Scandinavian Property Fund Environmental and energy audit 2017

Transcription

1 Scandinavian Property Fund Environmental and energy audit 2017

2 Table of contents 1. DNB Scandinavian Property Fund 2. Environmental management system 3. Energy consumption; Targets and development 4. Waste handling; targets and development 5. CO2 emissions; Control and measures 6. BREEAM in USE; Program for implementation 7. Labeling scheme 8. Green leases; Offer to new and existing tenants 9. ISO program 10. Global Real Estate Sustainability Benchmarks GRESB 11. History & summary 12. Basis for the audit 2

3 1. DNB Scandinavian Property Fund 2017

4 DNB Scandinavian Property Fund DNB Scandinavian Property Fund (DNB SPF) was established in 2007 by DNB to give institutional investors the opportunity to invest in a well-diversified and unlevered property portfolio together with DNB Life. The fund is managed by DNB REIM which holds an AIFM license. The fund owns commercial properties in Norway and Sweden, and it's Net Asset Value (NAV) as at December 31, 2017 was NOK 8.2 bn. The fund's objective is to build a broad and diversified property portfolio of NOK 12.5 bn. 4

5 Fund structure and termination FUND STRUCTURE AND TERMINATION The master Fund is a Norwegian limited partnership. International investors are invited to invest through a Luxembourg FCP. The Fund is open-ended. MAIN INVESTORS DNB Life 35.5 % Norwegian Pension Funds and institutional 44.3 % International Investors 19.5 % Retail 0.7 % DNB Life Insurance co-invests in the fund and will own a minimum of 16 per cent in the fund, when it is fully invested. 5

6 Investment strategy The Fund will invest in office, retail/shopping centers and other/hotel in Norway and Sweden. When fully invested the portfolio shall in line with the following structure: Office per cent Retail up 40 per cent Other/Hotel up to 25 per cent Geographically minimum 60 per cent will be invested in Norway and a maximum 40 per cent in Sweden. 6

7 Risk The risk profile of the Fund should be moderate, and classified as a "core" fund according to INREV. Investing in real estate involves risks that the investor may incur losses. The risk of loss or lower return than expected will depend on a number of conditions. Investors are therefore asked to review the risk factors described in the Subscription and assess the investment from their own risk profile and financial situation. Not suitable for short term investments. 7

8 Outlook SUSTAINABILITY DNB SPF and DNB REIM have strengthened the focus on the environment, and the fund has a strong 'Green star' categorization of GRESB. As manager DNB REIM is ISO certified. It is a target to achieve at least a very good certification according to BREEAM of the fund s properties. 8

9 Performance PORTFOLIO AND RETURN DNB SPF aims to achieve an annual return of 7-9 per cent over time, with an annual dividend of 3-5 per cent. The last 5 years annualized return on invested capital has been 7.9 per cent. The property portfolio of NOK 7.5 bn has a remaining weighted maturity of 7.4 years. Economic vacancy is 4.4 per cent. 9

10 2. Environmental management system 2017

11 Environmental management system DNB considers climate change to be one of the greatest challenges of our time and a source of both risk and opportunity. The DNB Group will seek to reduce its direct greenhouse gas emissions through regular measurement and monitoring. DNB also monitors clients, companies the group invests in and suppliers to the Group to ensure that they do not violate DNB's environmental requirements. The DNB Group has established and implementation an environmental management system based on the international standard ISO 14001:2015. The management system involves both direct and indirect environmental aspects. The environmental management system will to a greater extent manage Groups work with continuous improvement, to minimize its impact on the environment to a minimum. DNB received its first ISO certificate for parts of the Norwegian operations in May This includes all the Norwegian assets in the Scandinavian Property Fund.

12 Support to global and Norwegian initiatives In addition to complying with Norwegian standards, DNB has chosen to support and participate in a number of global initiatives and complies with international guidelines in the field of corporate social responsibility. This provides a basis for learning and knowledge sharing and for exerting influence. United Nations Global Compact is a UN-endorsed international corporate network based on ten principles in the areas of human rights, labour, environment and anti-corruption.

