REAL ESTATE INDUSTRY PERSPECTIVES

Transcription

1 REAL ESTATE INDUSTRY PERSPECTIVES Publshed by ZIA German Property Federaton Gudelne for the Introducton of Sustanablty Measurement n Real Estate Portfolos Technologcal-Envronmental Aspects In cooperaton wth:

2 Status: October 2013 Publshed by: In cooperaton wth: Zentraler Immoblen Ausschuss e.v. Drees & Sommer Wallstr. 16 Advanced Buldng D Berln Technologes GmbH Obere Waldplätze 11 D Stuttgart Responsble under German press law: Dens McGee Project manager: Thes Grothe Author: Dr. Peter Mösle, D.En.Sc.

3 Contents 1 Edtor s Preface Author s Edtoral Introducton Sustanablty Measurement as Part of the ZIA Sustanablty Code Dfference between New and Exstng Buldngs Levels of Sustanablty Management for Exstng Propertes Targets and Tasks n Sustanablty Measurement Sustanablty Indcators for Real Estate Portfolos Introducton Corporate Reportng Certfcaton Systems for Buldngs Ratng Systems / Catalogues Real Estate Valuaton Methods Ratng Methods Legslaton and Standardsaton of Sustanable Constructon Applcaton to Real Estate Portfolos Benchmarkng n Sustanablty Measurement Three Benchmarkng Levels Benchmarkng Prncples Data Collecton and Data Qualty Data Cleansng Reference Values Converson Factors for CO 2 Emssons Database Sources New Processes n Sustanablty Management Portfolo Level Buldng Level, Element and Installaton Level Gudelne for the Introducton of Sustanablty Measurement n Real Estate Portfolos Bblography

4 Preface Edtoral Introducton Sustanablty Indcators 1 Edtor s Preface Dear Madam, Dear Sr, The real estate ndustry s sustanablty clam represents a socetal challenge for every company n that ndustry, and companes should be well aware of t as a task and commtment. Sustanable acton s more than just a sngle-ssue focus on envronmental aspects. Key parameters for lastng corporate success n a modern enlghtened socetal paradgm nclude economc sustanablty (economc aspects) and socetal responsblty (socal aspects). Whle thoroughly aware of ts theoretcal depth and dversty, the ZIA German Property Federaton takes a hands-on approach to the ssue of sustanablty n the real estate economy. Indeed, the ZIA beleves that sustanablty n ts varous dmensons s one of the key ssues n today s real estate economy. The ZIA has therefore set tself the goal of contnuously redevelopng and mprovng the ndustry s sustanablty performance. Among the precondtons for achevng ths goal are transparency and the avalablty of comparable data from the real estate portfolos. Ths macro-socetal task has brought the real estate economy face to face wth an enormous challenge. It has yet to be determned n what ways owners, occupants, and polcymakers can help to acheve the clmate protecton targets n the housng stock context over a certan extended perod of tme, and at what costs. It s certanly not a job that wll be accomplshed short-term or through a one-off feat. The ZIA Commttee for Sustanablty, Energy, and Envronment (abbrevated NEU) has spent the past few years studyng related ssues, such as technologcalenvronmental benchmarkng and reportng, n depth. Aganst the background of the macro-socetal mega-trends lke clmate change or demographc change, t has specfcally covered the three dmensons of sustanablty (economc, envronmental, and socal) nsofar as they enter nto the corporate reportng on opportuntes and rsks but also on needs and expectatons from a corporate pont of vew. Defnng a reportng polcy also marks the frst step towards a benchmarkng among the varous real estate types and real estate portfolos. In order to lve up to the clam of comparablty n regard to the sustanable qualtes of real estate ndustry players, the ZIA n 2013 publshed a frst-ever recommendaton for a unform reportng polcy n the ndustry that takes ts cue from the nternatonally recognsed GRI standard. The new reportng standard s to form the bass for future benchmarkng. The NEU commttee of the ZIA has snce dscussed frst proposals for an ndustry-wde benchmarkng approach to the technologcal-envronmental complex. 2

5 Benchmarkng New Processes Gudelne Bblography Intally usng examples, the commttee demonstrated n what ways concretely developed benchmarks and ther applcaton can lower the costs and enhance the performance of propertes. What needs to be taken nto account n ths context s not just the resource dversty n buldngs but also today s and tomorrow s legal requrements. The bass for any such benchmarkng s an energy data management, meanng the process of aggregatng and revewng consumpton data. Also to be borne n mnd are one-off crtera on the demand sde (target) and the consumpton sde (actual). The evaluaton of benchmarks wll help to dentfy both the optmsaton needs and the optmsaton potental. The potental for optmsaton s subsequently and perodcally realsed by optmsng operatons and lowerng consumpton. From a commercal pont of vew, the nternal nformaton on benchmarks that companes ntend to publsh need to be dscussed. All thngs consdered, the advantages of an envronmental-technologcal benchmarkng are perfectly obvous, because they encourage transparency and competton, permt a much more qualfed montorng and evaluaton of consumpton data, keep owners and occupants better up to date, and reduce costs and resource depleton. Ths Gudelne for the Introducton of an Envronmental-Techncal Sustanablty Measurement n Real Estate Portfolos s the frst publcaton propagatng deas for the development of an envronmental-techncal benchmarkng approach. The gudelne s meant to encourage ndustry players to consder benchmarkng as a specfc sustanablty aspect n order to obtan a unform overvew on the company level. It concretses the recommendatons for acton contaned n the ZIA Sustanablty Gudelne and the ndustry code of conduct t ncludes. The ZIA s aware that the ntroducton of benchmarkng represents a long-term process that needs to put the hgh requrements n context wth what s feasble. However, the gudelne before you s meant as a frst step n ths process. We should lke to seze the opportunty to thank the company of Drees & Sommer and Dr. Peter Mösle, D.En.Sc., for ther dedcated professonal support n complng ths gude. Klaus-Peter Hesse Managng Drector of the ZIA Matthas Bönng Charman of the ZIA Commttee for Sustanablty, Energy, and Envronment 3

