1. Climate Change Capital Investing in Low Carbon Property Green Alpha?

2. 2 Climate Change Capital Climate Change Capital (CCC) is an investment manager and advisor specialising in the opportunities created by the transition towards the low carbon economy. Our activities aim to make the world’s environment cleaner while delivering attractive financial returns. Headquartered in London with an office in Beijing, CCC focuses on the regions of the EU, North America and Asia. ADVISORY  M&A  Corp./Project Finance  Strategy & policy Carbon Finance Private Equity Real Estate Energy Infrastructure INVESTMENT MANAGEMENT Develops, structures and supports a range of funds investing in assets, companies and instruments for the low carbon economy RESEARCH Research in-house policy

3. 3 Annual global flow of energy - 88% conversion loss Source: J.M. Alwood and J.M. Cullen, University of Cambridge

4. 4 Climate Change Property Fund UK Urban non car dependant city centres – no flood risk 2 nd Investment: Edinburgh 3 rd Investment: London 1 st Investment: Birmingham 4 th Investment: Manchester Location, Economics, Sustainability

5. 5 UK carbon emissions – The built environment Residential 28% Commercial 19% Agricultural 1%1% Industry 20 % Transportation 32% Buildings 47 % Source: BRE, GVA Grimley

6. 6 Regulatory change “20-20-20” goals set down by the European Union  20% of consumed energy to be renewable  20% increase in energy efficiency  20% reduction in emissions Energy Performance of Buildings Directive adopted in 2002  Certification of buildings based on its relative energy performance (EPCs)  Required in UK for all large buildings occupied by public authority or relevant institution by October 2008 (DECs)  UK Buildings regulations Zero Carbon by 2019 Climate Change Bill introduced by UK Government in November 2008  Reduction in emissions levels by 26-32% by 2020 and 60% by 2050  5 year carbon budgets  UK Carbon Reduction Commitment (CRC) = Carbon cap/trade on Property portfolios that consumed > 6,000 kw/h per annum in 2008 Trend in Regulation and Legislation  Increasingly onerous and weighted toward fiscal penalty rather than incentive By 2020 (compared to 1990)

7. 7 Carbon Reduction Commitment Energy Efficiency Scheme (CRC) CRC is a ‘cap and trade’ scheme ~ financial incentives/penalties for large occupiers + investors to improve energy efficiency Organisations with total electricity consumption over 6,000MW hrs/yr (typically £500,000 pa) A league table of performance will be published each year CRC brings carbon penalties to existing buildings in the UK Canary Wharf – lights at night Canary Wharf – thermal image

8. 8 Economization of Electricity: 55 % - Innovative climatisation concept - New Façade - Intelligent lighting control system - Innovative elavator technique Economization of Heat Energy: 67 % - Change heating system from gas to district heating - Installation of heat recovering systems - New Facade - Solar plant on the roof Economization of Water: 43 % - Rain water use - Techniques for water conservation - Use of grey water for toilet flush Need for ventilation energy: 60% - Change of climatisation concept - Heat/cooling transfer via water system - Natural ventilation CO 2 - Emissions: 55% - Installation of energy saving systems - Use of district heating - Use of “green” power Heat Island Effect: 50 % - Green roofs - Photovoltaik plant on the roof - Solar plant on the roof Recycling Material: 30% - Reuse raised floor - Recycling window glazing - Recycling Facade Potenziale in bestehenden Objekten Green Buildings Referenzen (Auszug)

9. 9 The plan is projected to: Cost $13.2 million (on top of a planned $500 refurbishment) with payback in 3 years - through energy & operational savings Reduce energy use by up to 38% Achieve annual savings of $4.4 million Reduce carbon emissions by 105,000 metric tons over the next 15 years Be complete within two years Serve as a global model for owners of existing buildings Empire State Building – Integrated sustainability refurbishment programme

10. 10 5 St Philip’s Place, Birmingham, UK  Electricity costs reduced by 45% (60% Gross)  Carbon emissions reduced by 43% (63% Gross)  Green Lease – Landlord and tenant share data (Energy/Water/Waste/Carbon) Prime offices let to UK Government for 10 years £750,000 (< 5 year payback) spent on Energy Efficiency Improvements by Landlord + Tenant

11. 11 Sustainable asset management – The journey 5 St Philip’s Place Offices: Annual CO 2 emissions, DEC Grades and benchmarks from Energy Consumption Guide 19 for a “Type 3” air-conditioned office Kg/m² Treated Floor Area at Defra 2008 CO 2 factors of 0.185 for gas and 0.537 for electricity

12. 12 Why “Green” buildings will outperform If…Investment ImplicationsUnderlying Effects on ‘Green’ Assets Tenants prefer to occupy ‘green’ buildings Green assets let more quicklyRental growth higher and lower depreciation Shorter cash flow risk Green buildings = lower operating costs More tenant money is available for rent Rental growth higher and lower depreciation Government regulation and legislation ‘Greener’ assets de-risked as more attractive to and retain tenants better Lower risk premium than ‘brown’ buildings Investors have fiduciary duty to invest in ‘green’ buildings ‘Green’ properties = more liquid‘Green’ properties are more liquid + should attract a lower risk premium = higher value = “Green Alpha” Original Source: IIGCC

13. 13 Low carbon property investment – the new mainstream  “Prime investment” now encompasses sustainability  Investment downside risk protection + value upside  Low growth, banking crisis > Cash flow fundamentals  Rents + 6-8%,Capital Values + 16% (Maastricht/Berkeley) more UK + pan European research in hand  Low carbon property is mispriced  No need to trade return for “Green”  > Green Alpha

14. 14 Contact Climate Change Capital CCC Head Office Climate Change Capital 3 More London Riverside London SE1 2AQ United Kingdom Tel: +44 (0)20 7939 5000 Fax: +44 (0)20 7939 5030 www.climatechangecapital.com Tim Mockett Tim Mockett is co-founder of CCPF (Climate Change Property Fund), the first low carbon property fund investing in mainstream UK commercial assets. Having raised c. £70m equity, the fund is now 100% invested in core assets in London, Edinburgh, Birmingham and Manchester with a GAV of approximately £150m. Prior to CCC, Tim was Property Director of Stow Securities plc where he was responsible for the implementation of Stow's UK and European investment strategy. In his seven years at Stow, Tim created an investment/development portfolio consisting of assets with a gross value of £200m, including mixed use, office and retail properties principally within Greater London. Tim has over 25 years of experience in commercial property investment and development advising and representing a range of investors, and has invested in and traded over £1bn of commercial property during this period, generating a typical portfolio IRR of over 15% pa.