13 Targets and measures DNB is committed to integrating corporate social responsibility into its operations. Here are the targets we have set ourselves and the measures which will help us reach these targets. The various targets and measures are divided into three different categories: Governance, society and climate and the environment. 1. Trust and role in society 2. Society 3. Climate and environment Support to global and Norwegian initiatives In addition to complying with Norwegian standards, DNB has chosen to support and participate in a number of global initiatives and complies with international guidelines in the field of corporate social responsibility. This provides a basis for learning and knowledge sharing and for exerting influence. This review consider Climate and environment according to pre-defined indicators

14 Climate and environment indicators Energy consumption; Targets and development 2. Waste handling; Targets and development 3. CO2 emissions; Control and measures 4. Pollution; Control and protection 5. BREEAM in USE; Program for implementation 6. BREEAM NOR; Program for certification 7. Energy consumption labeling scheme; Follow up and improvement 8. Green leases; Offer to new and existing tenants 9. ISO program

15 DNB SPF Assets Sweden Bicycle Uppsala Kungsbacka Gøteborg Norway Akerselva Atrium Bjørvika Bygg B, østbygget (acquired July 2015) Bjørvika Bygg C, vestbygget Kronprinsensgate 9 Lillestrøm Torv (acquired January 2017) Myrdalsveien 22* (sold July 2018) Petroleumsveien 6 Quality Hotel Expo, Fornebu (acquired September 2015) Sandslihaugen 30* (development project, empty since 2016 ) Sirkeltomten II, Portalen Smarthotel, Oslo (acquired July 2016) Øyrane Torg (acquired September 2017) *not included in like-for-like Bjørvika Building B

16 3. Energy consumption; Targets and development 2017

17 Energy consumption -Targets and development Energy target for all assets is a decrease of 5 % in annual consumption (corrected for degree days)

18 All assets - Energy consumption Energy mix is not corrected for degree days. Fossil fuel has not been used for heating assets since All the electricity purchased by DNB is hydro plant produced and guaranteed low carbon foot-print (Norwegian Assets).

19 All assets - Energy consumption and cost The change in energy consumption for all assets (like-for-like) is: +2 % (+0.7 GWh) in 2017 from base year 2014* -3 % (-1.1 GWh) reduction in energy consumption from 2016 to 2017 The accumulated increase in energy cost during the period is a total of NOK** The annual energy target is set to 5 % reduction in energy consumption 19 *Building composition has changed relative to the report of The development project Sandslihaugen 30 is not included in like-for-like in the report of Lillestrøm Torv, acquired in January 2017 is new to the report of **Energy price is set at 0.80 NOK/kWh for Norwegian assets and 0.80 SEK/kWh for Swedish assets through the period Swedish assets energy price is converted from SEK to NOK Source of exchange rate from SEK to NOK is:

20 All assets Trailing 12 months consumption Each plot in the diagram is the sum of 12 months energy consumption corrected for degree days. Each plot is equivalent to an annual consumption and indicates the trend in consumption change. 20

21 Norwegian assets - Energy consumption and cost The change in energy consumption for Norwegian assets (like-for-like) is: +1 % (+0.3 GWh) in 2017 from base year ,6 % (-0.5 GWh) reduction in energy consumption from 2016 to 2017 The accumulated savings in energy costs during the period is a total of NOK* The annual energy target is set to 5 % reduction in energy consumption 21 *Energy price: 0,80 NOK/kWh

22 Norwegian assets Trailing 12 months consumption Each plot in the diagram is the sum of 12 months energy consumption corrected for degree days. Each plot is equivalent to an annual consumption and indicates the trend in consumption change. 22

23 Norwegian assets Energy consumption trend The minor reduction in energy consumption for Norwegian assets is due to the sum of several measures implemented through years of focus and targeted measures concerning environmental impact improvements: 1. There is an overall focus through the entire organization all the way from the board of directors and CEO to the operational staff. Environmental policy is founded in the entire organization through various targets and measures set each year supported with resources, expectations, scores, environmental and energy management system and reports. This is how environmental and energy management is implemented through the organization. 2. One main focus has been to make the operational and tactical staff better understand and interact with existing technical installations and look for improvements and short comings in these. 3. The approach has been quite simple, but not often used to the extent as it has been used in DNB SPF Norwegian assets. The main focus has been to train the technical and operational staff continuously through various activities concerning both energy, energy use, analysis of energy consumption, technical understanding both specific relating to each system and also the overall interaction between these. All this in a setting where the tenant s indoor climate is in focus and is to be improved. 4. Another main focus area has been to let every interaction between advisor and employee be a transfer of competence and understanding the interactions between technical systems, BAM systems, tenants, indoor climate and outdoor temperature.

24 Swedish assets Energy consumption and cost The energy consumption for Swedish assets (like-for-like) is reduced by: -14 % (-0.7 GWh) in 2017 from base year % (-0.2 GWh) reduction in energy consumption from 2016 to 2017 The accumulated savings in energy costs during the period is a total of SEK The annual energy target is set to 5 % reduction in energy consumption 24

25 Swedish assets Trailing 12 months consumption Each plot in the diagram is the sum of 12 months energy consumption corrected for degree days. Each plot is equivalent to an annual consumption and indicates the trend in consumption change. 25

26 4. Waste handling; targets and development 2017

27 Waste handling DNB SPF shall contribute to reduce the amount of waste and increase recycling rate through: All assets report on separation rate, recycling rate and amount in kg into the web-based environmental management system <Entro Optima Waste> Dedicated reports are to be compiled when construction projects are conducted

