Our solutions for institutional investors

Responsible investment is the main fiduciary duty of an asset manager towards investors. Given the current political environment, with continued low interest rates and many real estate markets in a late stage of the cycle, a forward-looking strategy is key.

Our long-standing expertise
 

€ 19 billion

Amount invested in our institutional real estate solutions

Union Investment has been active in the institutional real estate sector since 1977. Our customers have benefited throughout from our deep expertise and management skill in the various real estate markets. Choosing Union Investment means choosing the professionalism, outstanding client focus and strong solution-orientation of one of Europe's leading asset managers.

Assets under management in institutional real estate solutions total EUR 19 bilion, split between actively managed funds (around EUR 9.7 billion) and Service KVG mandates (around EUR 9.3 billion). Our 39 institutional real estate funds and other vehicles together hold 517 properties.

Business segments

We provide tailored real estate product solutions and modular service packages compliant with either German or Luxembourg law, ranging from broadly diversified funds to purely administrative vehicles:

Feest en Cultuurpaleis

Funds

Open-ended and closed-ended real estate funds for institutional investors.

Individual mandates

Tailored solutions

Individual mandates, club deals and joint ventures for institutional Investors.

Service KVG mandates

Service KVG mandates

Administrative services in conjunction with third-party asset managers.

Our expertise

We are committed to fulfilling the varying requirements of institutional clients and leveraging our expertise to ensure that both individual client wishes and regulatory requirements are met. The starting point is always a personal discussion with the investor.

Property types

ATMOS, Munich

Offices

We focus on office properties in excellent locations and with high construction quality, but our acquisition planning also includes real estate in secondary locations, subject to meeting our criteria.

Alexa, Berlin

Retail

As one of the largest property holders in our peer group, we have the whole spectrum of retail properties worldwide in our sights, from retail/commercial buildings and retail parks through to shopping centres.

Radisson Blue, London Stansted

Hotels

We have been investing in hotels for over 40 years. Today, our broadly diversified hotel portfolio makes us one of the leading European investment managers for hotel real estate. We are among the largest holders of hotels in our peer group.

Amazon, Bad Hersfeld

Logistics

Excellent locations, good alternative use options and long-term rental income make logistics properties attractive, which is why we include them in our portfolios.

Residential

Residential

We have added another attractive use type in recent years, namely residential property. Within this category, we focus on apartments, student accommodation and micro apartments.

Formats & vehicles

From standard solutions to tailored structuring requirements, our product landscape comprises open-ended and closed-ended vehicles under German or Luxembourg law for one or more investors (e.g. limited partnerships (Investment KG), special AIFs, SICAV-SIFs).

Alongside traditional regulated funds, we also offer more recent structures, such as the Luxembourg Reserved Alternative Investment Fund (RAIF). As an institutional client, you benefit from our high level of structuring expertise and long experience of regulatory matters.

Processes

As one of the largest and oldest investment management companies in the real estate segment, our competitive advantage lies in the quality of our systems and processes across all areas of real estate management, fund management and risk management. This includes the following interfaces and processes:

  • in real estate management: in particular the acquisition and sale process, asset management, property management and project management of development projects
  • in fund management: performance management, liquidity management and planning, portfolio analysis and fund monitoring
  • in risk management: ongoing checking and monitoring of a fund’s main parameters

Fund management

The fund management team bears overall responsibility for fulfilling our product promise and for fund performance. To this end, alongside its operational and strategic functions, fund management also makes content decisions in conjunction with the respective departments.

The core fund management processes are:

  • Determining the fund strategy and risk strategy
  • Managing fund planning
  • Fund and risk management
  • Fund reporting (internal, legal and investor reporting) 
Graphic Overarching fund management

Investment management

As the so-called “deal captain”, the investment management team drives the transaction process. It is responsible for sourcing real estate in accordance with fund management requirements, it forms the interface to the individual departments and decision-making bodies and is in charge of delivering acquisitions. The following core strengths help to ensure strong execution:

  • Excellent relationships with the key developers and property holders in the real estate industry, established over many years
  • Deep market penetration and off-market opportunities due to market position as a substantial property holder
  • As one of the most active real estate managers in the market, we have a steady deal flow
  • We benefit from our reputation as a professional and reliable transaction partner
  • We are valued as an active asset manager that focuses on core/core-plus investments with commercially sustainable product quality

Asset management

Management of our property holdings is the responsibility of the asset management team, which is organised by country, region and sector. Asset management involves active management across the entire investment cycle of the individual property. This includes:

  • Strategic alignment of the individual asset (short, medium and long term; exit strategy)
  • Direct contact with the tenant through active lettings management
  • Managing the external property manager (commercial building management, rent collection and invoicing)
  • Managing the facility manager (technical property management, caretaker services, managing building services maintenance)

Risk management

Risk management is divided for organisational purposes into risk management and risk monitoring. Risk management is handled by fund management and risk monitoring by a dedicated real estate risk monitoring unit. The latter is independent of risk management, thereby ensuring the required legal separation of the two functions.

The Union Investment Group's real estate risk monitoring unit brings together all risk monitoring tasks related to the real estate process. There is a special focus on meeting the requirements of institutional investors. This comprises comprehensive checking of legal and contractual investment limits, an early warning system specific to each fund, sophisticated risk quantification techniques for the various risk types and their aggregation, and finally the carrying out of stress tests. This risk analysis is included in the regular risk reports for fund management. In addition, the real estate risk monitoring unit also determines the necessary risk metrics for institutional investors, especially for regulatory MaRisk reporting by investors in the banking sector.

Research

Our research team can draw on decades of real estate market experience across multiple cycles. Its ongoing analysis covers 26 international real estate markets in Europe, Asia and the Americas. This activity includes preparing forecasts and associated market recommendations. The focus is on office, retail, logistics and hotel properties. Additionally, the residential real estate markets in Germany and Europe are closely monitored.

The situation in potential investment locations to which we currently have no exposure is likewise tracked. Furthermore, the team explores issues such as demographics and cycle analysis which have medium to long-term effects on the real estate markets.

Sustainability management

Union Investment believes that sustainability and business success are inextricably linked. The Group-wide introduction of our Responsible Investment Policy means that sustainability considerations are firmly embedded in Union Investment’s investment processes.

Union Investment's sustainability management is based on the following principles:

  • The United Nations' Principles for Responsible Investment (UN PRI)
  • Sustainability Code for the real estate industry (ZIA – German Property Federation)

In order to achieve a sustainable portfolio design, we use specific tools to measure and analyse quantitative and qualitative data, and identify and implement potentials. These tools include:

  • the Portfolio Sustainability Management System
  • the Sustainable Investment Check
  • Green leases (i.e. featuring clauses on sustainability), which Union Investment is continually integrating in its portfolio
  • Participation in rating initiatives such as Scope and GRESB (Global Real Estate Sustainability Benchmark) for an external assessment of the sustainability performance of our real estate funds

More on sustainability:

Reporting

We provide professional reporting. The scope and level of detail can be defined for each individual client based on their requirements. Examples of reports include in particular:

  • Regulatory reports (e.g. MaRisk report, CRR report, GroMiKV (German regulation on large exposures and loans) report, Solvency II reporting, VAG (German Insurance Supervision Act) reporting)
  • Fund reports (e.g. factsheet, monthly report, semi-annual report, annual report)
  • Tax reports (e.g. taxation assessment principles (report pursuant to Section 5 of the German Investment Tax Act); tax reconciliation and offsetting of taxable income)
  • Further information based on specific requirements (e.g. brief overviews, fund price time series, complete statement of assets or additional individual evaluations as requested by the client)

Awards and ratings

We are delighted by the regular awards and top ratings we receive for real estate management, portfolio management and customer service:

Associations and institutions

Union Investment has an excellent market presence, a strong network and extensive industry contacts. The company also offers clear competitive advantages in terms of market penetration, industry perception and visibility.

