Brian McCauley President & Chief Operating Officer

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1 2014 With 2014 marking Concert s 25th anniversary, it is a natural time to reflect on both our history and where we are going as a company. Over the years there have been success stories on many fronts, but one of the things that I am personally most proud of is the company s increasing commitment to environmental sustainability across our operations. As a developer and long-term manager of a large and growing portfolio of properties, we have an obligation to take sustainability seriously. After years of benchmarking our developments against the LEED sustainability scorecard, we made the commitment in 2012 to ensure that all of our properties going forward would meet the rigorous standards of LEED Gold or equivalent. Also in 2012, the appointment of a Sustainability Manager, Jonathan Meads, was a critical step in accelerating our sustainability goals. Having a passionate in-house expert means we can better move towards our goal of utilizing a holistic and integrated approach to sustainability across the company s diverse operations. In 2010, Concert was proud to have become one of only a few real estate enterprises in Canada to complete a comprehensive calculation of the greenhouse gas emissions our organization generates. Coinciding with the annual calculation of Concert s emissions, we have released annual reports on sustainability ever since to document our efforts. While there have been a number of significant sustainability accomplishments over each of the four years we have reported on to date including this most recent year we have also met our fair share of challenges on the road to reducing our emissions. Despite our best efforts to bring per-square-metre emissions down, growth in the company s portfolio through the acquisition of existing properties and forces outside our control including extreme weather have impacted our overall per-square-metre emissions, often times negating the positive steps we ve taken toward reduction. This being said, our goal remains to become one of the most sustainable real estate developers and managers in Canada, and as such the company will continue to push the envelope with regards to innovative sustainability initiatives across the portfolio. Brian McCauley President & Chief Operating Officer August 18, 2014

2 Our Emissions Since first reporting our emissions in 2010, the size of Concert s portfolio has increased dramatically; we now report on 39% more square metres of property for the company s Scope 1 emissions, 17% more for Scope 2 emissions and 8% more for Scope 3. These increases are due to the completion of several purpose-built rental properties, as well as the acquisition of several commercial properties that the company now manages. Compared to last year, on a per-square-metre basis, Concert s Scope 1 emissions rose 9%, Scope 2 emissions rose by 5% and Scope 3 rose by 3%, equating to a total increase in per-squaremetre emissions of 3.6%. These increases are directly attributed to a variety of factors which have overshadowed the company s many sustainability-minded initiatives over the year. This year we experienced a 3.6% increase in emissions per square metre. The largest factor in this year s emissions increase was an unseasonably cold winter in Ontario and Alberta causing a significant spike in heating demands. In addition, the acquisition of several properties on the secondary market which were not yet up to the company s standards in terms of efficiency and performance contributed to this increase. Efforts to improve the performance of these properties will continue. Scope for Annual Emissions Report as required by the World Resources Institute s GHG Protocol SCOPE 3 Required Reporting SCOPE 1 Concert included: Heat generated Company-owned vehicles SCOPE 2 Concert included: Electricity purchased Optional Reporting Concert included: Electricity unmetered Heat unmetered Transporting people business mileage by car, air and water Staff commuting Landfilled garbage Paper consumption Concert excluded: couriers, construction activities by sub-trades and general contractors, outsourced activities, production of purchased materials and contractor-owned vehicles. 2

3 Selected Sustainability Accomplishments Five master-planned communities in Concert s development pipeline are being designed to pursue LEED Gold certification. Lighting upgrades within Concert s Tapestry at Arbutus Walk retirement community have made the building s cooling system almost redundant! Room temperatures are no longer artificially raised by the excessive heat generated by inefficient bulbs. Within the company s residential rental properties in British Columbia, garbage-related emissions have fallen 80% compared to the baseline established in Concert Infrastructure completed and delivered a LEED Gold certified project, the 663,000-square-foot Forensic Services & Coroners Complex in Toronto. 3

4 Case Study: Developing Sustainably-Minded Rental Apartments Developing rental housing is nothing new to Concert; in fact, it s where the company got its start in While Concert has grown and diversified by geography and asset class over the years, it has never strayed from a commitment to rental housing. Over the past 25 years, the rental properties Concert has developed have become increasingly sustainable, both in terms of their construction and ongoing operation from a property management perspective. As an owner and manager of rental properties over their entire useful life, Concert believes it has a duty to ensure that sustainability is kept top of mind as one of the most important considerations. Looking at one of Concert s newest rental properties - Palomar at Village Gate West in Etobicoke and comparing it to the first three rental buildings Concert developed in the Greater Toronto Area from 2003 to 2007, the results are illuminating. On an emissions per-square-metre basis, Palomar produces 40% fewer emissions! This is due in part to the design of the building, which has been LEED Gold certified, as well as the efforts of our property management team. Palomar produces 40% fewer emissions than the first 3 rental buildings Concert developed in the Greater Toronto Area. Moving forward, Concert will continue to develop rental properties which follow in Palomar s footsteps and create a downward pull on the company s total emissions per square metre. 4

5 Case Study: Repurposing an Aging Hotel Having traditionally focused on developing purpose-built rental housing from the ground up, repurposing an existing structure to become rental housing is something the company hadn t taken on until recently. In 2012, Concert acquired the Queen Victoria Hotel in Victoria originally constructed in 1965 with the intention of renovating and transforming it into a rental property. From a sustainability perspective, electing to renovate rather than demolish the eight-storey hotel yields a tremendous benefit. Re-use of the original concrete structure along with the windows and many other elements of the existing building saved the significant carbon that would have been produced through demolition and new construction. All waste incurred as a result of the renovation project was diverted from landfill. Furthermore, Concert made numerous energy efficiency upgrades within the building, including the installation of new energy-star appliances in every apartment. All waste incurred was diverted from landfill and re-use of the original concrete structure saved significant carbon. With the renovation now complete and the building in operation, we will be able to monitor its performance in the coming years to see how it stacks up against the company s purposebuilt LEED certified properties. 5

6 Case Study: Improvements to Pacific Business Centre The recent energy efficiency upgrades within Concert s Pacific Business Centre in Richmond, British Columbia are a prime example of the company s commitment to improving those properties that are underperforming from a sustainability perspective. Initially acquired by Concert in 2007, Pacific Business Centre was identified as an energy hog with significant opportunity for improvement. This past year, the building received extensive upgrades to its heating and cooling systems as well as its controls system all in an effort to bring the property s total annual emissions down. The effect of these improvements to the building s performance is anticipated to be quite significant. A new boiler was installed which operates at 90% efficiency; a variable cooling system was installed to prevent the overproduction of cold air; waste heat generated by the cooling process is now captured and re-used; and a new Direct Digital Control (DDC) system provides a web-based dashboard which allows for fine tuning of the building s performance. These upgrades to the heating and cooling systems are projected to yield a 40% improvement over the dated systems they replaced. These upgrades to the heating and cooling systems are projected to yield a 40% improvement over the dated systems they replaced. Recognizing the impact that these types of upgrades have on a building s performance, our property management team will continue to take on the challenge of improving the efficiency of other properties in the company s portfolio in the coming years. 6

7 As we continue with our efforts to make a difference, we are continually looking for ways to improve. If you have an idea big or small please contact us at MakingADifference@ConcertProperties.com.