CEFC and QIC boost energy efficiency in major Australian shopping centres

23 November, 2017

In a retail property first, the Clean Energy Finance Corporation (CEFC) will invest $200 million into QIC's Global Real Estate flagship Shopping Centre Fund (QSCF) to undertake improvements in energy performance across the QSCF shopping centre portfolio.

The senior debt facility is the CEFC's largest property investment commitment to date and will support improvements in shopping centres across Queensland, Victoria, New South Wales and the ACT.

CEFC CEO Ian Learmonth said Australian shopping centres, which account for 36 per cent of commercial building energy consumption, were a relatively untapped opportunity to transform energy use and reduce carbon emissions. They also provide the opportunity to make local communities "greener" by engaging with shoppers with initiatives to improve sustainability and reduce energy use.

"We have more than 1,750 shopping centres in Australia, and yet less than 10 per cent of them have attained National Australian Built Environment Rating System (NABERS) ratings that measure how well they perform in terms of energy use. That represents enormous potential for improvement," Mr Learmonth said.

"Shopping centres have substantial energy needs with large enclosed malls and retail areas necessitating 'year-round' heating and air-conditioning supply. There is a range of environmental initiatives that can be implemented to deliver energy efficiencies in shopping centre operations.

"Our finance to QSCF will demonstrate how energy efficiency technologies and renewable energy sources like solar can make a difference in leading Australia towards net zero carbon buildings."

QSCF's retail footprint encompasses over 1 million square metres of floor space and, each year,accommodates more than 130 million visitations, generating more than $5 billion in retail transactions.

Through the CEFC's agreement with QSCF, QIC will provide a pathway to reducing energy consumption and will undertake customer engagement activities that inform shoppers of the initiatives being carried out.

CEFC Property sector lead Chris Wade said the CEFC's finance was encouraging QIC to bring forward energy efficiency initiatives and to remain focused on upgrades across the QSCF portfolio.

"A series of energy efficiency and clean energy initiatives will be rolled out across the portfolio in the short and medium term. Although the shopping centres involved are of different ages and are at different levels of sustainability, QIC is targeting a minimum 4-star NABERS (excluding GreenPower) rating for all assets in its portfolio within 5 years, which will translate to energy savings of between 30 and 40 per cent," he said.

"In addition to existing assets in the portfolio, QIC will be seeking to design its new developments to a 5-Star NABERS Energy rating, taking advantage of the latest energy efficiency and clean energy technologies to drive better performance."

"As part of the facility, QIC will also be working closely with the CEFC in relation to a range of other initiatives including the potential incorporation of electric vehicle infrastructure and engagement with centre tenants on the benefits of energy efficiency and clean energy initiatives."

Steve Leigh, Managing Director of QIC's Global Real Estate said the agreement reached with CEFC was an important milestone in the history of the organisation. 

"All of the funds in the Global Real Estate portfolio are guided by a firm commitment to driving improvements in ESG-related initiatives, and in particular focusing on energy reduction and security across the portfolio.

"In a broader sense, successfully delivering these initiatives contributes to achieving our triple bottom line objectives incorporating economic and environmental factors, and social priorities. 

"Our ESG Strategy and operating procedures align with globally recognised standards and we partner with respected organisations to assist us in the delivery of programs designed to achieve industry best-practice."

QSCF Fund Manager, Michael Fattouh said: "This partnership with CEFC presents a unique opportunity to align QSCF's capital management strategy that seeks to diversify its sources of funding with Global Real Estate's broader ESG ambitions to drive sustainability initiatives and manage energy risk across our retail portfolio. The CEFC facility is also QSCF's first "green debt" facility and the first major investment CEFC has committed to the retail sector, for which we are extremely proud."

"QSCF is also commencing work with the CEFC to understand potential pathways to achieving net zero carbon emissions across its portfolio, building on QIC Global Real Estate's recently announced target of generating 30 per cent of all base load power for retail asset common areas from renewable energy by 2025."

While the energy efficiency targets will be achieved through strategies specific to each building, environmental initiatives identified may include:

-        onsite rooftop solar PV

-        LED lighting

-        heating, ventilation and air-conditioning system upgrades

-        sub-metering and energy data monitoring systems to provide data to optimise energy management processes.

The CEFC's finance for the QSCF is another example of its focus on clean energy solutions for Australian cities, as part of its Sustainable Cities Investment Program.

View our investment insight on the QIC Global Real Estate flagship Shopping Centre Fund

ABOUT QIC GLOBAL REAL ESTATE

QIC is one of Australia's largest institutional fund managers, which has over the past 20-plus years acquired and developed a retail portfolio of 50 real estate assets globally. 

QIC's domestic real estate portfolio comprises assets in Queensland, Victoria, New South Wales, ACT and Western Australia. Its international property holdings include regional retail malls in the United States located on the West Coast in California and Nevada and on the East Coast in Florida, New York, Virginia, West Virginia and Pennsylvania.

With a global real estate portfolio was valued at AUD18.9 billion as at June 2017, QICGRE has developed a reputation for creating vibrant places at the heart of communities. Places that build local experiences and meaningful relationships; with spaces to support each part of our lives.