The following overview shows Union Investment’s close ties with selected international associations and organisations. We actively contribute to a number of bodies, as a member and participant, to develop standards and drive progress in other areas.

  • Logo BVI

    BVI – German Investment and Asset Management Association (Bundesverband Investment und Asset Management e.V.)

    BVI is an association of investment companies founded in 1970 that works to establish uniform standards, among other things. Union Investment has been an active member for many years.

  • Logo ZIA

    ZIA – German Property Federation (Zentraler Immobilien Ausschuss)

    The ZIA is the only association that brings together the property and capital markets. As a ZIA member, Union Investment also contributes to increasing transparency and professionalism in the property industry and improving the industry's image.

  • Logo DGNB

    DGNB – German Sustainable Building Council (Deutsche Gesellschaft für Nachhaltiges Bauen e.V.)

    The DGNB was founded in 2007 and is the largest and most important sustainability organisation in the German real estate industry. Union Investment is among the founding members.

  • Logo ULI

    ULI - Urban Land Institute

    As a member of ULI Europe, Union Investment advocates responsible urban and regional planning and supports the training and continued professional development of young employees and real estate managers.

  • Logo AFIRE

    AFIRE – Association of Foreign Investors in Real Estate

    AFIRE members have a shared interest in maintaining and promoting cross-border real estate investment. As the official voice of the foreign real estate industry in the United States, AFIRE has represented the interests of more than 200 investing organisations worldwide since 1988.

  • Logo RICS

    RICS - Royal Institution of Chartered Surveyors

    RICS promotes and establishes the highest professional qualifications and standards in property development and management, construction and infrastructure. Union Investment is a member of this British professional association, which was founded back in 1868.

  • Logo gif

    gif – Society of Property Researchers

    The gif promotes research and teaching in the real estate industry. It builds bridges between the academic and business worlds, creates standards to boost market transparency and helps drive the professionalisation of the industry.

Your contact

Bastian Pütz

Would you like to know more about our institutional real estate solutions? Just give me a call. I look forward to hearing from you.

View contact information

EU Disclosure Regulation

EU-Offenlegungsverordnung

With Regulation (EU) 2019/2088 of 27 November 2019 on sustainability-related disclosures (Sustainable Finance Disclosure Regulation), the EU is seeking to achieve more transparency in the financial services sector. Since 10 March 2021, financial market participants have been required to publish sustainability-related information with respect to the company itself and its products. This must include information on how participants integrate sustainability risks and how they consider the principal adverse impacts of investment decisions on sustainability factors.

Treatment of sustainability risks (for mandates managed by Union Investment)

The following description explains how sustainability risks are handled for the investment funds managed by Union Investment Institutional Property GmbH (LEI 529900AVKTTLJSX76Y76), for which the Union Investment Group is solely responsible for management. 
Sustainability risks are environmental, social or governance events or conditions that, if they occur, could have a material impact – either actual or potential – on the value of the fund’s investments.
Sustainability risks are an integral part of known risks such as market risk, liquidity risk, counterparty risk and operational risk, and can influence the significance of these.

I. Investment decisions

At Union Investment, investment decisions are made on the basis of a fundamental assessment process. The principle of ESG integration is also embedded into all investment decisions. ESG integration is understood as the systematic consideration of sustainability factors during each of the key steps of the investment process. These sustainability factors include environmental, social and governance matters.

At Union Investment, a team of internal sustainability experts is responsible for integrating sustainability factors into the fundamental assessment process. The team deals for example with special types of real estate and countries which, due to specific events and/or structural trends, are particularly significant in terms of risk, income and valuation when sustainability aspects are taken into account. The team issues investment signals and recommendations for all the real estate, real estate funds, real estate companies and fund managers concerned.

II. Incorporating sustainability risks into investment decisions

Risk managers and sustainability experts analyse the most material sustainability risks for the respective property or real estate fund, thus adding information on financially significant sustainability risks to the classic acquisition due diligence.

The results of the ESG analysis are placed on record together with individual sustainability factors. The Union Investment fund managers have access to these documents, which enable them to assess the sustainability risks inherent in portfolios and base their investment decisions on their findings.

In order to minimise sustainability risks, the fund managers seek constructive dialogue with the asset managers responsible for servicing and developing the real estate. The goal is to actively develop the portfolios with reference to opportunities and risks that may be connected with sustainability factors (Manage to Green). 

III. Impact on returns

In the long term, the way in which sustainability factors are treated can have a material impact on how the value of an investment develops. Real estate with insufficient sustainability standards may be more susceptible to event risks, reputational risks, regulator risks, litigation risks and technology risks. These sustainability risks can for example affect business operations, property value, the continued rentability of the property and the way in which it is managed. If these risks materialise, the investment could be negatively valued with a corresponding impact on the fund’s returns.

Change history:

10.03.2021: Initial publication

Treatment of sustainability risks (for mandates managed by Union Investment and external partner(s))

The following description explains how sustainability risks are handled for the investment funds managed by Union Investment Institutional Property GmbH (LEI 529900AVKTTLJSX76Y76), for which parts of the management are outsourced to external managers. 
Sustainability risks are environmental, social or governance events or conditions that, if they occur, could have a material impact – either actual or potential – on the value of the fund’s investments.
Sustainability risks are an integral part of known risks such as market risk, liquidity risk, counterparty risk and operational risk, and can influence the significance of these.  

I. Investment decisions

At Union Investment, investment decisions are made on the basis of a fundamental assessment process. The principle of ESG integration is also embedded into all investment decisions. ESG integration is understood as the systematic consideration of sustainability factors during each of the key steps of the investment process. These sustainability factors include environmental, social and governance matters.

The integration of sustainability factors into the fundamental assessment process is guaranteed. Union Investment deals for example with special types of real estate and countries which, due to specific events and/or structural trends, are particularly significant in terms of risk, income and valuation when sustainability aspects are taken into account. 

II. Incorporating sustainability risks into investment decisions

Union Investment analyses the most material sustainability risks for the respective property or real estate fund, thus adding information on financially significant sustainability risks to the classic acquisition due diligence.

The results of the ESG analysis are placed on record together with individual sustainability factors. The Union Investment fund managers have access to these documents, which enable them to assess the sustainability risks inherent in portfolios and base their investment decisions on their findings. 

III. Impact on returns

In the long term, the way in which sustainability factors are treated can have a material impact on how the value of an investment develops. Real estate with insufficient sustainability standards may be more susceptible to event risks, reputational risks, regulator risks, litigation risks and technology risks. These sustainability risks can for example affect business operations, property value, the continued rentability of the property and the way in which it is managed. If these risks materialise, the investment could be negatively valued with a corresponding impact on the fund’s returns.

Change history:

10.03.2021: Initial publication

Principal Adverse Impact Statement of Union Investment Institutional Property GmbH (LEI Nummer: 529900AVKTTLJSX76Y76)

The company does not consider adverse sustainability impacts caused by investment decisions. The relevant data that needs to be collected for determining and weighting the adverse sustainability impacts is not yet available to the company in sufficient quantities.
The company is currently collecting the required data and intends to take into account the principal adverse sustainability impacts caused by investment decisions from 31 December 2023 onwards.

Change history:

10.03.2021: Initial publication

30.06.2021: As of 30 June 2021, the company considers the main adverse impacts of investment decisions on sustainability factors as part of its investment decisions.

29.11.2022: Change of approach. Since 29 November 2022, the company has not considered the principal adverse sustainability impacts caused by investment decisions because it became apparent that despite the measures taken it is currently not possible to collect comparable and consistent data within a short period of time in order to adequately consider the principal adverse impacts.

