The Carbon Trust, fund manager Threadneedle and developer Stanhope plc are to partner in a new fund that aims to significantly increase the availability of high specification low carbon commercial property in the UK.
The Threadneedle Low-Carbon Workplace Trust (Threadneedle LCW Trust) launched today aims to raise £100m in the next 12 months and up to £350m within three years from institutional investors. It will refurbish up to 50 properties over the next five years to best practice low carbon standards. Occupiers will be offered space at market rates and will benefit from significant reductions in carbon emissions and energy consumption. They will also receive ongoing assistance to help them occupy the buildings to their full low carbon potential.
The fund expects to deliver performance for investors through the ability of these uniquely competitive buildings to attract considerable demand from high quality occupiers and secure a long term income. In addition there is potential for capital growth and development profit.
Around 40 potential occupiers have already expressed interest in the Low-Carbon Workplace concept with demand being driven by the perceived reputational benefits of occupying low carbon properties, reduced energy costs and legislation including the CRC Energy Efficiency Scheme. The first occupier announcement is expected within the next few weeks.
Recent Carbon Trust research revealed that non-domestic buildings account for 18% of the UK’s carbon emissions. The partnership aims to address this not only by providing high specification low carbon buildings but also by assisting occupiers to deliver sustainable carbon savings. Occupiers will qualify for Low-Carbon Workplace accreditation if they achieve a verified per person, per day low-emissions target.
Tom Delay, CEO of The Carbon Trust, said:
“This initiative aims to prove that green business opportunities can deliver the secure long term returns institutional investors demand, which could be the key to unlocking the low carbon economy. We want to demonstrate the business case for low carbon property, encourage the wider property industry to follow suit and deliver both an economic and a carbon prize for the UK.”
Don Jordison, Managing Director, Threadneedle Property Investments said:
“We foresee strong interest in this product, there is high demand from institutional investors for property funds which can demonstrate real value added without undermining long term stability and performance.
“Of the £46bn in the Investment Property Databank Office Index over 90% is more than 10 years old and highly unlikely to be compliant with current or future carbon efficiency standards. Over the next 5 years 33% of all the leases in this space will expire and we believe a co-ordinated approach to address occupiers and investors needs can’t come a moment too soon.”
David Camp, CEO of Stanhope, said:
“We believe that the timing is right both from an economic and a carbon challenge perspective to launch this fund. Not only is there money to be made in refurbishing existing building stock whilst there is a dearth of new development; but we also know from our own post-occupancy evaluation that occupiers, especially those who will be affected by the Carbon Reduction Commitment, are looking for more support in managing their carbon emissions.
“We have successfully undertaken a number of one-off low-carbon refurbishments for occupiers who have committed to reducing their carbon emissions. For them retrofitting existing building stock has been the most practical way to dramatically reduce their carbon emissions and we are confident that LCW will tap into this growing market.”
ENDS
For further information please contact
Carbon Trust Press office – 020 7544 3100
Jessica Lord, Threadneedle – 020 7464 5047
Clare Duffy Redwood Consulting – 020 7828 5553
Notes to editors:
**In the UK, the Fund is an unregulated collective investment scheme for the purposes of Section 238 of the Financial Services and Markets Act 2000 of the United Kingdom. Accordingly, this document may only be issued in the United Kingdom to persons described in the Financial Services and Markets Act 2000 (Promotion of Collective Investment Schemes) Exemptions Order 2001 and to persons to whom Shares are permitted to be promoted in accordance with the Financial Services Authority’s Conduct of Business rules as from time to time.**
The roles of the partners:
The Carbon Trust has set up Low Carbon Workplace Ltd, a commercial enterprise that will contribute low carbon design advice for refurbishments, manage the Low Carbon Workplace accreditation and provide ongoing low-carbon assistance to occupiers.
The Carbon Trust is a not-for-profit company with the mission to accelerate the move to a low carbon economy, providing specialist support to business and the public sector to help cut carbon emissions, save energy and commercialise low carbon technologies.
