26 September 2011
Legal & General Property ("LGP") today announces that it has amended its standard lease format to include 'green' clauses, in a decision that demonstrates the Company's ongoing commitment to sustainability. Notifying its full panel of lawyers, LGP has issued a memorandum of green lease principles that must be considered in the drafting of all standard leases going forward, including clauses relating to the use of environmental contractors and upholding Energy Performance Certificates (EPCs).
As one of the UK's largest institutional property fund managers, with £10.3bn of property assets under management, LGP recognises its responsibility to minimise the impact of the built environment, and understands the need to engage with occupiers to ensure properties are managed in the most efficient and sustainable manner possible. With a sustainability strategy centred on maximising the efficiency and sustainability of its portfolio, it recognises the fundamental importance of working with tenants to take these changes to the next level.
Additional conditions set out in the lease include the implementation of a recycling strategy, and the agreement by both parties to meet regularly to discuss such issues as energy consumption and the use of grey water. The lease also sets out amendments to tenants' handbooks, to include incorporating information regarding energy and environmental management in relation to the estate, including EPC ratings and recommendations. Furthermore, leases may include energy reduction targets, monitoring data and other green initiatives in relation to the estate.
LGP considers it of the upmost importance that tenants understand the benefits of green policies, especially where they reduce energy costs and therefore the running costs for their premises. Its decision to adopt green leases follows a number of comprehensive initiatives undertaken by the Company to engage with occupiers, including the 'Office, Retail and Leisure Occupiers' Guides to Sustainability', which seek to equip tenants with a thorough understanding of the environmental impact of property and the necessary toolkit to implement change. Additionally, the Company broke new ground by being the first investment management firm to provide an intensive, six-month training course on sustainable property investment, which was made compulsory for all property fund managers within the business and rolled out to the rest of the industry through its partners and agents.
Commenting on this initiative, Bill Hughes (pictured), Managing Director of Legal & General Property, said: "The decision to implement green lease clauses further demonstrates LGP's ongoing efforts to reduce the environmental and social footprint across its portfolio, working from the grass roots up to implement change. As one of the UK's largest property fund managers, we recognise our responsibility to minimise the environmental impacts of our assets, and believe that by working closely with our occupiers, we can take these changes to the next level. The move to incorporate green lease clauses represents just one element of LGP's wider sustainability strategy which we look forward to continuing to develop going forward."
Katherine Laurenson, Senior Solicitor at Legal & General Property, added: "This memorandum seeks to provide full, clear guidelines to our lawyers as to the issues that we consider key, so that they can effectively liaise with our tenants' representatives to find a lease structure that accommodates both parties' needs and responds to the fundamentals of the building. We work from a principle that encouragement and flexibility is the most effective way to deal with green issues in leases, rather than enforcement provisions with penalties for tenants who fail to comply. If tenants can see that these procedures enhance their CSR profile, reduce their energy costs and are less harmful to the planet, it is more likely that they will implement them."
Dido Laurimore / Olivia Goodall / Toyah Simpson
Financial Dynamics (for Legal & General Property)
+44 (0)20 7831 3113
Legal & General Property
+44 (0)20 3124 2700
Legal & General Property (LGP) is a wholly-owned subsidiary of Legal & General Investment Management (LGIM), one of Europe's largest institutional asset managers and a major global investor. LGIM manages approximately £362bn of assets on behalf of more than 3,300 clients (31 March 2011) and provides products and solutions spanning all asset classes. LGP is the third largest institutional property fund manager in the UK, managing or co-managing 17 separate funds or vehicles and two segregated mandates with an aggregate asset value of over £10.3bn as at 30 June 2011. These funds include:
Specialist Pooled Funds
The Leisure Fund Limited Partnership; Industrial Property Investment Fund; UK Logistics Fund; Arlington Business Parks Partnership; and the English Cities Fund
Single Asset Vehicles
Bracknell Regeneration Partnership; Central Saint Giles Partnership; Performance Retail Limited Partnership and Warrington Retail Limited Partnership
Life Fund; Linked Pensions; Linked Life; Managed Fund; Property Unit Trust; UK Property Income Fund; LPI Income Property Fund and the Hybrid Property Fund.
LGP's UK-focused fund management platform has built and retained a strong track record of outperformance across the sector. Owing to its size, diversity and penetration, it benefits from best in class banking and property industry contacts which, along with its wealth of in-house skill and expertise, have enabled it to continue to attract and secure high quality market opportunities. Taking a client-centric approach, the business places the highest priority upon integrity and transparency, leveraging upon the significant resources provided by the wider LGIM platform. Sector specialists cover each sphere of the market and are supported by LGP's market-leading research capability.
LGP's sector specialisms cross all facets of the real estate market. In particular, the Company has a major development platform, responsible for delivering the West End office market's latest landmark, Central Saint Giles, and currently involved in developing its high profile Covent Garden scheme, Agar Street, as well as significant town-centre retail regeneration projects, including Bracknell, Northampton and Eastbourne.
Legal & General Property Limited. Registered address: One Coleman Street, London EC2R 5AA.
Registered in England 2091897.
For more information please contact:
t: +44 (0) 2031 242096