The funds listed here take into account sustainability features according to Section 8 of Regulation (EU) 2019/2088

  • UniInstitutional European Real Estate
  • UniInstitutional German Real Estate

The sustainability-related disclosures referred to in Article 10 of Regulation (EU) 2019/2088 are set out below:

UniInstitutional European Real Estate

Sustainability-related disclosure

Summary

Description of the environmental or social characteristics of the fund and investment strategy

For this fund, the company pursues an approach which seeks to ensure the sustainability of the real estate assets in particular by taking environmental characteristics into account. By taking account of environmental characteristics, the company is addressing the role of buildings in achieving the Paris climate targets. The building sector can make a substantial contribution towards achieving climate targets by significantly reducing CO2 emissions. In addition, good governance criteria are taken into account during the acquisition and management of properties. At present, no social criteria are taken into account for this fund. No reference value has been determined to establish whether the fund is aligned with the environmental or social characteristics promoted.
The fund’s investment strategy pursues an ESG approach which seeks to ensure the sustainability of the fund by taking various sustainability characteristics into account. The Manage to Green strategy is designed to continuously improve the sustainability and environmental impact of the real estate portfolio, both in the context of investment decisions and of portfolio management. One aim of investment decisions is to help protect the climate and limit the global temperature increase to 2°C. Sustainability data is provided via the ImmoSustain system, enabling the sustainability aspects of properties to be managed. To achieve the targets of the Manage to Green strategy, sustainability indicators are used and consistently applied. The sustainability indicator used in investment decisions is the SI Check. In portfolio management activities, the sustainability indicators are the SI Check and CO2 emissions. For the fund, the binding elements of the investment strategy that are used to achieve the environmental characteristics when acquiring properties are the SI Check, a mandatory environmental audit, energy performance certificates, avoidance of investment in buildings that are used to extract, store, transport or produce fossil fuels, and counterparty exclusions. Binding elements of the investment strategy that are used to achieve the environmental characteristics as part of portfolio management are the SI Check, CO2 emissions, environmental checklists and tenant exclusions. When selecting properties for the fund’s real estate portfolio, the principal adverse impacts (PAIs) of these investment decisions on sustainability factors are also taken into account.
With this financial product, environmental characteristics are promoted, but no sustainable investments are sought. In line with the investment strategy, the fund invests solely in real estate. Therefore, no information on the good governance practices of the companies invested in can be provided.
The fund’s assets are divided into various categories. The planned asset allocation can be found in the “Breakdown of investments” section. 

Monitoring of environmental or social characteristics 

Sustainability indicators are used to measure the extent of compliance with the fund’s environmental characteristics. The sustainability indicator used in investment decisions is the SI Check. In portfolio management activities, the sustainability indicators are the SI Check and CO2 emissions. Control mechanisms are implemented within the company in order to monitor and manage the criteria defined in the investment strategy for achieving the fund’s environmental characteristics (e.g. applying minimum requirements to the SI score). 

Data sources and data processing; methods and potential limitations

The company uses the SI Check and analysis of the CO2 emissions data of properties as methods for measuring achievement of the environmental characteristics. 

The company uses qualitative and quantitative data to analyse properties when making investment decisions and in portfolio management. This data is also obtained from external service providers. The quantitative and qualitative data is recorded in ImmoSustain and then analysed, edited for further processing and documented. 

Data collection is limited in particular for buildings that have no energy monitoring system and/or where there is no direct access to energy consumption data. A further limitation may become apparent when conducting the SI Check. PAIs are taken into account by focusing on investment in energy efficient buildings, among other measures. These are evaluated using energy performance certificates. No table is available yet that maps energy performance certificates to EPC ratings. Despite these limitations, the measures described can be used to achieve the environmental and/or social characteristics promoted by the financial product. 

Due diligence and engagement policy

The company has a fiduciary duty and acts solely in the interests of investors. This principle is embedded in the company’s business processes. An internal policy and process system has been developed accordingly, which all units must comply with. This is monitored by the relevant compliance department using a risk-based approach. 
As well as complying with the relevant legislation and regulatory requirements, the fund’s sustainable investment process is based on important national and international standards that serve as benchmarks for action. The fund invests in real estate, taking account of environmental characteristics. An engagement policy related to investment in securities is currently not part of the fund’s environmental investment strategy. Accordingly, no details can be provided of good governance procedures used by the companies invested in.

Further information

Further information can be found in the prospectus and the fund’s annual report.

No sustainable investment target

With this financial product, environmental or social characteristics are promoted, but no sustainable investments are sought.  

Environmental or social characteristics of the financial product

The company takes sustainability characteristics into account when acquiring properties and also as part of property management. Sustainability refers to environmental (E) and social (S) criteria and good governance (G). Environmental characteristics are, in particular, the reduction of a property’s CO2 emissions and of energy consumption in kWh per square metre. Social characteristics include, for example, projects that benefit the common good. Good corporate governance is measured against various criteria, including whether and to what extent users of properties engage in controversial business practices as defined in the principles of the UN Global Compact or whether their business operations involve banned and controversial weapons.

For this fund, the company pursues an approach which seeks to ensure the sustainability of the real estate assets in particular by taking environmental characteristics into account. By taking account of environmental characteristics, the company is addressing the role of buildings in achieving the Paris climate targets. The building sector can make a substantial contribution towards achieving climate targets by significantly reducing CO2 emissions. In addition, good governance criteria are taken into account during the acquisition and management of properties.

Consideration of sustainability characteristics in the real estate portfolio is a core element of the Manage to Green strategy which the company has put in place to achieve the goal of carbon neutrality by 2050 via a range of measures.

To implement the Manage to Green strategy the company has established a central data platform called ImmoSustain. Sustainability data is provided centrally via this system, enabling the sustainability aspects of properties to be managed.

The regulatory requirements for the design of social criteria are still being developed. In light of this, no social criteria are currently taken into account for this fund. However, in the context of investment decisions and also as part of property management, the company regularly reviews the extent to which social criteria can be included in its decisions.

Achieving environmental characteristics via outsourcing companies

The company has commissioned other companies to undertake asset management of certain parts of the fund and property management of the fund’s assets. When providing their services, these companies take into account the above-mentioned environmental characteristics of the fund in accordance with the company’s instructions.

Investment strategy

Investment strategy for meeting the environmental or social characteristics of the financial product

The fund’s investment strategy pursues an ESG approach which seeks to ensure the sustainability of the fund by taking various sustainability characteristics into account.
The Manage to Green strategy is designed to continuously improve the sustainability and environmental impact of the real estate portfolio, both in the context of investment decisions and of portfolio management. One aim of investment decisions is to help protect the climate and limit the global temperature increase to 2°C.

Sustainability data is provided via the ImmoSustain system, enabling the sustainability aspects of properties to be managed. 

To achieve the targets of the Manage to Green strategy, sustainability indicators are used and consistently applied. The sustainability indicator used in investment decisions is the SI Check. In portfolio management activities, the sustainability indicators are the SI Check and CO2 emissions. 

A property’s energy consumption contributes significantly to its CO2 emissions. For the analysis of energy consumption, energy performance certificates provide an initial insight into energy efficiency. Bills issued by energy providers are also entered into ImmoSustain every month. This data indicates the energy consumption per square metre per property. To ensure detailed analysis, appropriate energy performance monitoring and assessment by external service providers is being introduced across nearly all buildings. This process covers all the relevant technical systems, analyses the energy consumption of a building and includes the development of energy-saving measures, such as improvements to technical building systems like cooling facilities and electricity control for individual buildings. The consumption data (kWh/sq m/year) for all buildings is aggregated and presented at portfolio level. 

Reducing energy consumption thus contributes significantly towards reducing CO2 emissions and therefore plays an important part in limiting global warming. Accordingly, the company is committed to reducing the energy consumption (kWh/sq m/year) of buildings by 10 per cent at portfolio level by 2030. Energy-saving measures are designed to focus on buildings that do not meet the criteria for sustainable investment as set out in Regulation (EU) 2020/852 (Taxonomy Regulation).