6 Preface Edtoral Introducton Sustanablty Indcators 2 Author s Edtoral Ths gudelne dscussng the ntroducton of technologcal-envronmental sustanablty measurements n real estate portfolos was created n conjuncton wth the work of the ZIA Commttee on Sustanablty, Energy, and Envronment (NEU). In the benchmarkng area, t represents a supplementary contrbuton to the ongong development and concretsaton of the ZIA gudelne Sustanablty Code of Conduct, Reports, and Complance that was publshed n the Perspectves seres. It s meant to ad ZIA members partcularly n ther efforts to standardse ther communcaton and to deepen ther understandng of the technologcal-envronmental sustanablty measurements of exstng propertes wthn the ndustry. The sustanable constructon and operaton of buldngs has evolved a new outlook over the past ten years. Ths s explaned, on the one hand, by the shftng parameters n the natural envronment, government polces, the market, and socety as exemplfed by the phenomenon of clmate change, the German energy polcy shft, and the demographc trend n Germany. On the other hand, the ratng and measurng method have been redefned so as to profle the sustanable marketablty of buldngs n more meanngful and more defntve ways. The conventonal property portfolo management has thus metamorphosed nto a sustanablty management that ntegrates addtonal envronmental, economc, and socal ndcators and that s used for strategy development. New buldng codes and procedures tend to be ntroduced ntally for new buldngs because they are much easer to ntegrate nto an ongong development process than to mplemented through retrofttng. The sustanablty performance of Germany s real estate economy wll not be substantally enhanced unless t nvolves exstng real estate portfolos, too, as roughly 75% of the present property stock n Germany was rased before 1979 [1]. At the same tme, the mean annual refurbshment rate s currently about 1%. Ths s far from suffcent to meet the global requrements n a carbon-neutral buldng stock by the year Rasng the sustanablty performance of the legacy buldng stock wll thus be one of the prmary macro-socetal tasks for Germany s real estate ndustry. There s no way to acheve ths n the present market envronment unless the refurbshment of a gven real estate portfolo concdes wth ts apprecaton. Ths n turn presupposes nvestments n sustanable refurbshments as well as new processes and tasks for sustanablty management n order to establsh the planned captal preservaton and optmsaton n the true sense of the word sustanable. Dr. Peter Mösle Drees & Sommer 4

7 Benchmarkng New Processes Gudelne Bblography The Gudelne for the Introducton of a Sustanablty Measurement n Real Estate Portfolos Technologcal-Envronmental Aspects s publshed by ZIA German Property Federaton, and supported by the followng ZIA members: 5

8 Preface Edtoral Introducton Sustanablty Indcators 3 Introducton 3.1 Sustanablty Measurement as Part of the ZIA Sustanablty Code The past decade could arguably be consdered the formatve years for the re-defnton and applcaton of the term sustanablty n German socety n general and n the German real estate ndustry n partcular. The present decade s now seeng the applcaton of the foundaton lad n the prevous one. Ths means the sgnfcance of sustanable management wll soar, and wll nversely mply a corporate commtment f a gven company wshes to keep ts share of the market. In 2011, the ZIA set out the prncples for sustanable management n the real estate ndustry n ts sustanablty code. The code dentfed sustanablty measurement as one of fve subject areas that should be gven a hgher prorty n the ndustry (Fgure 3.1). CSR Corporate Socal Responsblty ndustry code Corporate Governance/ Responsblty ZIA- Code Industry reportng sustanablty montorng Gudelne for the Introducton of Sustanablty Measurement n Real Estate Portfolos Fgure 3.1: The ZIA sustanablty code n the context of ths gudelne. 6

9 Benchmarkng New Processes Gudelne Bblography 3.2 Dfference between New and Exstng Buldngs When ntroducng sustanablty requrements and ratngs for propertes, you need to dfferentate between new and exstng buldngs. Especally sustanablty measurements are subject to prncpally dfferent approaches (see Table 3.2). Whle new buldngs are developed on the bass of plannng fgures, the exstng fgures from operaton are used n exstng buldngs. SUBJECT AREA NEW BUILDING BUILDING STOCK Processes Project development, plannng and constructon Lettng, occupaton and management Ratng Plannng and acceptance Tenant communcaton and lve measurements Requrement Legal standard or over-fulflment Market-standard benchmark or over-fulflment; captal preservaton and growth Table 3.2: Dfferent Approaches for New vs. Exstng Buldngs Evdence suggests that the requrements for the constructon of new buldngs are essentally mandated by the lawmakers. Recent years have also wtnessed the use of voluntary certfcaton systems to mplement hgher requrements, e.g. DGNB, BREEAM, or LEED. As far as the buldng stock goes, however, there are vrtually no benchmarkng targets on hand that could be used to compare and assess buldng performance across varous clmatc zones. The purpose of ths gudelne s specfcally to offer helpful advce n ths context. 7

