Sustainability & Financing Structure Investment Portfolio

This case study focuses specifically on the technical upgrading of energy labels and the associated banking financing strategy for a commercial real estate portfolio.

Part 1: Strategic Energy Label Transformation

At the start of the project, the portfolio was technically outdated. The focus was on minimizing the stranded asset risk using the NTA 8800 methodology.

From baseline measurement to Label A

1. Detailed EPA-U Recording: Each building was examined for its thermal envelope (insulation values), installation technology (COP values of heat pumps), and lighting (W/m²).
2. Customized advice (scenario modeling): A specific sustainability path has been drawn up for each property with a label from D to G. This involves calculating which technical modifications (e.g., hybrid heat pump vs. fully electric) are needed to exceed the threshold for an Energy Label A score.
3. Monitoring & Certification: After completion of the work, the buildings were re-inspected. Through the use of building management systems (BMS), the theoretical label value is now substantiated with actual consumption data.

Part 2: Bank Financing & Green Loans

The financing of the sustainability operation is structured to optimize the portfolio's cash flow and improve the Loan-to-Value (LTV) ratio.

Financing structure

• Green Loan Facility: Thanks to the firm guarantee of Energy Label A certification, a 'Green Loan' could be taken out with a major bank. This resulted in an interest rate reduction (spread reduction) of 20 to 40 basis points compared to regular commercial financing.
• Increase in Market Value (LTV): The bank recognizes sustainability as value optimization. The increase in the appraised market value after label improvement improved the LTV ratio, which provided additional scope for refinancing other projects.
• CAPEX vs. OPEX: The investment (CAPEX) is partly covered by savings on energy costs (OPEX). The lease agreements include a 'Green Lease' provision, which allows part of the financing costs to be passed on to tenants via service charges or a sustainability fee. In turn, tenants benefit from lower energy bills.