Environmental checklists for buildings are also completed as an integral part of the annual review process. They are designed to help the company avoid risks and ensure safety. The sustainability of existing holdings is being improved through measures such as promoting green leases in accordance with the standard set by the German Property Federation (Zentraler Immobilien Ausschuss, ZIA) and green property management contracts (obligation to obtain environmental management certification in accordance with ISO 14.001 or comparable proof), as well as supporting sustainable tenant fit-outs. A green lease is a sustainability-focused lease that has been specially designed to encourage tenants to become sustainable occupiers. It is also intended to incentivise landlords to manage properties to high sustainability standards. This is the case, for example, where leases cover the sustainable management of a commercial property during ongoing operation, the provision of specific consumption and emissions data by the tenant, and sustainable modernisation and other construction work in order to promote sustainable use of the building.

When selecting properties for the fund’s real estate portfolio, the principal adverse impacts (PAIs) of these investment decisions on sustainability factors are also taken into account. 
Categories that can be used to determine adverse impacts on sustainability factors through investment in real estate are: fossil fuels, energy efficiency, and the energy consumption of a building.
PAIs are taken into account specifically by (1) avoiding investment in buildings that are used to extract, store, transport or produce fossil fuels, (2) focusing on investment in energy efficient buildings (assessed using energy performance certificates), and (3) reducing the intensity of the energy consumption (kWh/sq m/year) of buildings at portfolio level. 
Investment in buildings that are used to extract, store, transport or produce fossil fuels (e.g. filling stations) can only be made if they represent a minor part of the total investment in an acquisition (e.g. retail park with filling station). 

In addition, as part of investment decisions and the development of existing buildings, the company seeks to reduce the proportion of buildings in the portfolio that are not energy efficient. Roadmaps for the energy efficiency of buildings are developed and used to improve the total energy consumption (kWh/sq m/year) of buildings at portfolio level.
For the fund, the binding elements of the investment strategy that are used to achieve the environmental characteristics when acquiring properties are:

  • Buildings may only be acquired if a score of at least 2.5 is achieved in the SI Check (see below). If it is not, the measures required to reach this score must be budgeted for accordingly at the time of acquisition. These measures must be implemented within five years of transfer of ownership. 
  • In addition to the SI Check, a mandatory environmental audit (including a soil contamination check) is carried out by an external provider prior to every purchase. The findings play a role in every investment decision. 
  • All buildings must also have a valid energy performance certificate – if available in the country concerned – at the time of purchase, e.g. an energy passport complying with German energy-saving regulations (EnEV)/the German Buildings Energy Act (GEG) or an Energy Star rating in the US.
  • Investment in buildings that are used to extract, store, transport or produce fossil fuels (e.g. filling stations) can only be made if they represent a minor part of the total investment in an acquisition (e.g. retail park with filling station). 
  • No properties owned by companies that are engaged in controversial business practices as defined in the UN Global Compact (United Nations’ initiative for sustainable and responsible corporate governance), or those in which tenants are engaged in controversial business practices, will be acquired.

Binding elements of the investment strategy that are used to achieve the environmental characteristics as part of portfolio management are:

  • A stipulation that the overall portfolio of existing buildings should achieve an average SI Check score of at least 2.5.
  • If the CO2 emissions of a building in the fund significantly exceed the CRREM 2°C climate pathway over an extended period, measures to optimise energy use are developed and incorporated into annual investment planning by fund management on a case-by-case basis.
  • Environmental checklists for buildings are also completed as an integral part of the annual review process. They are designed to help the company avoid risks and ensure safety.
  • In managing the portfolio, no leases are signed with tenants who are engaged in controversial business practices as defined in the UN Global Compact (United Nations’ initiative for sustainable and responsible corporate governance).
     

Policy on evaluating the good corporate governance practices of the companies invested in

In line with the investment strategy, the fund invests solely in real estate. Accordingly, no details can be provided of good governance procedures used by the companies invested in.

Breakdown of investments

The investment fund’s assets are divided into different categories, as shown in the diagram below. The relative share of fund assets is shown as a percentage.
“Investments” comprises all assets belonging to the fund less loans taken out and other liabilities.
The category “#1 Aligned with environmental or social characteristics” refers to the real estate assets. It includes all properties and development projects (based on construction progress) held directly or through investment companies that are acquired and/or held as part of the investment strategy to achieve the environmental characteristics promoted.

graphic

The figure shown under #1 can exceed 100 per cent. One reason for this may be that debt is used in the fund to acquire properties, which increases the value of the real estate assets.

The category “#2 Other investments” includes all of the fund’s assets with the exception of real estate assets, e.g. bank deposits and units in investment funds. Sustainability characteristics are not currently taken into account when acquiring these assets.

Monitoring of environmental or social characteristics

Monitoring of environmental or social characteristics in investment decisions

The SI Check sustainability indicator is used in investment decisions to measure the extent of compliance with the fund’s environmental characteristics. In addition to this sustainability indicator, other binding elements for achieving the environmental characteristics are specified in the fund’s investment strategy.

The sustainability indicator is described in the “Methods” section, the binding elements in the “Investment strategy” section. Control mechanisms are implemented in the investment process prior to acquiring properties in order to monitor and manage the criteria defined in the investment strategy for achieving the fund’s environmental characteristics (e.g. applying minimum requirements to the SI score). When making investment decisions, the company analyses the extent to which properties comply with the sustainability indicator defined in the investment strategy and with the binding elements. The key acquisition data relating to sustainability is entered into ImmoSustain, where it is regularly monitored as part of the portfolio management process. 
In investment decisions, certain criteria are likewise enshrined in the company’s risk control process in order to enable subsequent monitoring as part of portfolio management activities.

Monitoring of environmental or social characteristics as part of portfolio management

The SI Check and CO2 emissions sustainability indicators are used as part of portfolio management activities to measure the extent of compliance with the fund’s environmental characteristics. In addition to these sustainability indicators, other binding criteria for meeting the environmental characteristics are specified in the fund’s investment strategy. The sustainability indicators are described in the “Methods” section, the binding elements in the “Investment strategy” section.

Control mechanisms are implemented as part of portfolio management and risk control in order to monitor and manage the sustainability indicators and binding elements defined in the investment strategy for achieving the fund’s environmental characteristics (e.g. applying minimum requirements to the SI score). Control and management of sustainability data in portfolio management activities is mainly carried out using ImmoSustain, with sustainability data being regularly provided via this system. Consumption data and the results of the SI Check are duly recorded in ImmoSustain. The system also displays other relevant data, e.g. energy performance certificates and the CRREM climate pathway. 

In ImmoSustain, the sustainability indicators for each property are calculated at regular intervals and aggregated at fund level. These sustainability indicators and the binding elements are monitored regularly by the company. Control mechanisms are implemented for this purpose, including as part of risk control (e.g. to maintain an average SI score of 2.5 at portfolio level for existing buildings). This regular internal analysis enables compliance with the fund’s environmental characteristics to be tracked over the lifecycle.  

Methods

Sustainability indicators are used to measure achievement of the real estate portfolio’s environmental characteristics. 

Sustainability characteristics in investment decisions:

The sustainability indicator used in the fund’s investment decisions on properties is:

SI Check

Sustainability aspects of buildings are assessed prior to acquisition by way of the company’s proprietary Sustainable Investment Check (SI Check). The environmental characteristics of a property are reviewed and analysed using the SI Check. The SI Check consists of seven categories: building automation, building envelope and technology, resources, economic factors, user comfort, in-use measures, and location. This tool enables the current condition of a building and the development potential of individual properties to be determined and analysed.