10 Preface Edtoral Introducton Sustanablty Indcators 3.3 Levels of Sustanablty Management for Exstng Propertes The sustanablty management of exstng propertes dvdes nto three levels: the portfolo level, the buldng level, and fnally the element and nstallaton level. Each level has ts own targets and requrements regardng processes, tools, and benchmarks to be ntegrated. SUSTAINABILITY MANAGEMENT LEVELS ASPECT PORTFOLIO BUILDING ELEMENT / INSTALLATION Sustanablty crtera Key performance ndcators (KPIs) Company reportng Green buldng certfcaton systems (DGNB, BREEAM, LEED) Indvdual evaluaton systems / catalogues Indvdual techncal qualty Objectve Identfcaton of good/poor performers Holstc property evaluaton Analyss and mprovement measures Strategy Superordnated (portfolo, funds) Property-related Benchmarkng Internatonal and/or market-related Market-related and/or property-related Property-related Increase n transparency and knowledge Optmsaton of buldng strategy Fgure 3.3: The 3 levels of sustanablty management As a rule, sustanablty measurement s ntroduced from the portfolo level. It should be noted that the processes ntroduced ought to be flexble enough to permt expandng the exchange of nformaton among the levels any tme. 8

11 Benchmarkng New Processes Gudelne Bblography 3.4 Targets and Tasks n Sustanablty Measurement The purpose of sustanablty measurement s to provde a bass for a value-add redevelopment of exstng propertes that ntegrates envronmental, economc and socal crtera. Ths process wll almost nevtably ental an ncrease n expendtures and possbly n labour costs, too. Accordngly, t nvolves longterm plannng and mplementaton. Its stakeholders also need to agree on the dstrbuton of the costs generated. Durng ths process, new tasks need to be ntroduced on all levels of the portfolo and property management (Fgure 3.4). Gven the strategc sgnfcance of the sustanablty performance, t necessarly requres an ncreased flow of techncal nformaton (e.g. on energy consumpton) from the property level to the portfolo level. Lookng forward, a gven fund and asset management wll lve up to ts responsblty only to the extent that t s able to delver data on an ncreased number of sustanablty ndcators for New Processes and Tasks PORTFOLIO-/BUILDING LEVEL contrbuton to corporate reportng objectves of sustanablty performance ntaton of sustanablty ananlyses development of sustanable mantenance strategy qualty assurance of sustanablty montorng Management Owner, Fundmanager Real Estate Asset Manager Sustanablty management requres an ncrease of nformaton from the buldng management to the strategy level Property Management Faclty Management BUILDING AND ELEMENT INSTALLATION LEVEL documentaton and montorng of actual condton mplementaton of measures costs condtons servces aera prces consumpton Data Fgure 3.4: New processes and tasks for sustanablty measurement 9

12 Preface Edtoral Introducton Sustanablty Indcators ts real estate portfolo. Other tasks for whch the fund and asset management wll be responsble nclude data mantenance and a successful mantenance strategy for the propertes along the lnes of a sustanable captal preservaton. Ths nvolves consderable techncal and admnstratve costs, and a transton process over several years. The dea s to enhance transparency for the purpose of hghlghtng possble apprecaton potental and thus to mplement economc measures for envronmental ends. 10

13 Benchmarkng New Processes Gudelne Bblography 4 Sustanablty Indcators for Real Estate Portfolos 4.1 Introducton Over the past ten years, a varety of actvtes were nstrumental n developng sustanablty ndcators for the real estate ndustry (Fgure 4.1). Dependng on who defned them and what the underlyng knowledge bass s, these ndcators are algned wth a certan purpose. In reportng and property valuaton context, for nstance, the specfc, current, and verfable performance fgures of propertes take centre stage n methodologcal terms. The certfcaton systems and standardsaton documents use a much greater number of ndcators to defne sustanablty performance. They even seek to nclude potental future effects. The ndcators normally used for new buldngs, however, cannot always be appled to every vntage property. To permt an end-to-end data coverage for exstng buldngs, t usually takes qute a bt of tme to create a vable approach for the systematc aggregaton of ndcators. You may even have to brng n the tenant to get all the data you need. Moreover, t may be vrtually mpossble to pnpont and publsh certan long-term ndcators, such as lfe cycle costs. Legslaton and standardsaton Certfcaton systems for buldngs Valuaton of real estate KPI Reportng systems Energy consumpton percentage of renewable energy CO 2 -emssons Water consumpton Waste consumpton Lfe-cycle-costs Comfort Ratng Indvdual evaluaton systems / catalogue * optonal Fgure 4.1: Sustanablty ndcators from dfferent sources 11

