1. Energy efficiency in real estate unlocking finance through an effective regulatory framework Money Matters – How to mobilise private finance for energy efficiency February 13, 2012 Tatiana Bosteels Hermes Real Estate - IIGCC

2. 06 January 2014 Hermes Real Estate I2 Energy efficiency and real estate Buildings are key to energy efficiency Existing buildings are real challenge! Regulatory pressure has been one of main drivers for sector No evidence, yet, of impact of sustainability on financial performance Increasing market pressure from institutional investors Growing sense in industry that sustainability is risk and opportunity that will impact financial performance

3. Crucial to understand real estates sustainability barriers Dynamic and cyclical nature of European real estate markets Large number of practitioners during long life cycles Complex management arrangements, fragmented responsibilities and conflicts of interest between them Limited investment terms by each practitioner Lease conditions limits opportunities for carbon events Small investment scale and lack of energy economics Lack of market information, demand, impact on financial performance Limited information and skills among large variety of practitioners 06 January 2014 Hermes Real Estate I3

4. Financing energy efficiency in real estate Energy efficiency and clean technology funds backed by multilateral banks –Able to support building energy efficiency products and services industry –Often government backed and public sector targeted –Few directly applicable for commercial and residential OR Energy efficiency investment theme within real estate investment and management Large potential capital investment opportunity within EU real estate investment industry 06 January 2014 Hermes Real Estate I4

5. Key is strong regulatory framework Sensitive to buildings complex management arrangements EU and MS, sound and comprehensive mix of sustainability policy instruments However some flagship policies poorly conceived and partially implemented Real estate effective policies need Account for complex management arrangement and conflict of interest between practitioners Who has control over energy consumption and control over capital allocation in buildings life cycle Improved skills of all practitioners in sector Fiscal incentives necessary to unlock full potential Policies should support internalisation of sustainability in real estate financial performance 06 January 2014 Hermes Real Estate I5