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 www.hermesfundmanagers.com | 1 www.hermesfundmanagers.com | 1 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. www.hermesfundmanagers.com | 7 www.hermesfundmanagers.com | 7 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. www.hermesfundmanagers.com | 11 www.hermesfundmanagers.com | 11 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 [email protected] +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 [email protected] 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 www.hermesfundmanagers.com
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