14 Preface Edtoral Introducton Sustanablty Indcators Corporate Reportng More and more often, companes actve n the real estate ndustry touch upon the sustanablty performance of ther real estate n ther annual accounts. The GRI standard [2] has to a large extent become the establshed bass for dong so. The real estate sector can actually take advantage of specal ndcators coverng the envronmental aspect. They may nclude, e.g., resource consumpton data (energy, water, waste) derved from the buldng operaton Certfcaton Systems for Buldngs Under the aegs of the umbrella organsaton World Green Buldng Councl (WBGC), natonal organsatons have establshed themselves that seek to further the cause of sustanable buldng. The nstruments used toward ths end are the certfcaton systems, be they domestc or nternatonal ones. These certfcaton systems may be appled n addton to the GRI standard n order to dentfy relevant ndcators, but are n no way mandatory. Whle system varants of the certfcaton systems were ntally lmted to new buldngs, recent varants refer expressly to exstng buldngs, too. The followng green labels are consdered qualfed for use n portfolos because of ther nternatonal acceptance: DGNB: BBV2013 [3] BREEAM In Use, Verson 2012 [4] LEED EB, Verson 3.0 [5] All three of these system come wth an exhaustve catalogue of crtera for ratng and certfyng exstng buldngs. In addton to the buldngs performance, all systems are rated n regard to operatng processes Ratng Systems / Catalogues Unlke the certfcaton systems, the ratng systems / catalogues offer no recognsed certfcates lke those ssued by an accredted certfcaton body. What the two systems have n common, however, s that both nclude comprehensve crtera that nclude ndcators for assessng the sustanablty of buldngs. Then agan, they dffer greatly n ther applcablty, and are almost mpossble to compare. 12

15 Benchmarkng New Processes Gudelne Bblography The followng valuaton systems / catalogues have become establshed on the market (a selecton): Non-proft: Green Ratng Allance (GRA): The Green Ratng Allance uses sx ndcators to apprase the sustanablty of exstng buldngs. The applcaton focus s on the deployment for European real estate portfolos [6]. Sustanable Buldng Allance (SBA): The SB Allance s an nternatonal probono organsaton (NGO) whose stated msson s to acheve a standardsaton of core ndcators and ther assessment of sustanable buldngs [7]. Unted Natons Envronment Programme (UNEP) Sustanable Buldngs & Constructon Intatve / Fnance Intatve: In ts 2009 revew report, UNEP merged the ndcators prevously used by market players for the assessment of sustanable buldngs, and dstlled them nto a set of core ndcators [8]. Better Buldngs Partnershp: Ths ntatve seeks to boost the sustanablty of the Cty of London, and developed a sustanablty benchmarkng concept for commercal buldngs [9] In-house assessment systems: Usng the bass of extant certfcaton systems for new buldngs, varous companes created ther own lst of crtera for the assessment of ther buldng stock. These checklsts are frequently used for the assessment and algnment of a gven portfolo, and for pre-acquston audts. 13

16 Preface Edtoral Introducton Sustanablty Indcators Real Estate Valuaton Methods There are some market- and feld-tested assessment methods that are detaled n the relevant standards, and are rooted dependng on the reason for a gven assessment n offcal drectves and gudelnes. These procedures mplctly nclude the concept of sustanablty. It becomes obvous, e.g. when comparng the assessment crtera of the DGNB wth the correspondng parameters of the valuaton models. As t s, the assessment s taken nto account when addressng the ssue of alternatve use optons. One of the central valuaton metrcs s the rent rate, for whch an assumed value s used n the valuaton model. Accordngly, the ramfcatons for the rental growth play a decsve role. Varous organsatons moreover developed detaled proposals on how to ntegrate sustanablty ndcators nto the valuaton. The dea to ntroduce a checklst whose submsson would be rewarded wth a lump-sum premum whereas the falure to fll n the checklst would result n a dscount was rejected, though. The ZIA therefore supports the proposed wordng for the sustanablty aspects of the RICS because ts text brefly and accurately hghlghts the key aspects n the survey wthout ntegratng t drectly nto the assessment model. It s also mportant to make sure that economc sustanablty data are not neglected n favour of envronmental aspects. Ths becomes apparent, n addton to the wordng proposed by RICS, n relevant standards: Informaton Paper Sustanablty and Valuaton, n the European Valuaton Standards (EVS 2012) ssued by TEGoVA [13] The feld report by the ZIA workshop on Sustanablty and Property Valuaton, especally Chapter 4, whch dscusses possble ways to ntegrate the sustanablty crtera of the DGNB standard nto the valuaton model. Economc Sustanablty Indcator (ESI): The Center for Corporate Responsblty and Sustanablty (CCRS) at the Unversty of Zurch developed the so-called ESI ndcators, whose purpose s essentally to gauge the rsk of a gven property to be mpared by future developments. t s embedded n a complex property valuaton procedure (see Secton 3.2.4) [12]. Survey by HypZert e.v.: a survey on the sustanablty of real estate and ts ntegraton n valuatons [14]. 14

