CEO's message


simply better business

Sustainability is about ongoing leadership, strengthening relationships, and continuous innovation. For over a decade, we have believed that obtaining green building certifications such as LEED, ENERGY STAR and BOMA BEST was the right thing to do – energy costs were lowered and tenants were increasingly becoming interested in green buildings. We felt that prioritizing sustainability and delivering certified buildings resulted in a superior experience for tenants and created value for investors.

But belief by itself is no longer enough. In 2014, we committed to obtaining compelling, portfolio-wide evidence that green certified buildings outperform their non-green counterparts. We commissioned an academic research study and were pleased to see it published in September 2015 in one of the most respected peer-reviewed journals, Institutional Investor's The Journal of Portfolio Management. The study results, discussed throughout this report, have deepened our conviction that sustainability attributes are essential criteria to delivering long-term value for investors. 

increasing net operating income: green building certifications

Green certified buildings are generally more efficient, thereby contributing to a reduction in operating costs and lower greenhouse gas emissions. Three key findings from our commissioned study suggest an 8-10% higher asset value for green office buildings compared to equivalent non-certified assets, which is implied from the following:

·      3.7% increase in rental rate premiums in LEED certified buildings;
·      4% decrease in rent concessions in Canadian LEED and BOMA BEST certified                     buildings and;
·      4% occupancy rate premium in U.S. LEED certified buildings.

This value impact model is discussed in more detail here.

enhancing tenant and resident loyalty: creating communities

The research clearly showed something that had never been published in academic literature before: tenants in green certified buildings are more satisfied and more likely to renew. This was most prominent with BOMA BEST certified buildings in Canada, and particularly for the Gold and Platinum levels. We believe this is largely due to the management practices instilled by the certification schemes and the dedication of property management teams to adhere to these practices while offering a superior environment for tenants. 

reducing risk: sustainable cities

A portfolio of green certified properties helps reduce the risk of building obsolescence. Selecting investments in cities which themselves are actively working on becoming sustainable is also important. We must carefully consider which cities have the appropriate infrastructure, policies and planning in place to attract and support people and businesses. We look for factors that improve overall livability of a city, including public transit, environmental health, protection of green spaces, nurturing of arts and culture, smart growth and a focus on increasing active transportation options such as walking and cycling.  These cities are increasingly requiring energy reporting and benchmarking of buildings and we are prepared to meet these requirements.

Within sustainable cities, there is a strong demand not just for green certified buildings, but for spaces that help people and companies achieve their broader health and well-being goals. We see health as a growing concern, and opportunities exist to provide spaces that encourage healthy lifestyles. 

Bentall Kennedy:  A Sun Life Investment Management Company

Bentall Kennedy became a Sun Life Investment Management Company in September 2015.  Sun Life has been a Bentall Kennedy client for over a decade and one of the many ways that the two companies are aligned is that we both have a strong focus on and commitment to sustainability. In 2016, Sun Life Financial was named among the Global 100 Most Sustainable Corporations in the World by Corporate Knights for the 7th consecutive year.

We appreciate the dedication of our real estate professionals to these initiatives, and we look forward to your feedback and to further sustainability innovations moving forward.  

  


Gary Whitelaw Signature

Gary Whitelaw
Chief Executive Officer, Bentall Kennedy Group
June 22, 2016

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