IPD Press Release
3rd July 2009
IPF/IPD sustainability framework will measure impact on returns
London, 3rd July 2009: IPF and IPD have launched ISPI (UK), a framework for monitoring the impact of sustainability on commercial property investment returns. ISPI (UK) has been developed by IPD and funded by the IPF Research Programme.
ISPI (UK) is constructed from the financial performance records of assets identified at the higher end of the spectrum of sustainability contained within the IPD UK Databank.
A robust methodology for assessing the assets was devised using existing public information which, in part, was rooted in academic research by Kingston University, as well as from debate among the ISPI cross-industry Steering Group and discussions with active fund managers.
The six-strong criteria – which are all objectively quantifiable – comprise: building accessibility; building quality; energy efficiency; waste; water and finally; flood risk. Wherever possible, the framework draws on existing environmental tools such as IPD Eco-Ledger, BREEAM, environment agency data and energy performance certificates to measure these criteria.
ISPI (UK) has already received wide support from the 39 founding portfolio contributors to the index. At ISPI’s launch event at IPF’s offices on June 30th, additional notable fund managers offered to provide further data to the overall Databank, and existing contributors indicated a willingness to provide additional data. Leading valuation company CBRE has indicated that it will begin to include the ISPI framework criterion within their property valuation methodology. Michael Brodtman, executive director at CBRE, said: “Being part of the Steering Group demonstrated to us the serious intent of a number of our clients to understand and measure the relationship between sustainability and investment performance. I hope that we can play a part in helping to establish this connection.”
By ultimately providing the market with new information, ISPI will help the property fund management industry as climate change legislation evolves requiring the adoption of higher sustainability standards. Its development will lead to the availability of bespoke analytics on the environmental performance drivers of property portfolios. Christina Cudworth, Global Head of Sustainability at IPD, said: “Over time, as the property industry begins to price sustainability into valuations, the need for a framework to measure this impact on commercial property will rapidly grow.
“The ISPI databank presently comprises 778 assets from 39 portfolios and 14 fund managers. We are confident that we can at least double this sample size by the end of 2009 and have aggressive ambitions to include all 220 quarterly valued funds of the IPD UK Quarterly Index within the next two years.” Louise Ellison, Research Director at IPF, said: “One of the key tools we are missing as our industry engages with the sustainability agenda is a means of analyzing investment returns against sustainability performance in a standardized, accessible way that is embedded within existing industry performance measurement systems. ISPI is a big step towards providing just that.” -----------------------------------------------------Ends --------------------------------------------------Notes to editors:
About IPD IPD is a global information business, dedicated to the objective measurement of commercial real estate performance. As the world’s number one provider of real estate performance analysis for funds, investors, managers and occupiers, we offer a full range of services including research, reporting, benchmarking, conferences and indices. We operate in over 20 countries including most of Europe, the US, Canada, South Africa, Australia, New Zealand and Japan. Our indices are the basis for the developing commercial property derivatives market, and the most authoritative measures of real estate returns worldwide. For further information visit www.ipd.com
The Investment Property Forum Research Programme 2006-2009 funded and commissioned this piece of research. The programme is funded by a cross-section of 24 businesses, representing key market participants.
About IPF The Investment Property Forum aims to enhance the knowledge, understanding and efficiency of property as an investment class. The initiative provides the UK property investment market with the ability to deliver substantial, objective and high quality analysis on a structured basis. It will enable the whole industry to engage with other financial markets, the wider business community and government on a range of complementary issues. For more information visit www.ipf.org.uk
For further information contact: Christina Cudworth, Global Head of Sustainability at IPD +44 (0)20 7336 9312, christina.cudworth@ipd.com
Louise Ellison, Research Director at IPF +44 (0)20 7194 7925, LEllison@ipf.org.uk
James Wallace, Global Press Officer +44 (0)20 7336 4778, james.wallace@ipd.com