17 Benchmarkng New Processes Gudelne Bblography Ratng Methods In ts Statement of Prncples Regardng the Actvtes of Credt Ratng Agences, the Internatonal Organzaton of Securtes Commssons (IOSCO) artculated requrements for ndependent ratng agences. In addton to analysng the credt worthness of companes and the default probablty of bonds, such ratng are also undertaken for real estate portfolos and the assets they hold. The crtera of today s ratng agences ncreasngly nclude ndcators that take a sustanable development of the portfolo assets nto account or reflect on sustanablty aspects [15 16]. Example: IOSCO-Statement of Prncples Regardng the Actvtes of Credt Ratng Agences (CRA): 3. CRAs should make dsclosure and transparency an objectve n ther ratngs actvtes. 3.3 CRAs should publsh suffcent nformaton about ther procedures and methodologes so that outsde partes can understand how a ratng was arrved at by the CRA. [ ] Legslaton and Standardsaton of Sustanable Constructon German lawmakers ntroduced the energy performance certfcate procedure for newly constructed buldngs and refurbshments wth the mplementaton of EU Gudelne 2002 / 91 / EC. Exstng publc buldngs (of more than 1,000 sqm and regular publc busness) also requre an energy performance certfcate. The tenant or buyer of a property also has the rght to demand an energy performance certfcate from the landlord or seller. The European and nternatonal standardsaton of sustanable constructon works dd not establsh tself untl roughly ten years ago. The standard documentaton for the sustanablty assessment of buldngs s essentally EN and ISO However, these works, whle lstng the crtera and ndcators, fal to defne any benchmarks for ther applcaton. 15

18 Preface Edtoral Introducton Sustanablty Indcators 4.2 Applcaton to Real Estate Portfolos For the applcaton to real estate portfolos, t recommends tself to apply those ndcators that cover all of the varous actvtes, and use these as basc, targeted key performance ndcators (see Table 4.2). Ths ensures that the ndcators meet wth market acceptance and are avalable for long-term use. The ndustry must n any case gve tself whatever tme t takes to mplement the KPIs. When ntroducng the ndcators on the portfolo level, t should moreover be ensured that the chosen data collecton and data stagng approach remans as effcent and pragmatc as assumed even f several hundreds of buldngs are to be assessed. Dependng on the type of exstng buldng, t may take a transtonal phase of several years to fnd adequate solutons. INDICATOR UNIT NOTE Fnal energy consumpton kwh/m 2 p.a. broken down by heat and electrcty, as well as by prmary fuels Renewable energy share % per kwh broken down by heat and electrcty n relaton to the total energy consumpton CO 2 emssons kwh/m 2 p.a. Water consumpton m 3 /m 2 p.a. broken down by drnkng water, ranwater harvestng, grey water recyclng Waste producton* kg/m 2 p.a. broken down nto resdual waste, paper, bodegradable waste, recyclables / plastc waste Lfe cycle costs* euro/m 2 p.a. separated n complance wth the DIN standard Amenty* Categores I-IV pursuant to EN Measured or projected square metre of condtoned net nternal area * optonal Table 4.2: Basc sustanablty ndcators (KPIs) In the long run, the measurements determnng the basc KPI should all be drectly or ndrectly obtaned from the buldng operaton, and should refer to the buldng as a whole, ncludng lettable areas. Ths would ntally necesstate an extensve ntegraton and converson process, because t would also nvolve rasng the awareness for the ssues of envronmental-techncal benchmarkng among the tenants or occupers of some of the real estate stock. Ths s not made any easer by the absence of legal provsons oblgng tenants to dsclose ther consumpton and user data. Even under exstng leases, tenants are not generally oblged to submt ther consumpton data to landlords or owners. 16

19 Benchmarkng New Processes Gudelne Bblography Lookng forward, ths aspect wll confront the ndustry wth the major challenge to fnd techncal, admnstratve and cost-effectve solutons. A separate assessment of structural buldng performance and use performance s mpossble due to the many overlappng areas between agreements (e.g. annual energy statements), responsbltes (e.g. whle the prncpal s responsble for choosng the lghtng type and control les at the tme of the buldng s constructon, the owner, operator and tenants are responsble for ther operatve management), and physcal effects (e.g. lower power consumpton by the tenant wll result n a hgher heat energy consumpton and a lower coolng energy consumpton by the buldng) on the bass of measurement readouts. The purpose of sustanablty measurement s therefore to assess the techncal-envronmental buldng performance, and to ensure ts permanent optmsaton through approprate processes (e.g. green leases, montorng). Redevelopng the Portfolo Assessment After the ntroducton and use of the basc KPIs on the portfolo level, users wll wsh to take advantage of addtonal crtera and ndcators on the property, element / nstallaton level n order to fne-tune ther strateges. One opton for the expanded assessment would be to apply a bespoke set of crtera and ndcators, customsed to the core busness of the user, n addton to the KPIs used. Such a set could take the form of an n-house company standard or of a certfcaton system for buldngs. KPI KPI + Separate evaluaton e. g. as certfcaton or company-related standard (propretary score) today future Buldng level further ndcators Portfolo level fundamental KPIs Fgure 4.2: Redevelopng the Portfolo Assessment 17

20 Preface Edtoral Introducton Nachhaltgketsndkatoren 5 Benchmarkng n Sustanablty Measurement 5.1 Three Benchmarkng Levels The term benchmarkng refers to the comparatve analyss of results or processes usng a fxed reference value or reference process, as the case may be [17]. Of the essence s whch standards are appled to the comparson, and how a gven standard s composed. The sustanablty benchmarkng dvdes nto three levels: the portfolo level, the buldng level, and fnally the element and nstallaton level (see Fgure 5.1). The portfolo level represents the macro level used to dentfy propertes wth low sustanablty performance. On the buldng level, property-related approxmate analyses are used to determne the potental for mprovement. Ths process maps the envronmental measures whle ntegratng calculatons of proftablty. On the element and nstallaton level, detaled analyses of addtonal optmsaton potental are conducted along wth a detaled montorng of techncal metrcs and utlsaton rates. SUSTAINABILITY MANAGEMENT LEVELS ASPECT PORTFOLIO BUILDING ELEMENT / INSTALLATION Type of value Mean values, market values Property-related metrcs, sub-area metrcs Techncal metrcs, utlsaton rates Benchmarkng method Comparng market values (to the extent that the requred adjustment functons have been taken nto account) Approxmate analyss custom benchmark va sub-area metrcs Detaled analyss use-adjusted smulaton Instruments for data aggregaton and benchmarkng Portfolo management software Energy montorng software, buldng smulaton Captal preservaton and growth approach Top-down approach to dentfy potental Bottom-up approach for developng mprovement measures. Fgure 5.1: The 3 levels of sustanablty benchmarkng All three level need to be covered f the sustanablty management s supposed to serve ts purpose. At the same tme, t may be customsed as needed. The process usually starts on the portfolo level. 18

