A Fund managed by Mayfair Capital
A Fund managed by Mayfair Capital
Blog 2 of 3
The latest Intergovernmental Panel on Climate Change (IPCC) report (AR6) finds that unless there are immediate, rapid and large-scale reductions in greenhouse gas emissions, limiting warming close to 1.5°C or even 2°C will not be possible. The science is clear, if we do not limit emissions and consequent warming, we will fail to mitigate the worst impacts of climate change, with devastating consequences for ecosystems and communities. It has never been more critical that we tackle the challenge head on, and as investment managers we have a duty to take practical steps to decarbonise and future proof the real estate portfolios under our care.
It is evident that some of the biggest challenges lie ahead in decarbonising existing building stock, in the UK, 80% of properties that will exist in 2050 have already been built. In England, two thirds of non-domestic Energy Performance Certificates (EPCs) lodged in Q1 2020 were given a C or D rating, with only 15% achieving EPC B or higher. In addition to this, research and modelling for the Climate Change Committee (CCC) has outlined that natural gas heating must all but be eliminated for the UK to meet its net zero carbon target by 2050. Addressing the existing building stock, by improving efficiency with consideration for life cycle carbon, installing on site renewables, gathering quality ESG data, FRI lease terms and limited control are only a few of the challenges that Mayfair Capital and the real estate industry are collectively navigating.
Newmarket - refurbishment of PITCH industrial asset aiming to deliver net zero a net zero building
The data challenge
One of the most pressing ESG challenges in the industry is data acquisition. Actual whole building energy data is fundamental to understanding energy performance and as a result transitional risk. Energy Performance Certificates (EPCs) are required by UK law, yet EPCs have their limitations, with a clear disconnect between the theoretical performance of the building (assessed at a point in time), and the actual performance. The performance can be heavily influenced by the way the tenant uses the building and if there is any additional plug-in equipment consuming energy.
Accessible, accurate and automated data is the goal, but this is seldom achieved at scale across a real estate portfolio, particularly where Funds comprise of a high percentage of FRI leased assets, where procurement of utilities is the responsibility of the occupier and they do not have an obligation to share data. Without regulatory or contractual support, landlords can be limited in accessing data from their tenants.
Mayfair Capital’s PITCH Fund, deliberately structured as a leaner portfolio of assets, allows for close engagement with its occupiers. PITCH has built, and continues to build, strong relationships with its tenants which we believe is crucial to accessing this data, and jointly working towards our climate goals. We are also leveraging technology to support automation, benefiting both parties, including the roll out of a data management system and automated data extraction tools that obtain data directly from suppliers (subject to tenant permissions).
FRI leases and limited control
For portfolios with a high proportion of assets on FRI lease terms, the landlord will not only have limited access to data, but also limited control and ability to implement sustainability initiatives. Approximately 88% of the PTICH Fund is subject to FRI lease terms, and thus tenant engagement is vital to making progress, as well as implementing initiatives when one has an intervention point e.g. at acquisition, vacant possession, or when negotiating a lease extension.
Despite limitations in control, we are carefully reviewing each asset and believe this bottom-up planning across our investment process provides us with a clear understanding of our exposure to transition risk informing the next steps in our pathway to net zero carbon. Our acquisition process includes net-zero carbon assessments, all refurbishment projects follow our Sustainable Development & Refurbishment Guide to enhance efficiency, and for standing investments we routinely conduct
technical assessments to identify practical carbon reduction strategies. Over time this builds a comprehensive picture of our portfolio, supporting our pathway to net zero and most importantly, ensuring our assets are appropriately futureproofed enabling us to implement targeted measures when an intervention point arises. We are also being approached by our tenants who want to engage on topics such as solar panel installations, with this collaboration vital to making progress.
Addressing costs and uncertainties
Building climate resilience and developing a clear pathway to net zero carbon is a primary focus for our parent company, Swiss Life Asset Managers and for Mayfair Capital. Swiss Life Asset Managers has committed to reduce the carbon intensity of its direct real estate portfolio by 20%, in line with the aims of the Paris Agreement. The pathway analysis for the UK business is still underway, while we continue to progress our programme of asset and portfolio level net zero actions. By having a clear understanding of our pathway to net zero, we will be able to plan carefully, prioritise effectively, and utilise all the decarbonisation levers available, in order to make informed investment decisions.
At present there are uncertainties surrounding the scale of investment required to achieve net zero carbon, however we expect that the picture will become clearer as more case studies become available, improving the quality of cost data and allowing one to reduce the reliance on cost assumptions. As the industry makes progress on decarbonisation, and as technology advances, we also expect to see the cost of net zero carbon measures and technologies become increasingly competitive and readily available. It is a careful balancing act transitioning a portfolio to net zero with consideration for timing, resource use, cost benefit, reducing our climate impact, whilst trying to maintain sustainable returns.