In total, over 100 sustainability criteria across the seven categories are evaluated using the SI Check. Category 1, “building automation”, involves checking whether ventilation and heating systems have sensors installed that allow efficient management, and if so, what type of technology is used. In category 2, “building envelope and technology”, sustainability aspects including green electricity, heat transfer coefficients, glazing and solar shading are evaluated in order to identify measures for improved energy efficiency and fewer greenhouse gas emissions. In category 3, “resources”, the focus is on aspects such as saving water and making use of rainwater and on greening measures. Category 4, “user comfort“, covers topics including security in and around buildings, as well as charging points for vehicles. In category 5, “economic factors”, the efficiency of buildings is determined by looking at aspects such as building geometry, flexibility of the floor plan and variety of space configurations. Category 6, “location”, involves examining and tracking aspects such as proximity to public transport, cycling infrastructure, physical risks such as flooding, and other issues. Lastly, category 7, “in-use measures”, includes analysing whether building management and waste management are sustainable and whether service providers are selected on the basis of sustainability.

The SI Check data is gathered by local building service providers, validated by the company and stored in the ImmoSustain system.

To evaluate these sustainability criteria, points are awarded and added up for each category. The total per category is converted to a weighted percentage and a total score is calculated for each building. This is shown on a scale from 0 to 5, with 5 being the highest score. The SI Check is carried out prior to every acquisition and is an integral part of the investment decision-making process.

Buildings may only be acquired if a score of at least 2.5 is achieved. If it is not, the measures required to reach this score must be budgeted for accordingly at the time of acquisition. These measures must be implemented within five years of transfer of ownership.

Sustainability indicators as part of portfolio management:

The following sustainability indicators are taken into account when managing the fund’s properties:

SI-Check 

To help protect the climate and limit the global temperature increase to 2°C, environmental characteristics are also taken into account as part of portfolio management activities, based on a fundamental review process. The company starts by using the same method here as is already used in investment decisions.

For existing properties, an annual SI Check is carried out and the results documented in the ImmoSustain system.

The environmental characteristics of existing properties are reviewed and analysed based on the same seven categories that feature in the SI Check for investment decisions. For each existing property, sustainability aspects are evaluated and the total score calculated according to the procedure already described as part of the investment process. 

The ImmoSustain system enables everyone involved in the process to gain a rapid and reliable overview of the sustainable development status of individual buildings and of the entire portfolio. It is thus possible for fund management to take sustainability into account when working on the portfolio. Individual potential is identified at building level as part of the SI Check evaluation and recorded together with measures to improve the overall score of the building. The cost-effectiveness of the measures is taken into account and they are included in annual budget planning, before being implemented in line with the overall strategy for a particular building. Possible measures include the installation of external solar shading, use of green electricity and the installation of new building services. The decision to implement measures in individual cases is taken by fund management as part of its annual investment planning activities. There is a stipulation that the overall portfolio of existing buildings should achieve an average SI Check score of at least 2.5.

CO2 emissions

CO2 emissions data is a vital part of the analysis of the environmental characteristics of an existing property. CO2 emissions caused by the consumption of electricity, heat and cooling in the buildings are the top priority. These are calculated per square metre and year by the ImmoSustain system and compared with scientific data (Carbon Risk Real Estate Monitor, CRREM data). CRREM data takes account of the building class and geographical location and indicates whether a building is on the 2°C climate pathway and helping to limit global warming to 2°C or not. This means, for example, that office properties in Germany will not be allowed to emit more than 67.3 kg of CO2 per square metre per year from 2030 onwards (information current as at 2022). In addition, the company regularly reviews whether measures can be taken to reduce the CO2 emissions of a building to achieve the 2°C CRREM climate pathway. If the CO2 emissions of a building in the fund significantly exceed the CRREM target of 2°C over an extended period, measures to optimise energy use are developed (e.g. renewal of the heating system) and incorporated into annual investment planning by fund management on a case-by-case basis. Depending on market developments and/or the performance of the fund, a disposal process for a property may be initiated, where applicable.

Data sources and data processing

Quantitative data:

Consumption data used to analyse the sustainability of the fund’s real estate portfolio is primarily gathered by the company itself and/or its local building service providers. It is also supplied by external providers. The data from these external providers comprises, for example, raw data from energy providers and/or specialist service providers, e.g. Carbon Risk Real Estate Monitoring (CRREM) or the International Energy Agency (IEA). Both the internal data and the data obtained from external sources is checked for completeness and plausibility (e.g. for significant deviations over time or missing data records for a building). ImmoSustain also provides a review option.

Qualitative data:

The SI Check data is gathered during the acquisition process and annually for each property by external parties using a questionnaire developed by the company. Based on the results of the survey, the company checks whether the specified minimum requirement for the SI Check has been met, for example. If no SI Check data is available for a building, the lowest possible value (0) is assumed when calculating the portfolio average. Data for environmental checklists incl. soil surveys and energy performance certificates is gathered by external service providers or supplied by the vendor of the property. 
The quantitative and qualitative data is recorded in ImmoSustain, analysed, validated, edited for further processing and documented. The majority of the data is not based on estimates.

Limitations of methods and data

Data collection is limited in particular for buildings that have no energy monitoring system and/or where there is no direct access to energy consumption data. This is the case, for example, if there is a direct contractual relationship between the energy supplier and the respective tenant, and the company has no way of reading the building’s consumption data centrally (e.g. due to legal requirements and/or lack of access). If the tenant does not supply consumption data to the company, the company cannot gather consumption data for this part of the space and must estimate consumption based on comparable spaces/buildings. For extrapolation, empirical values higher than the portfolio average are always used to ensure that the data projections remain realistic.

A further limitation may become apparent when conducting the SI Check. If no SI Check data is available for a building, the lowest possible value (0) is assumed as a precautionary measure when calculating the portfolio average. This may lead to a lower SI score at portfolio level.

PAIs are taken into account by focusing on investment in energy efficient buildings (assessed using energy performance certificates), among other measures. For the evaluation of energy efficient buildings, Annex I of Regulation (EU) 2019/2022 states that buildings built before 31 December 2020 are considered energy efficient if they have an EPC class A or B. However, EPCs are not available in all investment countries. In Germany, for instance, an energy performance certificate without letters is issued for commercial properties. In countries where EPCs are not available, the company carries out an evaluation based on the available documents that most closely correspond to an EPC. For example, in the case of German energy performance certificates for commercial properties, the letter scale from German energy performance certificates for residential buildings is used as a reference.

Due to the precautionary measures described above, the impact of any limitations of the data on the environmental characteristics promoted by the financial product is kept as low as possible or excluded entirely (SI Check). Plausibility checks are carried out on data from external service providers as part of internal processes, but flawed data cannot be completely ruled out.

Despite the data limitations in some cases, the measures described can therefore be used to ensure that the environmental or social characteristics promoted by the financial product are met.

Due diligence

The company has a fiduciary duty and acts solely in the interests of investors. This principle is embedded in the company’s business processes. An internal policy and process system has been developed accordingly, which all units must comply with. This is monitored by the relevant compliance department using a risk-based approach. 
As well as complying with the relevant legislation and regulatory requirements, the fund’s sustainable investment process is based on important national and international standards that serve as benchmarks for action, e.g.:

  • the UN-backed Principles for Responsible Investment (UN PRI)
  • the UN Global Compact
  • the BVI (German Investment and Asset Management Association) Rules of Conduct
  • the BVI guidelines for sustainable real estate portfolio management
  • the Sustainability Code adopted by the German real estate sector

During the acquisition and ongoing analysis of the fund’s assets, sustainability risks are taken into account as part of the company’s general due diligence obligations and in risk analysis.

Engagement policy

In the fund, environmental characteristics are currently taken into consideration only in the real estate portfolio. An engagement policy related to investment in securities is currently not part of the fund’s environmental investment strategy. Accordingly, no details can be provided of good governance procedures used by the companies invested in.

“Specific reference value” if an index has been defined as a reference value for the environmental or social characteristics promoted by the financial product.

No reference value has been defined to establish whether the fund is aligned with the environmental or social characteristics promoted.

 

Change history:

01.11.2021: Initial publication

01.07.2022: Inclusion of description for considering adverse impacts on sustainability factors.

01.01.2023: Additional information in accordance with the regulatory technical standards supplementing the Disclosure Regulation (EU) 2019/2088.