28 Waste handling Targets for Norwegian assets: Minimum 5 waste fractions Recycling rate of 60 % There has been no monitoring concerning waste handling in Swedish assets in 2017 Norwegian assets with waste monitoring: Akerselva Atrium Bjørvika Bygg B, østbygget Bjørvika Bygg C, vestbygget Kronprinsensgate 9 Lillestrøm Torv (acquired January 2017) Myrdalsveien 22 (sold July 2017) Petroleumsveien 6 Quality Hotel Expo, Fornebu Sirkeltomten II, Portalen Smart Hotel, Oslo

29 Norwegian assets - Waste production Much of the increase in waste volume since comes from Bjørvika. For the first years when the building was new and tenants started moving in, the waste amounts increased for every year but are since 2016 stabile.

30 Norwegian assets - Waste handling Average separation rate for Norwegian assets (like-for-like) in 2017 is 57 %, whilst the average in 2016 was 52 %.

31 Waste handling Norwegian assets Recycling rates keep improving each year. In 2017 the amount of mixed waste decreased by -9 %. This shows the effect from targets and focus on increased fraction separation and recycling rate.

32 5. CO2 emissions; Control and measures 2017

33 CO 2 emissions All assets All assets (like-for-like) total CO 2 emission are tons in 2017 In 2015 DNB started purchasing electricity with guarantees of origin, hence the significant reduction in CO 2 emissions from energy

34 6. BREEAM in USE; Program for implementation 2017

35 BREEAM NOR In Use Target is to license all DNB SPF assets in Norway Assets licensed and certificates issued to: Sirkeltomten II Smarthotel Oslo Quality Hotel Expo, Fornebu Petroleumsveien 6 / Stavanger Kronprinsensgate 9 Akerselva Atrium The asset «Sandslihaugen 30» is due for reconstruction, hence no longer on the target to license list The asset «Myrdalsvegen 22» is sold in July 2017, hence no longer on the target to license list

36 7. Labeling scheme 2017

37 Labeling scheme Asset Asset component Date Label Akerselva Atrium Office Bjørvika Bygg B Office Bjørvika Bygg C Office Kronprinsensgate 9 Office Lillestrøm Torv, Bygg B Office Retail Petroleumsveien 6, Vinkelhuset AS Retail Office Quality Hotel Expo, Fornebu Portalen Hotel Retail Office Gym Sandslihaugen 30 Smarthotel Oslo Office Hotel Myrdalsveien 22 (sold July 2017) Retail Office

38 8. Green leases; Offer to new and existing tenants 2017

39 Customer value and tenant involvement Green leases Interaction, involvement and co-funding of measures between landlord and tenants Involvement Interaction with tenants concerning energy consumption, waste handling and water usage Subdivision fee A clear goal to reduce costs concerning energy, water and waste supported with continuous reports Tenant induced change in energy consumption Remodeling of tenant area Focus on environmental and energy efficient solutions when tenant space is up-graded Economic models Cost and reduction sharing between tenants and landlord Meter structure Measures of all heavy energy consumers to support continuous focus and reductions

40 9. ISO program 2017

41 DNB NE is ISO certified The purpose of the environmental management system is to contribute to: That DNB REIM fulfills government rules and regulation related to external environment Establish an environmental policy, environmental targets and measures. Continuous improvements of own environmental impact That environmental targets are met That DNB REIM achieve a higher environmental rating with international recognized analysis bureaus (GRESB) That DNB REIM meets the high standards concerning environmental performance indicators in business and competition Increased focus and engagement concerning climate and environmental related focus for DNB REIM employees Approved certificate was issued March 27th Periodically audits are completed annually and mandatory thorough 3 year audit. Mandatory audit has been done during fall of The annual audits are completed with excellent feedbacks from DNV GL Business Assurance. 41

42 10. Global Real Estate Sustainability Benchmarks - GRESB 2017

43 GRESB Real Estate Assessment The score of 83 in 2017, reporting year 2016, made DNB REIM 2nd best out of 89 in peer comparison group. This strengthens our «Green Star» rating in accordance with our objective. GRESB peer average score was 61 in A total of 850 real estate portfolios was assessed in the GRESB benchmark The total property value of the participants is more than $ 3.7 trillion. The benchmark results provide DNB REIM with the opportunity to identify the areas in which sustainability performance can be improved, both in absolute terms and relative to a competitive peer set. It also enables consistent communication of commitments to sustainability and responsible investing to the funds existing and potential investors 43

44 GRESB Scorecard 2017, reporting year

45 11. History & summary 2017

46 Environment and energy consumption in DNB REIM In 2006 an Energy Efficiency and Management Program was implemented for all assets. What can be optimized? With new tenants, the measures can be performed in cooperation with these. A solid overview of where the energy is consumed, means a strong handle of the whole asset, says Erlend Simonsen. The recent project started in 2013 and ends in The energy target is a decrease of kwh equivalent to 20 %. During the last 6 years DNB REIM continuous energy efficiency efforts has reduced the value of purchased energy by a total of 175 million NOK. To manage properties energy and environmental efficient gives us a competitive advantage, says Head of the Technical Management unit, Erlend Simonsen in DNB Næringseiendom.