As an industry we are collectively tackling these challenges with net zero carbon fundamental to mitigating climate change. The imperative to act has never been clearer than set out in the stark warning from the IPCC and as was evidenced in the conversations surrounding COP26 in Glasgow last year. As we navigate the next decade, collaboration, innovation and knowledge sharing are key. We hope that our series of blogs and white paper encourage discourse within the industry, and initiates collaboration and collective solutions that support advancement of the sector towards net zero carbon.
For the full Mayfair Capital Net Zero carbon white paper, please access this here
Christi Vosloo - Head of ESG, UK Mayfair Capital Investment Management
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This policy is issued by Mayfair Capital Investment Management Limited ("Mayfair Capital"), a company incorporated in England and Wales under number 04846209, authorised and regulated by the Financial Conduct Authority ("FCA") with FRN 229228 and its registered office is at 55 Wells Street, London, W1T 3PT.
Mayfair Capital is committed to safeguarding the personal information which you may provide to us and to the extent that Mayfair Capital collects any personal information, Mayfair Capital will hold it in confidence in accordance with the Data Protection Act 1998 and the General Data Protection Regulation (GDPR) (EU) 2016/679 which came into force on 25 May 2018.
You may be asked to voluntarily provide certain personal information details about you such as your name, address, telephone number, email address and other information in connection with Mayfair Capital's customer or tenant registration procedures and job application process. Mayfair Capital will use this information for the administration and servicing of your investments, performing its obligations under lease contracts, evaluating job applications and other related activities and to ensure compliance with its obligations under the UK regulatory regime. Mayfair Capital may disclose the information to its agents and service providers.
Please note that by submitting personal information you are consenting to such information being processed for the purposes referred to above. You agree that Mayfair Capital has the right to use and store such data on its internal systems and to transfer it to its associated companies and third- party agents and service providers where applicable, whether inside or outside the European Union to countries having an adequate level of data protection.
The Mayfair Capital site collects both behavioural data (information about how you use our site); and technical data (information about the device you use to access our site). Mayfair Capital uses the Google Analytics service provided by Google Inc. (“Google”) to collect this data.
Examples of behavioural data collected:
Examples of technical data collected:
The site does not collect any data that makes you personally identifiable. The information obtained via Google Analytics is anonymised and cannot be attributed to any one individual. Google Analytics is set to retain data for a duration of 38 months.
Google provides a method to opt out of their Google Analytics service completely. Opting out will prevent Google Analytics from collecting your data from any site that uses their service.
This information provides us with a better understanding of how our site is being used. This understanding informs any improvements we undertake and ensures that the site and its content continue to best serve the needs of our visitors.
Mayfair Capital adheres to the following practices to help keep the data that we process safe:
A Data Processor is a third party with which we are required to share personal detail in the provision of investment and property management services. Mayfair Capital will only share personal information in the following circumstances:
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We may share your personal information with third party organisations:
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We are required under the Markets in Financial Instruments Directive II (MIFID II) rules to retain all client related information for up to 7 years, after which time it will be destroyed. Personal information that we use for marketing purposes will be kept with us until you notify us that you no longer wish to receive this information. After you stop being a client, we may keep your data for up to 7 years for one of these reasons:
CVs in respect of unsuccessful applicants are deleted promptly following completion of the job application process.
We may use your personal information to tell you about relevant products and offers. This is what we mean when we talk about ‘marketing’.
The personal information we have for you is made up of what you tell us, and data we collect when you use our services, or from third parties we work with.
We study this to form a view on what we think you may want or need, or what may be of interest to you. This is how we decide which products, services and offers may be relevant for you. We can only use your personal information to send you marketing messages if we have either your consent or a ‘legitimate interest’. That is when we have a business or commercial reason to use your information. It must not unfairly go against what is right and best for you. You can ask us to stop sending you marketing messages by contacting us at any time. If at any point you believe the information we process on you is incorrect you can request to see this information and have it corrected or deleted. If you wish to raise a complaint on how we have handled your personal data, you can contact us on the details below to have the matter investigated.
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If you are a European resident, you have the right to access personal information we hold about you and to ask that your personal information be corrected, updated, or deleted. If you would like to exercise this right, please contact us through the contact information below.
For the purpose of the Data Protection Act (1998) and the General Data Protection Regulations (GDPR) (EU) 2016/679 the Data Controller is Mayfair Capital Investment Management Limited.
Mayfair Capital is not required to appoint a Data Protection Officer. For more information about our privacy policies or if you have any questions, we welcome your comments. Please contact us at email@example.com, by telephone 020 7495 1929 or by mail:
Mayfair Capital Investment Management Limited
55 Wells Street,
Last updated: 3 July 2019
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Last updated: 3 July 2019