Property Asset Management for a Sustainable Future Property 5 St Philips Place, Birmingham, UK Internal view of 5 St Philips Place, Birmingham, UK Sustainable Property as an Asset Class The value of commercial property is increasingly influenced by factors related to environmental and social sustainability and, most specifically, by the impact of climate change. Political pressure and the convergence of environmental and climate change policy and law are leading to regulatory and legislative change across the built environment. Built Environment of non-compliance as well as capturing the valuation upside of a compliant low carbon portfolio. There is now widespread awareness throughout the property industry of the need to mitigate and Of all the factors associated with the ‘sustainability’ adapt to the risks and drivers of climate change. concept, climate change remains the most prominent in This significant shift in sentiment has led to major the minds of not only institutional property investors but stakeholders in commercial property focusing on the also of those occupying commercial property. possible impacts of climate change, driven by matters This is likely to mean that a new category of climate such as corporate social responsibility, brand reputation, change proofed buildings will constitute a new asset the desire to reduce energy costs and the need to class that will become a “must have” for a diversified future-proof property investments. risk-adjusted portfolio. At the same time, design and technological Organisations like the Carbon Disclosure Project have improvements are leading towards the evolution of made institutional investors increasingly aware of their more sustainable buildings, which are increasingly fiduciary responsibility to address climate change risk in more desirable to occupiers and investors. the built environment. Our strategy offers investors an Valuers estimate that there will be a potential value opportunity to contribute in a positive manner. differential in compliant buildings relative to non- compliant buildings. CCC’s Property Strategy Climate Change Capital’s Property team manages in Market Development excess of £55m of equity for investment in commercial By investing in climate change anticipating property, property. The Fund Managers, Tim Mockett and Esme investors will be protecting against the downside risk Lowe, expect to be investing in major city centres ® Creating Wealth Worth Having 3-5 Morrison Street, Edinburgh, UK View from Morrison Street Boardroom, Edinburgh, UK The Investment Team across the UK with the emphasis on “retro-fitting” The experienced investment team has over existing buildings. The investment team works 45 years in property fund management, investment closely with CCC’s research and policy professionals and development. The individuals comprising the who, with other CCC investment professionals, investment team are respected industry figures in the provide the Property team with advice spanning UK and European commercial property sector. They the fund’s key sectors, helping them to understand have complementary skills ranging across the spectrum the complex interdependencies between market, of property fund management, development and technology and policy trends. asset management. 5 St Philips Place – Birmingham In February 2009 Climate Change Capital’s Property Fund completed its first purchase – a prime office and retail property in an excellent location overlooking the cathedral in Birmingham’s central business district. This landmark six storey property, comprising 67,000 sq ft of offices and 13,000 sq ft of retail, was acquired off market for an undisclosed sum. 5 St Philips Place is let to the Department for Communities and Local Government while the retail occupiers include Marks and Spencer, HSBC and HBOS. 3-5 Morrison Street – Edinburgh The team completed its second purchase on 15th July 2009, taking their investment in the UK market to around £55 million. The property was purchased from Hermes Property Unit Trust for £23.9m. The Edinburgh property comprises 57,000 sq ft of Grade A office space, let to Franklin Templeton Global Investors, 5,000 sq ft of retail space, let to Sainsbury’s and a 14,500 sq ft cinema, let to Odeon. The net initial yield is 7.4%. Advisory | Carbon Finance | Private Equity | Property | Energy Infrastructure CCC Head Office Climate Change Capital 3 More London Riverside London SE1 2AQ United Kingdom T: +44 (0) 20 7939 5000 F: +44 (0) 20 7939 5030 www.climatechangecapital.com Disclaimer The financial services outlined in this document constitute regulated activities as defined by the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001; as such these activities can only be undertaken by an authorised person. Climate Change Capital Limited (“CCC”) is authorised and regulated by the Financial Services Authority. Some of the information, and in particular the financial services described within this document, are intended exclusively for persons who qualify as a professional client or eligible counterparty. Retail clients may not rely on the information herein.