21 Benchmarkng New Processes Gudelne Bblography 5.2 Benchmarkng Prncples Pursuant to EN 15643/1 (sustanablty of constructon works), an assessment comparng buldngs s meanngful only f the respectve type of use, clmatc condtons, and market are dentcal, among other crtera. Strctly speakng, ths would make a comparson among exstng propertes mpossble. In order to permt the ntroducton of buldng benchmarkng nonetheless, the measured data and constrants should be adjusted to represent measurements as standardsed as possble (Fgure 5.2). The followng parameters for a drlldown by buldng category and measurement adjustment should be remembered: Classfcaton by category: Type of use Market segment / locaton Optonal: Buldng sze Adjustment of the measurement data ( normalsaton ) Clmate Vacancy rate Operatng and useful lfe Populaton and ft-out Specal consumers Clean-up functon Benchmark Actual consumpton fgures per category Adjusted consumpton fgures per category Benchmark per category Fgure 5.2: The prncple of Benchmark defntons 19

22 Preface Edtoral Introducton Sustanablty Indcators 5.3 Data Collecton and Data Qualty KPIs for the portfolo level nclude exclusvely measurement data that may be perodcally aggregated on the property level. Present asset management processes, however, fal to ensure that all of the requred precondtons for the data aggregaton are actually n place. It s therefore rather obvous that any data aggregaton as profled n Table 5.3 wll be far from complete at the tme a sustanablty measurement s ntroduced. In the ntal stage of the sustanablty measurement stage, the data may by all means be flled-n usng typcal partal benchmarks, though even these should be posted n transparent ways. 20

23 Benchmarkng New Processes Gudelne Bblography DATA AGGREGATION REQUIREMENT UNIT Basc parameters Capturng cycle At least once a year, preferably once a month [a] [month] Acquston perod* 3 years to usablty as nternal standard [a] Data qualty Drect measurement data aggregaton, or, f mpossble, dervaton from other sources (e.g. energy consumpton data from cost accountng) that should be dentfed n the documentaton Vacancy rate Monthly or n the annual mean, by lettable area [%] Operatng and useful lfe Monthly or n the annual mean, by lettable area Mean value: Daytme hours per day and week Populaton densty and roster of occupants Monthly or n the annual mean, by occuped area Mean value: per day and week Indcators Heat energy consumpton Power consumpton Water consumpton Waste producton Lfe cycle costs, thereof overhead* broken down by prmary fuel separate aggregaton of waste heat utlsaton or renewable heat utlsaton (e.g. solar energy) broken down by prmary fuel broken down by landlord / tenant responsblty separate aggregaton of nternal power generaton utlsaton or renewable power generaton (e.g. photovoltacs) separate aggregaton of specal uses (e.g. data centre) broken down by landlord / tenant responsblty separate aggregaton of grey water recyclng broken down by landlord / tenant responsblty dvded by types broken down at least nto the followng subcategores: Supplyng Dsposng Cleanng and mantenance Operatng, revewng, servcng Renstatement broken down by landlord / tenant responsblty [kwh] [kwh] [m 3 ] [kg] [%] [Euro] Tabelle 5.3: Data Aggregaton for the Portfolo-Level * optonal 21

24 Preface Edtoral Introducton Sustanablty Indcators 5.4 Data Cleansng The data cleansng of the measured actual consumpton data represents the sne-qua-non condton of benchmarkng. No standardsed adjustment functons are yet n place n Germany s real estate ndustry. The DGNB German Socety for Sustanable Constructon s currently developng a protocol as part of ts actvtes n the World Green Buldng Councl (WGBC), and wll seek ts general acceptance. There s no tellng, though, when the protocol may be released. Untl t has been ratfed, and s generally endorsed, the adjustment functons from the DGNB certfcaton system for the BBV13 stock may be used [3]. 5.5 Reference Values The measured and adjusted consumpton data need to refer to a sutable value n order to qualfy as benchmark. Here, the followng reference values tend to be avalable: Floor area of the buldng Number of buldng occupants Snce the number of occupants s too volatle n the case of many use types, the floor area tends to be chosen as reference. For the sake of comparablty, t s mportant to choose the so-called energy reference area. The energy reference area represents the heated / chlled net nternal area (NIA) mnus the floor area taken up by the underground car park and separate use areas. 5.6 Converson Factors for CO 2 Emssons Varous database values are avalable to determne the carbon emssons. The energy consumpton for each prmary fuel type s multpled wth a converson factor, whch n turn s used to calculate the CO 2 emssons. Ths means that the CO 2 emssons are not drectly measured. CO 2 converson factors therefore vary dependng on the prmary fuel reference. They can depend on the buldng-specfc energy concept, and on the regonal or natonal energy supply. Moreover, the values change n sync wth any development affectng the energy supply. 22

