Sustainable office trust attracts major new investor
26 July 2016
Uniting Financial Services (UFS), has joined the Clean Energy Finance Corporation (CEFC) to drive Australia’s commercial property sector towards a higher-performance future. UFS is the Treasury and Investment Services arm of the Uniting Church in Australia Synod of NSW and the ACT.
UFS has committed $25 million to the High Income Sustainable Office Trust (HISOT). The CEFC has already made a cornerstone $125 million equity commitment to HISOT.* Leading real estate fund manager, EG Funds Management (EG) is the HISOT manager and is targeting a $400 million portfolio.
The HISOT is designed to refurbish up to a dozen decentralised city office buildings, giving them a new lease on life through improvements that increase their sustainability and reduce their carbon emissions.
CEFC Corporate and Project Finance Director, Rory Lonergan, said the CEFC’s commitment to HISOT reflected the CEFC’s broader strategy to drive Australia’s commercial property sector towards carbon neutral buildings.
“For our cities to be competitive and dynamic business centres in the future, it is imperative that we act now to boost the energy performance of buildings so they are equipped to handle the demands of a clean energy economy,” Mr Lonergan said.
“High cost CBD office spaces, infrastructure constraints and urban regeneration are all major factors contributing to increased demand for higher performing commercial office space in outer metropolitan areas. The decentralisation of government departments is also driving up demand.
“Through the HISOT we’re looking to develop and refurbish buildings in these outer areas so that they have increased performance and lower carbon emissions. Energy efficient buildings have lower operating costs and have the potential to provide higher net operating income and have lower vacancy rates, providing clear benefits to building owners, investors and tenants.”
UFS is the first institutional investor to support HISOT, alongside the CEFC and EG. As HISOT grows it will purchase eligible buildings and reposition them. In broad terms, the HISOT intends to improve the energy efficiency of properties to the equivalent of at least 4.5 stars under the National Australian Built Environment Rating System (NABERS).
Warren Bird, UFS Executive Director Treasury and Investments, said UFS invests according to the Uniting Church’s ethical investment policies and recognises the ongoing environmental and social benefits of revitalising decentralised city office buildings.
“The Uniting Church Synod of NSW and the ACT is one of the earliest adopters of ethical investment principles. We are deeply passionate about investment opportunities that have positive environmental and social benefits and meet our rigorous Ethical/ESG investment due diligence process,” Mr Bird said.
EG’s Executive Director Roger Parker said securing UFS as an investor would enable HISOT to commence investment activities, acquiring properties with significant potential to achieve environmental re-ratings and improved value.
“We see a strong future for our partnership with the CEFC and UFS,” Mr Parker said. “Improvements in the NABERS rating are proven to have a positive impact on attracting blue-chip tenants to formerly low income generating office buildings, as well as revitalising office space for future use.”
*Adjusted to up to $50 million in January 2019
About Uniting Financial Services
Uniting Financial Services is the trading name of The Uniting Church (NSW) Trust Association Limited which provides the Treasury and Investment Services for the Uniting Church in Australia, Synod of NSW and the ACT (the “Synod”). For more than 80 years Uniting Financial Services has been providing income to the Synod, directly contributing to the Uniting Church’s mission and service to communities in need, as well as supporting church life and congregations. A professional and prudent approach to investing has helped Uniting Financial Services build funds under management from just over $400 million 10 years ago, to more than $1 billion today.
EG is a leading real estate fund manager founded in 2000, with over $2.4 billion in assets under management. Its ability to identify and realise opportunities has helped it achieve consistently high, risk-adjusted returns for investors. Its current portfolio spans the retail, commercial and industrial sectors. Its developments across Australia have a pipeline value of more than $2 billion. EG is a signatory to the UN Principles of Responsible Investment (UNPRI). With offices in Sydney Melbourne and Perth. For more information about EG see www.eg.com.au/
Media release, 2016