Carbon Trust

Carbon Trust

Low carbon workplace trust completes first pre-let and signs fourth acquisition


Source: Carbon Trust

The Threadneedle Low-Carbon Workplace Trust (LCW) has successfully completed four property acquisitions with an end value forecasted at £54m, each of which is to be refurbished to provide high quality office accommodation with a focus on reducing carbon, both embedded and in-use.

LCW has also just signed its first pre-let with Thames Valley Housing Association (TVHA) for Premier House, Twickenham. LCW is a partnership between leading property investment manager Threadneedle, The Carbon Trust and developer Stanhope plc.

Premier House in Twickenham will be let on a new 15-year lease to TVHA involving an annual rental commitment of £600,000, subject to annual fixed rental uplifts of 2.5%.

The property is being fully refurbished to a high energy efficiency specification to enable TVHA to apply for the Carbon Trust’s Low Carbon Workplace Standard, which recognises the occupier’s class-leading carbon footprint. The refurbished accommodation is expected to achieve in the region of a 50% reduction in carbon emissions when in use at high occupancy levels.

TVHA is the first organisation in the UK to sign the Low Carbon Workplace Charter with Low Carbon Workplace Ltd, a Carbon Trust subsidiary and key advisor to LCW. The Charter is an ongoing commitment undertaken by the tenant, closely supported by Low Carbon Workplace Ltd, to minimise its carbon emissions while occupying the premises.

Geeta Nanda, Chief Executive, Thames Valley Housing Association said:

“We’re committed to providing quality office space for our staff while reducing our carbon footprint. We needed to move into more spacious, modern accommodation and we’re delighted to be working with Low Carbon Workplace to achieve this in both an environmentally and financially viable way. Their approach fits in well with one of our key business aims, which is to provide quality sustainable homes. We’re hugely looking forward to moving into what will be an impressively refurbished low carbon building.”

Don Jordison, Managing Director of Threadneedle Property Investments said:

“This is the first significant pre-letting of a West London refurbishment project since the financial crisis. The low-carbon, low-energy concept, which supports the Low Carbon Workplace Standard, was the key to landing the pre-letting commitment. Thames Valley Housing Association will benefit from as much as 50% reductions in carbon emissions and energy consumption and will receive ongoing assistance to achieve the building’s full low carbon potential.

With the signing of this pre-let, our foundation investors will also benefit from enhanced returns at lower overall risk, achieved primarily from reducing the void period. So we are seeing carbon reduction, energy reduction and significant reduction of investment risk.”

Tom Delay, Chief Executive of the Carbon Trust, said:

“We set out to demonstrate that low carbon properties make sound commercial sense; that they are not only attractive to high quality occupiers but also secure long-term income for investors. This agreement with Thames Valley Housing Association does just that. The UK is at a turning point as business moves from debating whether there is opportunity in green products and services to an all-out race for competitive advantage. The Low Carbon Workplace concept is at the centre of this green growth.”

David Camp, CEO of Stanhope, said:

“The partnership has gained excellent momentum since its launch last year and we now have a good pipeline of projects to take forward. The pre-letting to Thames Valley Housing Association, together with a number of other discussions that we are having with occupiers, confirms our belief that this approach to retro-fitting dated office stock in the right location and the relationship with the occupier is the right one, and I am sure that it won’t be too long before the market sees it as the new norm.”

The approach to delivering low in-use carbon emissions at Premier House is based upon four key areas: 1) improving the fabric of the building, 2) deploying high efficiency technologies to heat, cool and ventilate the space, 3) reducing operational energy consumption through sophisticated energy monitoring and 4) a high level of occupier engagement.

Many of the principles adopted at Premier House will apply to all the LCW Trust projects, although the technical solutions to the building fabric and for providing environmental control will be tailored to the particular building to take account of its condition and form and the local environment.