25 Benchmarkng New Processes Gudelne Bblography To qualfy the use of carbon emssons per area as benchmark, t would make sense to have unform datasets for cross-border portfolos. The Greenhouse Gas Protocol (GHG) s nternatonally appled to ths end [18]. 5.7 Database Sources A number of database owners have establshed themselves on the market that collect and process buldng-relevant data from sustanablty measurement, ncludng wthout beng lmted to: Green Ratng Allance [19] Investment Property Database (IPD) [20] Internatonal Sustanable Allance (ISA) 21] Global Real Estate Sustanablty Benchmark (GRESB) [22] Greenprnt Foundaton (GPF) [23] These databases are not open to the general publc. Snce moreover the adjustment functons for processng the actual fgures are not (yet) standardsed, the database stats tend to be unqualfed for sustanablty measurement benchmarkng. Accordngly, the ZIA consders the nternatonal standardsaton of adjustment functons for the purpose of processng stats a defntve long-term objectve. Once the protocol for the adjustment of actual data has been approved by the WGBC, the functons needed as bass for real estate economy benchmarkng wll be avalable. That sad, the functons need to be subsequently ntegrated nto the databases by the database owners n order to enhance the comparablty of the data. 23

26 Preface Edtoral Introducton Sustanablty Indcators 6 New Processes n Sustanablty Management 6.1 Portfolo Level The ntroducton of a sustanablty management ncludng KPI measurements and, lookng ahead, the measurement of addtonal ndcators, wll enhance the transparency on the portfolo level. Ths addtonal nformaton wll be used for the strategc algnment of the respectve portfolo. The requred processes are lsted n Table 6.1. Responsbltes and Tasks Reportng Processes Documentaton Requrements Process owned by management board / senor management Industry reportng A company reports ts sustanablty performance to ts stakeholders The asset management reports to the management board / senor management Sustanablty management wthn the company created by the management board / senor management Analysng the sustanablty management on the portfolo level by the senor management / asset management Dscusson of the sustanablty performance by the asset management wthn the framework of the mantenance plannng Conductng approxmate analyses on the property level* Tranng the staff Capturng the KPIs at least once a year Provdng detals on the data qualty Tracng measures, and conductng actual / budget comparsons* Permttng adjustments to actual fgures* In-house and external benchmarkng Complance wth ISO 9001, ISO 14001, ISO 50001* audt-proof compared externally audted corporate reportng (e.g. GRI A+, B+, C+)* * followng the start of the sustanablty measurement n subsequent years Table 6.1: Sustanablty management processes portfolo level 24

27 Benchmarkng New Processes Gudelne Bblography 6.2 Buldng Level, Element Level, Installaton Level Acton on the buldng level wth ts structural elements and techncal equpment ncludes the mplementaton of the measures, on the one hand, and the set-up of the montorng, on the other hand. Table 6.2 lsts the key processes. Responsbltes and Tasks Reportng Processes and Tasks Documentaton Requrements Mastermnded by the property management Supported by the faclty management PM/FM report to the asset management Settng up and ntatng the montorng (energy consumpton, tenant contentment, etc.) Supportng green lease agreements Implementng structural and process-related mprovement measures Tranng the staff See portfolo level requrements Introducng an energy and envronmental management system Settng up a montorng system for the element and nstallaton level Table 6.2: Sustanablty management processes buldng, element, and nstallaton level 25

28 Preface Edtoral Introducton Sustanablty Indcators 7 Gudelne for the Introducton of Sustanablty Measurement n Real Estate Portfolos In order to facltate the ntroducton to sustanablty measurement and ts ntegraton nto exstng processes, the ssues dscussed n the foregong chapters are summarsed once more n the fgure below. It lsts sx steps that should be repeated from tme to tme n analogy to a contnuous mprovement process. Dependng on ts status quo, a company should freely pck the scope t wshes to start wth, and set the correspondng roadmap for the full-scale mplementaton. The process flow below permts an expanson n lne wth known parameters or n antcpaton of future crtera at any tme. 0 Integrate sustanablty management Check evaluaton of expanson Select range 1 Identfcaton of actual status Object-related montorng and reportng 5 2 Determne process objectves Portfolo objectves: Implement property value retenton and apprecaton 4 3 Object-related rough and detaled analyss Fgure 7: Contnuous mprovement process durng the sustanablty measurement 26