UniInstitutional German Real Estate

Sustainability-related disclosure

Summary

Description of the environmental or social characteristics of the fund and investment strategy

For this fund, the company pursues an approach which seeks to ensure the sustainability of the real estate assets in particular by taking environmental characteristics into account. By taking account of environmental characteristics, the company is addressing the role of buildings in achieving the Paris climate targets. The building sector can make a substantial contribution towards achieving climate targets by significantly reducing CO2 emissions. In addition, good governance criteria are taken into account during the acquisition and management of properties. At present, no social criteria are taken into account for this fund. No reference value has been determined to establish whether the fund is aligned with the environmental or social characteristics promoted.
The fund’s investment strategy pursues an ESG approach which seeks to ensure the sustainability of the fund by taking various sustainability characteristics into account. The Manage to Green strategy is designed to continuously improve the sustainability and environmental impact of the real estate portfolio, both in the context of investment decisions and of portfolio management. One aim of investment decisions is to help protect the climate and limit the global temperature increase to 2°C. Sustainability data is provided via the ImmoSustain system, enabling the sustainability aspects of properties to be managed. To achieve the targets of the Manage to Green strategy, sustainability indicators are used and consistently applied. The sustainability indicator used in investment decisions is the SI Check. In portfolio management activities, the sustainability indicators are the SI Check and CO2 emissions. For the fund, the binding elements of the investment strategy that are used to achieve the environmental characteristics when acquiring properties are the SI Check, a mandatory environmental audit, energy performance certificates, avoidance of investment in buildings that are used to extract, store, transport or produce fossil fuels, and counterparty exclusions. Binding elements of the investment strategy that are used to achieve the environmental characteristics as part of portfolio management are the SI Check, CO2 emissions, environmental checklists and tenant exclusions. When selecting properties for the fund’s real estate portfolio, the principal adverse impacts (PAIs) of these investment decisions on sustainability factors are also taken into account.
With this financial product, environmental characteristics are promoted, but no sustainable investments are sought. In line with the investment strategy, the fund invests solely in real estate. Therefore, no information on the good governance practices of the companies invested in can be provided.
The fund’s assets are divided into various categories. The planned asset allocation can be found in the “Breakdown of investments” section. 

Monitoring of environmental or social characteristics 

Sustainability indicators are used to measure the extent of compliance with the fund’s environmental characteristics. The sustainability indicator used in investment decisions is the SI Check. In portfolio management activities, the sustainability indicators are the SI Check and CO2 emissions. Control mechanisms are implemented within the company in order to monitor and manage the criteria defined in the investment strategy for achieving the fund’s environmental characteristics (e.g. applying minimum requirements to the SI score). 

Data sources and data processing; methods and potential limitations

The company uses the SI Check and analysis of the CO2 emissions data of properties as methods for measuring achievement of the environmental characteristics. 

The company uses qualitative and quantitative data to analyse properties when making investment decisions and in portfolio management. This data is also obtained from external service providers. The quantitative and qualitative data is recorded in ImmoSustain and then analysed, edited for further processing and documented. 

Data collection is limited in particular for buildings that have no energy monitoring system and/or where there is no direct access to energy consumption data. A further limitation may become apparent when conducting the SI Check. PAIs are taken into account by focusing on investment in energy efficient buildings, among other measures. These are evaluated using energy performance certificates. No table is available yet that maps energy performance certificates to EPC ratings. Despite these limitations, the measures described can be used to achieve the environmental and/or social characteristics promoted by the financial product. 

Due diligence and engagement policy

The company has a fiduciary duty and acts solely in the interests of investors. This principle is embedded in the company’s business processes. An internal policy and process system has been developed accordingly, which all units must comply with. This is monitored by the relevant compliance department using a risk-based approach. 
As well as complying with the relevant legislation and regulatory requirements, the fund’s sustainable investment process is based on important national and international standards that serve as benchmarks for action. The fund invests in real estate, taking account of environmental characteristics. An engagement policy related to investment in securities is currently not part of the fund’s environmental investment strategy. Accordingly, no details can be provided of good governance procedures used by the companies invested in.

Further information

Further information can be found in the prospectus and the fund’s annual report.

No sustainable investment target

With this financial product, environmental or social characteristics are promoted, but no sustainable investments are sought.  

Environmental or social characteristics of the financial product

The company takes sustainability characteristics into account when acquiring properties and also as part of property management. Sustainability refers to environmental (E) and social (S) criteria and good governance (G). Environmental characteristics are, in particular, the reduction of a property’s CO2 emissions and of energy consumption in kWh per square metre. Social characteristics include, for example, projects that benefit the common good. Good corporate governance is measured against various criteria, including whether and to what extent users of properties engage in controversial business practices as defined in the principles of the UN Global Compact or whether their business operations involve banned and controversial weapons.

For this fund, the company pursues an approach which seeks to ensure the sustainability of the real estate assets in particular by taking environmental characteristics into account. By taking account of environmental characteristics, the company is addressing the role of buildings in achieving the Paris climate targets. The building sector can make a substantial contribution towards achieving climate targets by significantly reducing CO2 emissions. In addition, good governance criteria are taken into account during the acquisition and management of properties.

Consideration of sustainability characteristics in the real estate portfolio is a core element of the Manage to Green strategy which the company has put in place to achieve the goal of carbon neutrality by 2050 via a range of measures.

To implement the Manage to Green strategy the company has established a central data platform called ImmoSustain. Sustainability data is provided centrally via this system, enabling the sustainability aspects of properties to be managed.

The regulatory requirements for the design of social criteria are still being developed. In light of this, no social criteria are currently taken into account for this fund. However, in the context of investment decisions and also as part of property management, the company regularly reviews the extent to which social criteria can be included in its decisions.

Achieving environmental characteristics via outsourcing companies

The company has commissioned other companies to undertake asset management of certain parts of the fund and property management of the fund’s assets. When providing their services, these companies take into account the above-mentioned environmental characteristics of the fund in accordance with the company’s instructions.

Investment strategy

Investment strategy for meeting the environmental or social characteristics of the financial product

The fund’s investment strategy pursues an ESG approach which seeks to ensure the sustainability of the fund by taking various sustainability characteristics into account.
The Manage to Green strategy is designed to continuously improve the sustainability and environmental impact of the real estate portfolio, both in the context of investment decisions and of portfolio management. One aim of investment decisions is to help protect the climate and limit the global temperature increase to 2°C.

Sustainability data is provided via the ImmoSustain system, enabling the sustainability aspects of properties to be managed. 

To achieve the targets of the Manage to Green strategy, sustainability indicators are used and consistently applied. The sustainability indicator used in investment decisions is the SI Check. In portfolio management activities, the sustainability indicators are the SI Check and CO2 emissions. 

A property’s energy consumption contributes significantly to its CO2 emissions. For the analysis of energy consumption, energy performance certificates provide an initial insight into energy efficiency. Bills issued by energy providers are also entered into ImmoSustain every month. This data indicates the energy consumption per square metre per property. To ensure detailed analysis, appropriate energy performance monitoring and assessment by external service providers is being introduced across nearly all buildings. This process covers all the relevant technical systems, analyses the energy consumption of a building and includes the development of energy-saving measures, such as improvements to technical building systems like cooling facilities and electricity control for individual buildings. The consumption data (kWh/sq m/year) for all buildings is aggregated and presented at portfolio level. 

Reducing energy consumption thus contributes significantly towards reducing CO2 emissions and therefore plays an important part in limiting global warming. Accordingly, the company is committed to reducing the energy consumption (kWh/sq m/year) of buildings by 10 per cent at portfolio level by 2030. Energy-saving measures are designed to focus on buildings that do not meet the criteria for sustainable investment as set out in Regulation (EU) 2020/852 (Taxonomy Regulation).

