Managing to Green Building Certifications

Challenge: As alternative property sectors have become more mainstream, new and relevant certifications are needed to assess and guide sustainability building performance improvement. PGIM was invited to participate in the Institute of Real Estate Management (IREM) Certified Sustainable Property (CSP) pilot for self-storage assets.

Action: Three self-storage facilities were onboarded to the IREM CSP pilot program and each property completed scorecards evaluating sustainability performance, receiving credits for energy efficiency and carbon reduction criteria.

Integrating Sustainability into Investment

Challenge: The European core plus fund acquired a portfolio of purpose-built student accommodation (“PBSA”) in the UK. The due diligence identified a possible exposure to the expected 2030 Minimum Level of Efficiency standard (EPC rating B).

Action: The Capex for upgrade works to the property services and flood risk management works, alongside an allocation for sub-metering at the assets to achieve EU Taxonomy alignment, were budgeted into the investment analysis and approved by the European Investment Committee. The roadmap will provide a framework to determine and drive additional sustainable improvements, beyond climate mitigation.

Actively Managing Transition Risks

Challenge: To retrofit an existing multi-tenant commercial building to improve energy efficiency and tenant comfort, primarily to comply with local energy regulations and improve the energy performance rating for the building.

Action: A comprehensive energy audit was commissioned for the office and common areas of the building. The energy audit informed the retrofit works and identified the most impactful and cost-effective steps.

Transforming a Distribution Center into a Carbon Neutral Operating Hub

Challenge: To replace a 30-year-old, single story warehouse with a five-story modern ramp-up, premium distribution center. The facility was designed beyond regulatory requirements to be carbon neutral in operation.

Action: A carbon study was completed during concept design and refined throughout the subsequent design stages to quantify the environmental impact of construction, building materials and operational energy and to prioritize low-carbon materials and solutions.

Engaging to Improve the Energy Efficiency of Hospitality Assets

Challenge: Identify and implement an energy management solution specific to the hospitality sector, which not only improves energy efficiency but also maintains guest comfort. The solution would need to be cost-effective and deliver a return on investment within the hold period of the assets.

Action: Four hotel/co-living assets in Hong Kong were identified on acquisition to have unnecessarily high energy consumption. The asset management team then identified a Smart Room Energy Management (SmartREM) solution which leverages Internet of Things (IoT) sensors to monitor room occupancy, guest temperature preferences, and HVAC performance in real-time. 

Decarbonizing Our Assets in Germany

Challenge: Identify and implement a viable business model for the provision of rooftop photovoltaic (PV) systems for light industrial premises in Germany. This business case was especially strong due to the high price of electricity relative to other developed countries in Europe and the existence of government/ state subsidies for commercial and industrial rooftop solar projects.  

Action: The asset management team evaluated a series of business models to install rooftop PV systems and negate tax implications to the wider business. This included a rooftop rental model, where the landlord also receives the sustainability benefits and obtains the roof rental income with no upfront costs.