47 The Energy Efficiency and Management Program Worked systematically through-out the organization, in the pursue of establishing and achieving a common goal. Established scorecard methods, implemented in ISO Substantial savings is obtained, when investments are safeguarded by the operational organization. Lessons learned in regards to evaluation of larger investment projects and reconstruction of tenants spaces. Learning to evaluate and select the most beneficial energy solutions. Of a total investment budget of MNOK, 350 MNOK was invested in energy related measures. ENOVA has funded the project with 40 MNOK Achieved energy reduction in the period : 32.3 GWh

48 The Energy Efficiency and Management Program The goal of reducing purchased energy with kwh is achieved* *Corrected for changes in portfolio, from 90 buildings in 2013 to 64 buildings in 2017.

49 12. Basis for the audit 2017

50 Integrated Reporting The Environmental and energy audit 2017 of DNB Scandinavian Property Fund is aligned with the principle-based framework of Integrated Reporting (IR) by The International Integrated Reporting Council (IIRC). IIRC is a global coalition of regulators, investors, companies, standard setters, the accounting profession and NGOs Integrated Reporting is enhancing the way DNB SPF thinks, plan and report the story of their business. DNB SPF are using <IR> to communicate a clear, concise, integrated story that explains how resources are creating value, in this specific Environmental and energy audit linked to the environmental management system and risks and opportunities thereby. 50

51 Data collection, presentation and quality control Data collection and invoice control Data collection of consumption is performed electronically between meters and Entro Database (ED). Grid distribution companies retrieve data and transfer hourly values to ED weekly. Entro collects data from private meters via GSM (direct meters) and via servers from BAM. Entro executes an extensive control of invoices for purchased energy and grid rental against the measured energy consumption data. Quality control of energy consumption data used in audits is performed continuously as part of the energy monitoring system. Weekly consumption is compared to historical and expected consumption. Deviations due to measurement errors are identified and meters are replaced. Consumption is corrected against corresponding historical consumption, in accordance with the grid distribution company s recalculation. All data retrieved from grid distribution companies is quality controlled by the grid distribution company before they are sent to Entro AS. Energy consumption data from grid companies meters is controlled once a month as part of the invoice control system. Manual readings are performed periodically to detect system errors in data transfer between meters and grid distribution company / ED. Deviations in weekly consumption of more than 10 % are investigated immediately by technical staff. Minor deviations and changes over time are assessed through periodic reports (quarterly). The total of energy consumption from private meters installed is compared to the grid distributor company meters. Presentation and quality control Energy consumption is corrected according to degree days for the yearly reporting, both manually and automatically. Heating related energy consumption is corrected according to degree days from Norwegian Meteorological Institute. All reports are quality controlled by at least two energy consultants. Building reports and collected reports are prepared independently to uncover any system errors. Most probable source of consumption error is the implementation of new buildings and/or new meters in the energy monitoring system. Routines are established to reveal such errors (manually readings and imports of hourly values/historical data). Where consumption meters are not present or data is not possible to retrieve, the consumption is compared and controlled against a reference consumption and measures are taken. Entro AS consider this as the biggest source of error. Corrections are performed in <Entro Optima>. 51

52 Waste DNB NE waste reporting is performed based on data from the waste management companies. Manual quality control of the data is performed prior to uploading to Entro Database. There is uncertainty regarding if the tenant has private waste handling, which is not reported by DNB NE waste management company. There is a continuous focus and improvement in collecting data from tenants that have private waste handling. 52

53 Method for environmental impact reporting for DNB NE Environmental impact reporting is aligned by the recognized method of the GHG Protocol (ISP :2006). Environmental impact is sorted according to the extent of influence owner/user has on the direct choices (e.g. choice of energy source) (Scope 1 to 3). All environmental impact factors are converted to CO 2 equivalents. Since 2015 DNB NE has purchased electricity with «guarantees of origin», for calculations of these emissions a low emission factor for hydro plant power has been used. Emission factor for Nordic Residual mix is used for tenant s electricity consumption, and for DNB NE s consumption before For district heating and cooling the district heating company s documented factors are used, and where this was not available a calculated general factor has been used. All waste is converted to CO 2 equivalents and reported per building. The various waste fractions have specific emission factors. 53

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