environmental enhancement and value-added practices for our trusted property

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Environmental Enhancement and Value-Added PracticesEnvironmental Enhancement and Value-Added Practices

for Our Trusted Propertyfor Our Trusted Property

Keiko Hosoyama

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Outline

1. Environmental Risks in Real Estate

2. Tokyo Metropolitan Environmental Security Ordinance

3. Practices for Our Trusted Property

4. To be Responsible for Green Real Estate

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Total CO2 Emissions in Tokyo

1990FY 2000FY 2006FY Growth

(Mt-Co2) (Mt-Co2) (Mt-Co2) 1990-2006 2000-2006

Industry 9.8 6.8 5.2 ▲47.0% ▲23.5%

Commercial 15.7 18.9 20.6 31.1% 9.0%

Household 13.0 14.3 14.4 11.0% 0.7%

Transportation 14.8 17.6 14.7 ▲1.1% ▲16.5%

Others 1 1.2 1.0 ▲0.5% ▲16.7%

Total 54.4 58.8 55.9 2.8% ▲4.9%

Tokyo Metropolitan Government

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Environmental Risks in Real Estate

Toxic substance

Soil contamination

Earthquake resistance

CO2 emission

Energy

Water

Solid Waste

Safety

Comfortability

Tree preservation

Cultural preservation

Transportation

Biological diversity

EnvironmentalEnvironmental 　　 RisksRisksEnvironmentalEnvironmental 　　 RisksRisks

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Stakeholders

Community

Customers

Employees

Tenants

PM/AM

Government

Financial Institutions

Investors

Property

Company

Compliance

Accountability

Reputation

Education

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Tokyo Metropolitan Environmental Security Ordinance

Introduction of the world’s first urban cap and trade program to cover office buildings as its emissions reduction targets

Commercial37%

Household26%

Industry9%

Others2%

FY2006

CO2emissions

559m t

40% ： Large CO2 emitters

(1,400 installations)

60% ： Small or middle CO2 emitters

(700,000 installations)

Coverage

Large installations, such as office buildings and factories---Consumption of fuels, heat and electricity is 1,500kl or larger per year

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Cap setting

The cap for the first compliance period has been set at a level of 6% or 8% below base year emission

The cap for the second compliance period will be set at a level of 17% below base year emission

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Allowance Allocation

Base year emission × Compliance factor × Compliance period

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Emissions trading mechanism

① Reduction exceeding the obligation

Emission reduction exceeding the yearly obligation may be traded from the 2nd year

② Small and Midsize facilities Credits

Emission reduction by energy-saving measures

③ Outside Tokyo Credits

④ Renewable Energy Certificates

cf. solar energy, wind energy, geothermal energy,

hydropower energy, biomass energy

Offset Credits

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Structures of Trust Scheme

①Land Trust

Lender

Trust bankOriginator

Tenant

Property manager

General constructor

Trust contract

Outsourcing of property management

Financing for construction

Rental contract

Construction contract

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Structures of Trust Scheme

②Real estate securitization

Lender

Trust bank

Originator

Tenant Property manager

Asset manager

Equity member

Specific borrowing

Equity

Real estate

Vehicle (SPC)Vehicle (SPC)

Outsourcing of property management

Rental contract

Operation of vehicleSale of beneficiary interests in trust

Trust contractDirection of operation

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Practice for Our Trusted Property①

①Energy Assessment

CO2 reduction（）ｔ CO2 reduction %（） cost reduction yen（） payback period year（）

8.5 1.0 398,000 －20.6 2.3 836,000 －29.1 3.3 1,234,000 －

CO2 reduction（）ｔ CO2 reduction %（） cost reduction yen（） payback period year（）

48.1 5.5 2,253,000 4.58.0 0.9 374,000 0.656.1 6.4 2,627,000 －85.2 9.7 3,861,000 －

Floor areaStructure

Building CompletionTotal energy consumptions

Total CO2 emissionsimproved by management【】

12,016.68㎡8 stories with 2 basement floors

J une 1991543kl878t

Building A

cutting fresh air intake by modulation of damper

imporoved by refurbishment【】renewal for low- energy lightsrenewal for low- flourescent lamps

(Total)

shortening the operation time for fan

Total(Total)

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Practice for our trusted property②

②Simulation by CASBEE

BEE (Building Environmental Efficiency) ＝Ｑ (Building Environmental Quality & Performance)

L (Building Environmental Loadings)

Q1:Indoor Environment

Q2:Quality Services

Q3:Outdoor Environment on Site

L1:Energy

L2:Resouces & Materials

L3:Off-site Environment

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Sco

reS

core

0.0

1.0

2.0

3.0

4.0

5.0

0.00 0.02 0.04 0.06 0.08 0.10 0.12

Consideration of Global Warming

Perimeter Performance

Daylight FactorIlluminance

Air Supply Planning

Building Thermal Load

Natural Energy Utilization

Use of Recycled Materials as Non-

structural Materials

weighting coefficientsweighting coefficients

If the scores of all three will up to 4.

0 ・・・

If the score will up to 3.0 ・・・

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Practice for our trusted property③

③MOU on CO2 emissions

Hotel

Office

MUTB MUTB (Trustee)(Trustee)

MUTB MUTB (Trustee)(Trustee) Investor①Investor①Investor①Investor①

Hotel Hotel Management Management

CompanyCompany

Hotel Hotel Management Management

CompanyCompany

MUTB MUTB (Trustee)(Trustee)

MUTB MUTB (Trustee)(Trustee) Investor②Investor②Investor②Investor② TenantTenantTenantTenant

Conclude MOU on CO2 emissionsConclude MOU on CO2 emissions

positive to reduce CO2 emissions

MUTBMUTB(Asset manager )②(Asset manager )②

MUTBMUTB(Asset manager )②(Asset manager )②

few choices as prioritizing over hotel

users

Asset manager①Asset manager①Asset manager①Asset manager①

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Practice for our trusted property④

④ideas for market of emissions trading

installations which demand for Credits

MUTB

Large installations Large installations

Large installationsSmall and Midsize

installationsLarge installations

(outside Tokyo)

installations which can supply for Credits

①reduction exceeding the obligation

②Small and Midsize facilities Credits

③Outside Tokyo Credits

supply Credits

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Responsible Property Investing

UNEP FI Property Working Group

Mission: To encourage property investment and management practices that achieve the best possible environmental, social and financial goals, as consistent with fiduciary responsibilities


All the ways that investors can find and create value through improving the economic, social, and environmental profile of their investments.

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『 Owner-Tenant Engagement in Responsible Property Investing 』

This report presents several stories from leading property organizations that are committed to sustainability and responsible investing on innovative ways to promote better cooperation between owners and tenants.

『 What the leaders are doing 』

This report presents 10 strategies for responsible property investment, each demonstrated by a collection of case studies that explain the financial and environmental value of responsible property investment.

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『 Metrics for Performance Measurement 』

The purpose of this toolkit is to provide how to develop systems of metrics meant to measure RPI, how those metrics across property portfolios can be collected, and finally those information collected can be integrated into portfolio management.

『 Committing and Engaging 』

The purpose of this toolkit is to provide how to commit to RPI as an investment strategy, hot to put into place governance and management structures that integrate RPI into corporate culture and practice etc.

environmental enhancement and value-added practices for our trusted property

Economy & Finance