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  1. Responsible Property Investing WHAT THE LEADERS ARE DOING UNEP Finance Initiative Property Working Group www.unepfi.org

  2. UNEP FI 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.

  3. Responsible Property Investing Briefs • 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

  4. CEO Briefing: Responsible Property Investing

  5. 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.

  6. Brief Snapshots

  7. 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”.

  8. Community Development Education, crime prevention and homeownership programs cuts losses & improve income. Learning Links Centers have increased net income by 26% through educational programming.

  9. 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 andCO2 via bulk purchasing for 240 properties.

  10. Transit Oriented 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.

  11. 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.

  12. Fair Labor Fair 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.

  13. Certified Green Building Promises 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.

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

  15. Urban Regeneration Property in UK regeneration areas have matched or exceeded national benchmarks, lowered risk per unit of return, and added diversification to property portfolios Morley Igloo Fund - the UK’s first urban regeneration fund - is expected to outperform its benchmarks.

  16. Design Quality The best designed properties can rent for 20% more than otherwise similar structures. Bad design can lead to economic failures. Hammerson, Land Securities, and Henderson have built the award winning Bullring in Birmingham City Centre.

  17. Other Examples Safety and Risk Management Parks, Plazas, and Atriums Historic Preservation Corporate Governance Recycling

  18. CEO Briefing: Responsible Property Investing • We hope these examples demonstrate: • the variety of ways that lenders, owners, asset managers, property managers and developers can incorporate RPI strategies into their work, • that RPI can be a good financial strategy, and • that there is still much to be learned about “doing well by doing good” in real estate and property investing.

  19. UNEP FI Property Working Group AXA Real Estate Investment Managers Caisse des dépôts et consignations Calvert Group F&C Property Asset Management Hermes Real Estate Infrastructure Leasing & Financial Services Mitsubishi UFJ Trust and Banking Corporation Morley Fund Management PRUPIM Sumitomo Trust WestLB AG Advisor & Principal Author: Gary Pivo, University of Arizona