Environmental checklists for buildings are also completed as an integral part of the annual review process. They are designed to help the company avoid risks and ensure safety. The sustainability of existing holdings is being improved through measures such as promoting green leases in accordance with the standard set by the German Property Federation (Zentraler Immobilien Ausschuss, ZIA) and green property management contracts (obligation to obtain environmental management certification in accordance with ISO 14.001 or comparable proof), as well as supporting sustainable tenant fit-outs. A green lease is a sustainability-focused lease that has been specially designed to encourage tenants to become sustainable occupiers. It is also intended to incentivise landlords to manage properties to high sustainability standards. This is the case, for example, where leases cover the sustainable management of a commercial property during ongoing operation, the provision of specific consumption and emissions data by the tenant, and sustainable modernisation and other construction work in order to promote sustainable use of the building.

When selecting properties for the fund’s real estate portfolio, the principal adverse impacts (PAIs) of these investment decisions on sustainability factors are also taken into account. 
Categories that can be used to determine adverse impacts on sustainability factors through investment in real estate are: fossil fuels, energy efficiency, and the energy consumption of a building.
PAIs are taken into account specifically by (1) avoiding investment in buildings that are used to extract, store, transport or produce fossil fuels, (2) focusing on investment in energy efficient buildings (assessed using energy performance certificates), and (3) reducing the intensity of the energy consumption (kWh/sq m/year) of buildings at portfolio level. 
Investment in buildings that are used to extract, store, transport or produce fossil fuels (e.g. filling stations) can only be made if they represent a minor part of the total investment in an acquisition (e.g. retail park with filling station). 

In addition, as part of investment decisions and the development of existing buildings, the company seeks to reduce the proportion of buildings in the portfolio that are not energy efficient. Roadmaps for the energy efficiency of buildings are developed and used to improve the total energy consumption (kWh/sq m/year) of buildings at portfolio level.
For the fund, the binding elements of the investment strategy that are used to achieve the environmental characteristics when acquiring properties are:

  • Buildings may only be acquired if a score of at least 2.5 is achieved in the SI Check (see below). If it is not, the measures required to reach this score must be budgeted for accordingly at the time of acquisition. These measures must be implemented within five years of transfer of ownership. 
  • In addition to the SI Check, a mandatory environmental audit (including a soil contamination check) is carried out by an external provider prior to every purchase. The findings play a role in every investment decision. 
  • All buildings must also have a valid energy performance certificate – if available in the country concerned – at the time of purchase, e.g. an energy passport complying with German energy-saving regulations (EnEV)/the German Buildings Energy Act (GEG) or an Energy Star rating in the US.
  • Investment in buildings that are used to extract, store, transport or produce fossil fuels (e.g. filling stations) can only be made if they represent a minor part of the total investment in an acquisition (e.g. retail park with filling station). 
  • No properties owned by companies that are engaged in controversial business practices as defined in the UN Global Compact (United Nations’ initiative for sustainable and responsible corporate governance), or those in which tenants are engaged in controversial business practices, will be acquired.

Binding elements of the investment strategy that are used to achieve the environmental characteristics as part of portfolio management are:

  • A stipulation that the overall portfolio of existing buildings should achieve an average SI Check score of at least 2.5.
  • If the CO2 emissions of a building in the fund significantly exceed the CRREM 2°C climate pathway over an extended period, measures to optimise energy use are developed and incorporated into annual investment planning by fund management on a case-by-case basis.
  • Environmental checklists for buildings are also completed as an integral part of the annual review process. They are designed to help the company avoid risks and ensure safety.
  • In managing the portfolio, no leases are signed with tenants who are engaged in controversial business practices as defined in the UN Global Compact (United Nations’ initiative for sustainable and responsible corporate governance).
     

Policy on evaluating the good corporate governance practices of the companies invested in

In line with the investment strategy, the fund invests solely in real estate. Accordingly, no details can be provided of good governance procedures used by the companies invested in.

Breakdown of investments

The investment fund’s assets are divided into different categories, as shown in the diagram below. The relative share of fund assets is shown as a percentage.
“Investments” comprises all assets belonging to the fund less loans taken out and other liabilities.
The category “#1 Aligned with environmental or social characteristics” refers to the real estate assets. It includes all properties and development projects (based on construction progress) held directly or through investment companies that are acquired and/or held as part of the investment strategy to achieve the environmental characteristics promoted.

The figure shown under #1 can exceed 100 per cent. One reason for this may be that debt is used in the fund to acquire properties, which increases the value of the real estate assets.

The category “#2 Other investments” includes all of the fund’s assets with the exception of real estate assets, e.g. bank deposits and units in investment funds. Sustainability characteristics are not currently taken into account when acquiring these assets.

Monitoring of environmental or social characteristics

Monitoring of environmental or social characteristics in investment decisions

The SI Check sustainability indicator is used in investment decisions to measure the extent of compliance with the fund’s environmental characteristics. In addition to this sustainability indicator, other binding elements for achieving the environmental characteristics are specified in the fund’s investment strategy.

The sustainability indicator is described in the “Methods” section, the binding elements in the “Investment strategy” section. Control mechanisms are implemented in the investment process prior to acquiring properties in order to monitor and manage the criteria defined in the investment strategy for achieving the fund’s environmental characteristics (e.g. applying minimum requirements to the SI score). When making investment decisions, the company analyses the extent to which properties comply with the sustainability indicator defined in the investment strategy and with the binding elements. The key acquisition data relating to sustainability is entered into ImmoSustain, where it is regularly monitored as part of the portfolio management process. 
In investment decisions, certain criteria are likewise enshrined in the company’s risk control process in order to enable subsequent monitoring as part of portfolio management activities.

Monitoring of environmental or social characteristics as part of portfolio management

The SI Check and CO2 emissions sustainability indicators are used as part of portfolio management activities to measure the extent of compliance with the fund’s environmental characteristics. In addition to these sustainability indicators, other binding criteria for meeting the environmental characteristics are specified in the fund’s investment strategy. The sustainability indicators are described in the “Methods” section, the binding elements in the “Investment strategy” section.

Control mechanisms are implemented as part of portfolio management and risk control in order to monitor and manage the sustainability indicators and binding elements defined in the investment strategy for achieving the fund’s environmental characteristics (e.g. applying minimum requirements to the SI score). Control and management of sustainability data in portfolio management activities is mainly carried out using ImmoSustain, with sustainability data being regularly provided via this system. Consumption data and the results of the SI Check are duly recorded in ImmoSustain. The system also displays other relevant data, e.g. energy performance certificates and the CRREM climate pathway. 

In ImmoSustain, the sustainability indicators for each property are calculated at regular intervals and aggregated at fund level. These sustainability indicators and the binding elements are monitored regularly by the company. Control mechanisms are implemented for this purpose, including as part of risk control (e.g. to maintain an average SI score of 2.5 at portfolio level for existing buildings). This regular internal analysis enables compliance with the fund’s environmental characteristics to be tracked over the lifecycle.  

Methods

Sustainability indicators are used to measure achievement of the real estate portfolio’s environmental characteristics. 

Sustainability characteristics in investment decisions:

The sustainability indicator used in the fund’s investment decisions on properties is:

SI Check

Sustainability aspects of buildings are assessed prior to acquisition by way of the company’s proprietary Sustainable Investment Check (SI Check). The environmental characteristics of a property are reviewed and analysed using the SI Check. The SI Check consists of seven categories: building automation, building envelope and technology, resources, economic factors, user comfort, in-use measures, and location. This tool enables the current condition of a building and the development potential of individual properties to be determined and analysed.

