Post on 23-Jan-2016
description
Climate Change CapitalInvesting in Low Carbon PropertyGreen Alpha?
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Climate Change Capital
Climate Change Capital (CCC) is an investment manager and advisor specialising in the opportunities created by the transition towards the low carbon economy. Our activities aim to make the world’s environment cleaner while delivering attractive financial returns.
Headquartered in London with an office in Beijing, CCC focuses on the regions of the EU, North America and Asia.
ADVISORY
M&A Corp./Project
Finance Strategy & policy Carbon
FinancePrivateEquity
RealEstate
EnergyInfrastructure
INVESTMENT MANAGEMENTDevelops, structures and supports a range of funds investing in assets, companies and instruments for the low carbon economy
RESEARCHResearch in-house policy
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Annual global flow of energy - 88% conversion loss
Source: J.M. Alwood and J.M. Cullen, University of Cambridge
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Climate Change Property Fund UK Urban non car dependant city centres – no flood risk
2nd Investment: Edinburgh
3rd Investment: London
1st Investment: Birmingham
4th Investment: Manchester
Location, Economics, Sustainability
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UK carbon emissions – The built environment
Residential28%
Commercial19%
Agricultural1%
Industry20%
Transportation32%
Buildings47%
Source: BRE, GVA Grimley
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Regulatory change
“20-20-20” goals set down by the European Union 20% of consumed energy to be renewable 20% increase in energy efficiency 20% reduction in emissions
Energy Performance of Buildings Directive adopted in 2002 Certification of buildings based on its relative energy performance (EPCs) Required in UK for all large buildings occupied by public authority or relevant
institution by October 2008 (DECs) UK Buildings regulations Zero Carbon by 2019
Climate Change Bill introduced by UK Government in November 2008 Reduction in emissions levels by 26-32% by 2020 and 60% by 2050 5 year carbon budgets UK Carbon Reduction Commitment (CRC) = Carbon cap/trade on Property
portfolios that consumed > 6,000 kw/h per annum in 2008
Trend in Regulation and Legislation Increasingly onerous and weighted toward fiscal penalty rather than incentive
By 2020 (compared to 1990)
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Carbon Reduction Commitment Energy Efficiency Scheme (CRC)
CRC is a ‘cap and trade’ scheme ~ financial incentives/penalties for large occupiers + investors to improve energy efficiency
Organisations with total electricity consumption over 6,000MW hrs/yr (typically £500,000 pa)
A league table of performance will be published each year CRC brings carbon penalties to existing buildings in the UK
Canary Wharf – lights at night Canary Wharf – thermal image
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Economization of Electricity: 55 %- Innovative climatisation concept- New Façade- Intelligent lighting control system- Innovative elavator technique
Economization of Heat Energy: 67 %- Change heating system from gas to district heating- Installation of heat recovering systems- New Facade- Solar plant on the roof
Economization of Water: 43 %- Rain water use- Techniques for water conservation- Use of grey water for toilet flush
Need for ventilation energy: 60%- Change of climatisation concept- Heat/cooling transfer via water system- Natural ventilation
CO2- Emissions: 55%- Installation of energy saving systems- Use of district heating- Use of “green” power
Heat Island Effect: 50 %- Green roofs- Photovoltaik plant on the roof- Solar plant on the roof
Recycling Material: 30%- Reuse raised floor- Recycling window glazing- Recycling Facade
Potenziale in bestehenden Objekten
Green Buildings Referenzen (Auszug)
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The plan is projected to:
Cost $13.2 million (on top of a planned $500 refurbishment) with payback in 3 years - through energy & operational savings
Reduce energy use by up to 38% Achieve annual savings of $4.4 million Reduce carbon emissions by 105,000 metric tons over the next 15 years Be complete within two years Serve as a global model for owners of existing buildings
Empire State Building – Integrated sustainability refurbishment programme
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5 St Philip’s Place, Birmingham, UK
Electricity costs reduced by 45% (60% Gross)
Carbon emissions reduced by 43% (63% Gross)
Green Lease – Landlord and tenant share data (Energy/Water/Waste/Carbon)
Prime offices let to UK Government for 10 years
£750,000 (< 5 year payback) spent on Energy Efficiency Improvements by Landlord + Tenant
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Sustainable asset management – The journey
5 St Philip’s Place Offices: Annual CO2 emissions, DEC Grades and benchmarks from Energy Consumption Guide 19 for a “Type 3” air-conditioned office
Kg/m² Treated Floor Area at Defra 2008 CO2 factors of 0.185 for gas and 0.537 for electricity
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Why “Green” buildings will outperform
If… Investment Implications Underlying Effects on ‘Green’ Assets
Tenants prefer to occupy ‘green’ buildings
Green assets let more quickly Rental growth higher and lower depreciation
Shorter cash flow risk
Green buildings = lower operating costs
More tenant money is available for rent
Rental growth higher and lower depreciation
Government regulation and legislation
‘Greener’ assets de-risked as more attractive to and retain tenants better
Lower risk premium than ‘brown’ buildings
Investors have fiduciary duty to invest in ‘green’ buildings
‘Green’ properties = more liquid ‘Green’ properties are more liquid + should attract a lower risk premium = higher value = “Green Alpha”
Original Source: IIGCC
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Low carbon property investment – the new mainstream
“Prime investment” now encompasses sustainability
Investment downside risk protection + value upside
Low growth, banking crisis > Cash flow fundamentals
Rents + 6-8% ,Capital Values + 16% (Maastricht/Berkeley)
more UK + pan European research in hand
Low carbon property is mispriced
No need to trade return for “Green”
> Green Alpha
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Contact Climate Change Capital
CCC Head Office
Climate Change Capital3 More London RiversideLondonSE1 2AQUnited Kingdom
Tel: +44 (0)20 7939 5000Fax: +44 (0)20 7939 5030
www.climatechangecapital.com
Tim Mockett
Tim Mockett is co-founder of CCPF (Climate Change
Property Fund), the first low carbon property fund
investing in mainstream UK commercial assets. Having
raised c. £70m equity, the fund is now 100% invested in
core assets in London, Edinburgh, Birmingham and
Manchester with a GAV of approximately £150m.
Prior to CCC, Tim was Property Director of Stow
Securities plc where he was responsible for the
implementation of Stow's UK and European investment
strategy. In his seven years at Stow, Tim created an
investment/development portfolio consisting of assets
with a gross value of £200m, including mixed use, office
and retail properties principally within Greater London.
Tim has over 25 years of experience in commercial
property investment and development advising and
representing a range of investors, and has invested in
and traded over £1bn of commercial property during this
period, generating a typical portfolio IRR of over 15% pa.