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 in March 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.”
Source: The Carbon Trust
.jpg "Ambitious low carbon commercial property")
