construction cost premium.

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UNEP Finance Initiative

Tree Planting

Aeon’s Hometown Forest program planted more than 500,000 trees at 59 sites in 2005.

Trees increase property values by 14%, lower energy bills, and attract more shoppers who will pay 9-12% more for the same goods and services.

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UNEP Finance Initiative

Urban Regeneration

Morley Igloo Fund - the UK’s first urban regeneration fund - is expected to outperform its benchmarks.

Property in UK regeneration areas have matched or exceeded national benchmarks, lowered risk per unit of return, and added diversification to property portfolios

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UNEP Finance Initiative

Design Quality

Hammerson, Land Securities, and Henderson have built the award winning Bullring in Birmingham City Centre.

The best designed properties can rent for 20% more than otherwise similar structures. Bad design can lead to economic failures.

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UNEP Finance Initiative

Other ExamplesSafety and Risk Management

Parks, Plazas, and Atriums

Historic Preservation

Corporate Governance

Recycling

We hope these examples demonstrate:

o the variety of ways that lenders, owners, asset managers, property managers and developers can incorporate RPI strategies into their work,

o that RPI can be a good financial strategy, and

o that there is still much to be learned about “doing well by doing good” in real estate and property investing.

CEO Briefing: Responsible Property Investing

AXA Real Estate Investment ManagersCaisse des dépôts et consignationsCalvert GroupF&C Property Asset ManagementHermes Real Estate Infrastructure Leasing & Financial ServicesMitsubishi UFJ Trust and Banking CorporationMorley Fund ManagementPRUPIM Sumitomo TrustWestLB AG

Advisor & Principal Author: Gary Pivo, University of Arizona

UNEP FI Property Working Group