Threadneedle is the fund manager for the Threadneedle LCW Trust. Threadneedle has one of the largest and most experienced property team’s operating in the UK today with 19 investment professionals (as at 31.12.2009).
Threadneedle has been investing in commercial property since 1994 and currently manage more than £4 billion in property assets (as at 31.12.2009). Our property team have an average of 17 years’ market experience and have been with Threadneedle for more than nine years on average. This stability has been a key factor in the team’s success. Indeed the team was awarded the Fund Manager of the Year at the 2009 Property Week Awards – the fourth time they have won this high profile award, and were also awarded Europroperty’s Fund Manager of the Year 2009.
Stanhope Plc is a specialist UK real estate developer of major commercial and mixed-use projects. With 25 years experience, and more than £10 billion of completed projects behind it, Stanhope has built an unrivalled specialist in-house team which has earned a reputation for quality and integrity that is second to none.
Stanhope will devise and deliver all the refurbishment work for LCW. With a strong focus on research and innovation, Stanhope has been at the forefront of sustainable innovation in the built environment for over a decade. Stanhope’s experience in the field and established supply chain, along with a commitment to working with the occupier throughout the design process, will reduce both financial and material waste.
Stanhope’s completed projects include Broadgate, the Royal Opera House, Tate Modern, HM Treasury and Paternoster Square and totals more than 30 office buildings delivered for owner occupiers or pre-lets. The team is currently working on a pipeline of 10million sq ft across 17 projects with partners including the Crown Estate, Legal & General, BSkyB and Schroders.
KEY FACTS
- The Carbon Trust Threadneedle and Stanhope plc are to partner in an initiative that will provide up to 50 refurbished low carbon office buildings within five years, accommodating up to 25,000 employees in key locations throughout the UK.
- Up to £350m is to be raised through the Threadneedle Low-Carbon Workplace Trust fund.
- The project will offer high specification low carbon office space at the same cost to occupiers as conventional refurbishments: green for the price of grey.
- The properties could deliver up to 60% reduction in energy consumption and carbon emissions, significantly higher than conventional refurbishments. They will be highly efficient in use of space and make maximum use of cost effective low-carbon technologies such as insulation, natural daylight and fresh air, and state of the art building controls. Showers, changing rooms and bike storage will be standard.
- Over half (54%) of commercial occupiers say it is very likely they would take a sustainable property at their next move. Two thirds said the CSR agenda was important or very important to their company. Energy efficiency is seen as the most important factor in a sustainable building. (Source: Corporate Real Estate Matters. Lambert Smith Hampton, May 2009)
- The low carbon opportunity is in refurbishment rather than new build. Around 60 % of the non domestic buildings in use today will still be in use in 2050 (Source: Building the Future Today, The Carbon Trust, 2009). There are about four times as many commercial property refurbishments as new builds in the UK with annual refurbishment spend of around £2billion. (Source: AMA Market Research: Commercial Interior, Refurbishment and Fit-out market 2008-2012 (2008))
- Occupiers will be provided with ongoing assistance enabling them to minimise their carbon emissions through efficient everyday use of the properties.
- The partnership has access to a large pool of properties: around 60% of UK office buildings are likely to be suitable for low carbon refurbishment and around 500 are available at any one time (Source: The Carbon Trust). They will be primarily buildings built between 1940 and 1980.
- Of the £46bn in the Investment Property Databank Office Index over 90% is more than 10 years old and therefore highly unlikely to be carbon efficient. Over the next 5 years 33% of all the leases in this space will expire.
- 80% of Threadneedle’s property fund range has outperformed the IPD index for at least 12 out of the last 15 years.
- The potential UK occupier market for low carbon properties has been identified as 1700 organisations employing 10 million people and representing between £300m and £1.1bn annual rental income (Source: The Carbon Trust)
- There is a growing body of research suggesting that high levels of daylight, fresh air and good lines of sight typically found in low carbon buildings have a positive impact on employee health and well being. (Sources include: ‘Green Buildings: What Australian Buildings Users Are Saying. EcoLibrium. Nov 2007. ‘In the Bricks’. The Carbon Trust. June 2009).