29 Benchmarkng New Processes Gudelne Bblography The tasks n sustanablty management should deally be coordnated wth exstng processes such as: corporate reportng green lease agreements green buldng certfcaton processes mantenance plannng and mantenance strategy development acquston and sales due dlgences etc PROCESS STEP Step 0 Settng up the sustanablty management, defnng the scope Step 1 Identfyng the status quo Step 2 Defnng the process goals Step 3 Conductng property-level analyses Step 4 Portfolo targets Implementng captal preservaton and growth Step 5 Montorng and reportng SENIOR / ASSET MANAGEMENT ACTIVITY Defnng the sphere of ownershp for the sustanablty management Selectng the KPIs Settng up the top-ter processes (mlestones, software support, et al.) Startng wth the 2nd cycle: Revewng the KPIs for sutablty and the need to expand Complng a portfolo overvew Analysng whch other nfrastructure measures could be requred to obtan data Conductng drlldowns to the property level, where requred Gettng started: Defnng the process goals (e.g. rasng to data aggregaton to > 80 % of the propertes) Startng wth the 2nd cycle: Concretsng process goals (e.g. expanson of scope and drlldown depth) Conductng outlne analyses and detaled analyses to mprove the sustanablty of sub-performng propertes Defnng and prortsng measures Implementng the measures (detaled plannng, renstatement, constructon, change of operaton, etc.) Settng up a property-level montorng system Conductng an actual / budget comparson (nvestment, savngs, value-add) Forwardng the fndngs to portfolo reportng and the corporate reportng Table 7: Tasks n the contnuous upgrade process under the sustanablty management 27

30 Preface Edtoral Introducton Sustanablty Indcators 8 Bblography [1] Das Energekonzept der Bundesregerung (September 2011) [2] Global Reportng Intatve (GRI) (as at Aprl 2013) [3] DGNB (as at Aprl 2013) [4] BRE Envronmental Assessment Method (BREEAM) (as at Aprl 2013) [5] LEED (Leadershp n Energy and Envronmental Desgn) (as at Aprl 2013) [6] Green Ratng Allance (as at Aprl 2013) [7] Sustanable Buldng Allance (SBA) (as at Aprl 2013) [8] Unted Natons Envronment Programme (UNEP) (as at Aprl 2013) [9] BetterBuldngs Partnershp (as at Aprl 2013) [10] Unon Investment Real Estate (as at Aprl 2013) [11] CA lmmo nachhaltgket/cast_das_ca_mmo_tool_zur_bestandsbewertung/#c51 (as at Aprl 2013) [12] Economc Sustanablty Indcator (ESI) es.html (as at Aprl 2013) 28

31 Benchmarkng New Processes Gudelne Bblography [13] Royal Insttuton of Chartered Surveyors (RICS) (as at Aprl 2013) [14] HypZert e. V. (as at Aprl 2013) [15] Scope (as at Aprl 2013) [16] Atmosgrad. (as at Aprl 2013) [17] [18] Greenhouse Gas Protocol (as at Aprl 2013) [19] Green Ratng Allance (as at Aprl 2013) [20] Investment Property Database (IPD) (as at Aprl 2013) [21] Internatonal Sustanable Allance (ISA) (as at Aprl 2013) [22] Global Real Estate Sustanablty Benchmark (GRESB) (as at Aprl 2013) [23] Greenprnt Foundaton (GPF) (as at Aprl 2013) 29

32 Status: October 2013 Layout: The ZIA Sustanablty Concept The ZIA German Property Federaton rates the sustanablty ssue n ts varous dmensons as a key concern for the real estate ndustry. Whle thoroughly aware of ts theoretcal depth and dversty, the ZIA German Property Federaton takes a hands-on approach to the ssue of sustanablty n the real estate economy. The ZIA has therefore set tself the goal of contnuously redevelopng and expandng ts sustanablty polcy. As t takes all aspects of sustanablty nto account, meanng the economc, envronmental and socal aspects, the ZIA pursues a holstc sustanablty approach. The real estate ndustry s sustanablty clam represents a socetal challenge for each company n that ndustry, and companes should be well aware of t as a task and commtment. Sustanable acton s more than just a sngle-ssue focus on envronmental aspects. Key parameters for lastng corporate success n a modern enlghtened socetal paradgm nclude economc sustanablty (economc aspects) and socetal responsblty (socal aspects). Ths macro-socetal task has brought the real estate economy face to face wth an enormous challenge. It has yet to be determned n what ways owners, occupers, and polcymakers can help to acheve the clmate protecton targets n the context of exstng buldng stock and n buldng constructon over a certan long-term tmelne, and at what costs. About the Publsher The ZIA German Property Federaton counts among the leadng nterest groups of the German real estate ndustry. It represents 175 drect members, ncludng a number of renowned companes of the real estate and fnancal sector, along wth 21 ndustry assocatons wth a combned total of 37,000 members. The ZIA has set tself the task of provdng a comprehensve and unform representaton of nterests for the real estate economy that reflects ts sgnfcance for Germany s natonal economy. As umbrella organsaton representng both corporates and other ndustry assocatons, t lends ts voce to the entre German real estate ndustry both on the natonal and on the European level and n the BDI Federal Assocaton of the German Industry. Presdent of the ndustry assocaton s Dr. Andreas Mattner. About the Partner Drees & Sommer has advsed prncpals and nvestors n all real estate ssues for more than 40 years. The company s servce portfolo ncludes development consultancy, engneerng, real estate consultancy, nfrastructure consultancy, and strategc process consultancy. The company provdes all of ts servces subject to the prncple that envronmental, archtectural, and well-beng aspects are taken nto account as much as aspects of economy, functonalty and process qualty. Drees & Sommer calls ths holstc and sustanable approach the blue way. More than 1,500 staff work at 17 locatons n Germany and 18 nternatonal locatons to ensure ther clents success, generatng a total turnover of mllon euros n ZIA Zentraler Immoblen Ausschuss e.v. Wallstraße 16 D Berln Tel.: Fax: nfo@za-deutschland.de