Including Premier House, LCW now has a portfolio of four projects involving a significant net internal area in terms of space being refurbished. To date, supported by initial investor equity commitments, LCW has committed and contracted to £42.5m of capital expenditure across its four projects, the post refurbishment end value of which is forecasted to reach £54m. The three further acquisitions across its initial portfolio are: Grove House, Hammersmith; Mansel Court, Wimbledon and The Billings, Guildford.

Launched in 2010, LCW Trust was formed to provide an investment vehicle offering exposure to a low carbon workplace UK commercial real estate portfolio. LCW’s investment strategy is unique within the UK commercial real estate investment sector, being focused on satisfying the growing demand for low carbon workplaces and providing the solution to the single specific low-carbon issue readily identified by occupiers.

The Four Properties in the Low Carbon Workplace Trust:

  • 1-4 The Billings, Walnut Three Close, Guildford, GU1 4UL
  • Premier House, Twickenham
  • Mansel Court, Wimbledon Hill Road, Wimbledon London, SW19 4AA
  • Grove House, 27 Hammersmith Grove, London, W6 0NE

The roles of the partners:
Threadneedle is the fund manager for the Threadneedle LCW Trust. Threadneedle has one of the largest and most experienced property teams operating in the UK today with 26 investment professionals.

Threadneedle has been investing in commercial property since 1994 and currently manage more than £5.6 billion in property assets (as at 31.12.2010). Our property team have an average of 17 years’ market experience and have been with Threadneedle for more than nine years on average. This stability has been a key factor in the team’s success. Indeed the team was awarded the Fund Manager of the Year at the 2009 Property Week Awards – the fourth time they have won this high profile award, and were also awarded Europroperty’s Fund Manager of the Year 2009.

Stanhope Plc is a specialist UK real estate developer of major commercial and mixed-use projects. With 25 years experience, and more than £10 billion of completed projects behind it, Stanhope has built an unrivalled specialist in-house team which has earned a reputation for quality and integrity that is second to none.

Stanhope will devise and deliver all the refurbishment work for LCW. With a strong focus on research and innovation, Stanhope has been at the forefront of sustainable innovation in the built environment for over a decade. Stanhope’s experience in the field and established supply chain, along with a commitment to working with the occupier throughout the design process, will reduce both financial and material waste.

Stanhope’s completed projects include Broadgate, the Royal Opera House, Tate Modern, HM Treasury and Paternoster Square and totals more than 30 office buildings delivered for owner occupiers or pre-lets. The team is currently working on a pipeline of 10million sq ft across 17 projects with partners including the Crown Estate, Legal & General, BSkyB and Schroders.

The Carbon Trust is a not-for-profit company with the mission to accelerate the move to a low carbon economy, providing specialist support to business and the public sector to help cut carbon emissions, save energy and commercialise low carbon technologies.

Low Carbon Workplace Limited is a wholly-owned subsidiary of Carbon Trust Enterprises Limited, the commercial arm of the Carbon Trust, and will contribute low carbon design advice for refurbishments, coordinate the Low Carbon Workplace Protocol certification and provide ongoing low-carbon assistance to occupiers under the Low Carbon Workplace Charter.

Thames Valley Housing is a Registered Social Landlord providing over 14,000 affordable homes across London and the South East. Thames Valley Housing were advised by Drivers Jonas Deloitte.

About Threadneedle

Threadneedle is an international investment manager with a strong track record of out-performance across asset classes. We actively manage £64.8bn (as of end September 2010) of assets, investing on behalf of individual investors, pension schemes, insurers, corporations, mutual funds and affiliate group companies. Threadneedle's distinctive investment approach is based on creative thinking, sharing of ideas and rigorous debate. Established in 1994 in London, Threadneedle operates in 15 countries.

Threadneedle is owned by Ameriprise Financial (NYSE: AMP), a leading US diversified financial services company with $US600bn(as of end September 2010)  in owned, managed and administered assets. As its international investment platform, Threadneedle provides Ameriprise and its retail and institutional clients with world class investment solutions.

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