Buildings as a financial asset - lessons to be learned from the fund managers

Ian Ellis says that the big property investors are leading the way on using data to enhance the value of their portfolios.

As we continue to face a challenging economy, the performance of buildings as a financial asset is rising up the business agenda. Property fund managers are leading the way in maximising the returns on their investment in buildings by being more energy efficient and sustainable, and there are lessons to be learned from their practices.

The recent 40% Symposium*, held by BRE at the end of 2011, introduced speakers from leading financial investors such as PRUPIM and Aberdeen Asset Management. These fund managers oversee hundreds of buildings around the world. For example, the PRUPIM portfolio consists of 740 buildings worth £18.5 billion.  These experts made it clear that understanding the performance of the buildings they manage is vital.

Even with this level of property investment, information on individual buildings is a matter of great interest. Collecting data has several functions at this level. It allows fund managers to prioritise assets for improvement plans; and it enables the managers to identify good operational practice to implement in other properties. Hard data has real value for them.

Nina Jackson, director of sustainability and environment at PRUPIM said at the conference: “Why measure environmental performance? Because you can’t manage what you don’t measure.”

This is a message that all building owners, FMs and energy managers should take to heart. The fund managers are well aware of the pressures of legislation. The CRC Energy Efficiency scheme is probably the most significant at the moment, as it now represents a tax on carbon and therefore on building energy use. Looking to the future, the large funds view a further tax on buildings rated F- and G- under the EPC scheme as highly likely.

This legislation affects all building management professionals, no matter how small or large their portfolio. Collecting data, and understanding how to turn that into useful information will become increasingly important. Sub-metering is key, but knowing how to get the most from a building energy management system is also vital.

Make 2012 the year in which you focus on collecting useable data from your building about its energy use and other performance factors. It doesn’t have to be complicated, but it is a very worthwhile project that will bear dividends in the long-term. If pension fund managers are interested in sub-metering, it’s time to pay close attention.

*40% Symposium organised by BRE and held at RIBA on 23rd November 2011.