In total, over 100 sustainability criteria across the seven categories are evaluated using the SI Check. Category 1, “building automation”, involves checking whether ventilation and heating systems have sensors installed that allow efficient management, and if so, what type of technology is used. In category 2, “building envelope and technology”, sustainability aspects including green electricity, heat transfer coefficients, glazing and solar shading are evaluated in order to identify measures for improved energy efficiency and fewer greenhouse gas emissions. In category 3, “resources”, the focus is on aspects such as saving water and making use of rainwater and on greening measures. Category 4, “user comfort“, covers topics including security in and around buildings, as well as charging points for vehicles. In category 5, “economic factors”, the efficiency of buildings is determined by looking at aspects such as building geometry, flexibility of the floor plan and variety of space configurations. Category 6, “location”, involves examining and tracking aspects such as proximity to public transport, cycling infrastructure, physical risks such as flooding, and other issues. Lastly, category 7, “in-use measures”, includes analysing whether building management and waste management are sustainable and whether service providers are selected on the basis of sustainability.

The SI Check data is gathered by local building service providers, validated by the company and stored in the ImmoSustain system.

To evaluate these sustainability criteria, points are awarded and added up for each category. The total per category is converted to a weighted percentage and a total score is calculated for each building. This is shown on a scale from 0 to 5, with 5 being the highest score. The SI Check is carried out prior to every acquisition and is an integral part of the investment decision-making process.

Buildings may only be acquired if a score of at least 2.5 is achieved. If it is not, the measures required to reach this score must be budgeted for accordingly at the time of acquisition. These measures must be implemented within five years of transfer of ownership.

Sustainability indicators as part of portfolio management:

The following sustainability indicators are taken into account when managing the fund’s properties:

SI-Check 

To help protect the climate and limit the global temperature increase to 2°C, environmental characteristics are also taken into account as part of portfolio management activities, based on a fundamental review process. The company starts by using the same method here as is already used in investment decisions.

For existing properties, an annual SI Check is carried out and the results documented in the ImmoSustain system.

The environmental characteristics of existing properties are reviewed and analysed based on the same seven categories that feature in the SI Check for investment decisions. For each existing property, sustainability aspects are evaluated and the total score calculated according to the procedure already described as part of the investment process. 

The ImmoSustain system enables everyone involved in the process to gain a rapid and reliable overview of the sustainable development status of individual buildings and of the entire portfolio. It is thus possible for fund management to take sustainability into account when working on the portfolio. Individual potential is identified at building level as part of the SI Check evaluation and recorded together with measures to improve the overall score of the building. The cost-effectiveness of the measures is taken into account and they are included in annual budget planning, before being implemented in line with the overall strategy for a particular building. Possible measures include the installation of external solar shading, use of green electricity and the installation of new building services. The decision to implement measures in individual cases is taken by fund management as part of its annual investment planning activities. There is a stipulation that the overall portfolio of existing buildings should achieve an average SI Check score of at least 2.5.

CO2 emissions

CO2 emissions data is a vital part of the analysis of the environmental characteristics of an existing property. CO2 emissions caused by the consumption of electricity, heat and cooling in the buildings are the top priority. These are calculated per square metre and year by the ImmoSustain system and compared with scientific data (Carbon Risk Real Estate Monitor, CRREM data). CRREM data takes account of the building class and geographical location and indicates whether a building is on the 2°C climate pathway and helping to limit global warming to 2°C or not. This means, for example, that office properties in Germany will not be allowed to emit more than 67.3 kg of CO2 per square metre per year from 2030 onwards (information current as at 2022). In addition, the company regularly reviews whether measures can be taken to reduce the CO2 emissions of a building to achieve the 2°C CRREM climate pathway. If the CO2 emissions of a building in the fund significantly exceed the CRREM target of 2°C over an extended period, measures to optimise energy use are developed (e.g. renewal of the heating system) and incorporated into annual investment planning by fund management on a case-by-case basis. Depending on market developments and/or the performance of the fund, a disposal process for a property may be initiated, where applicable.

Data sources and data processing

Quantitative data:

Consumption data used to analyse the sustainability of the fund’s real estate portfolio is primarily gathered by the company itself and/or its local building service providers. It is also supplied by external providers. The data from these external providers comprises, for example, raw data from energy providers and/or specialist service providers, e.g. Carbon Risk Real Estate Monitoring (CRREM) or the International Energy Agency (IEA). Both the internal data and the data obtained from external sources is checked for completeness and plausibility (e.g. for significant deviations over time or missing data records for a building). ImmoSustain also provides a review option.

Qualitative data:

The SI Check data is gathered during the acquisition process and annually for each property by external parties using a questionnaire developed by the company. Based on the results of the survey, the company checks whether the specified minimum requirement for the SI Check has been met, for example. If no SI Check data is available for a building, the lowest possible value (0) is assumed when calculating the portfolio average. Data for environmental checklists incl. soil surveys and energy performance certificates is gathered by external service providers or supplied by the vendor of the property. 
The quantitative and qualitative data is recorded in ImmoSustain, analysed, validated, edited for further processing and documented. The majority of the data is not based on estimates.

Limitations of methods and data

Data collection is limited in particular for buildings that have no energy monitoring system and/or where there is no direct access to energy consumption data. This is the case, for example, if there is a direct contractual relationship between the energy supplier and the respective tenant, and the company has no way of reading the building’s consumption data centrally (e.g. due to legal requirements and/or lack of access). If the tenant does not supply consumption data to the company, the company cannot gather consumption data for this part of the space and must estimate consumption based on comparable spaces/buildings. For extrapolation, empirical values higher than the portfolio average are always used to ensure that the data projections remain realistic.

A further limitation may become apparent when conducting the SI Check. If no SI Check data is available for a building, the lowest possible value (0) is assumed as a precautionary measure when calculating the portfolio average. This may lead to a lower SI score at portfolio level.

PAIs are taken into account by focusing on investment in energy efficient buildings (assessed using energy performance certificates), among other measures. For the evaluation of energy efficient buildings, Annex I of Regulation (EU) 2019/2022 states that buildings built before 31 December 2020 are considered energy efficient if they have an EPC class A or B. However, EPCs are not available in all investment countries. In Germany, for instance, an energy performance certificate without letters is issued for commercial properties. In countries where EPCs are not available, the company carries out an evaluation based on the available documents that most closely correspond to an EPC. For example, in the case of German energy performance certificates for commercial properties, the letter scale from German energy performance certificates for residential buildings is used as a reference.

Due to the precautionary measures described above, the impact of any limitations of the data on the environmental characteristics promoted by the financial product is kept as low as possible or excluded entirely (SI Check). Plausibility checks are carried out on data from external service providers as part of internal processes, but flawed data cannot be completely ruled out.

Despite the data limitations in some cases, the measures described can therefore be used to ensure that the environmental or social characteristics promoted by the financial product are met.

Due diligence

The company has a fiduciary duty and acts solely in the interests of investors. This principle is embedded in the company’s business processes. An internal policy and process system has been developed accordingly, which all units must comply with. This is monitored by the relevant compliance department using a risk-based approach. 
As well as complying with the relevant legislation and regulatory requirements, the fund’s sustainable investment process is based on important national and international standards that serve as benchmarks for action, e.g.:

  • the UN-backed Principles for Responsible Investment (UN PRI)
  • the UN Global Compact
  • the BVI (German Investment and Asset Management Association) Rules of Conduct
  • the BVI guidelines for sustainable real estate portfolio management
  • the Sustainability Code adopted by the German real estate sector

During the acquisition and ongoing analysis of the fund’s assets, sustainability risks are taken into account as part of the company’s general due diligence obligations and in risk analysis.

Engagement policy

In the fund, environmental characteristics are currently taken into consideration only in the real estate portfolio. An engagement policy related to investment in securities is currently not part of the fund’s environmental investment strategy. Accordingly, no details can be provided of good governance procedures used by the companies invested in.

“Specific reference value” if an index has been defined as a reference value for the environmental or social characteristics promoted by the financial product.

No reference value has been defined to establish whether the fund is aligned with the environmental or social characteristics promoted.

 

Change history:

01.11.2021: Initial publication

01.07.2022: Inclusion of description for considering adverse impacts on sustainability factors.

01.01.2023: Additional information in accordance with the regulatory technical standards supplementing the Disclosure Regulation (EU) 2019/2088.

To the sustainability portal of Union Investment