401 Collins Case Study: Heritage & Environmental Performance

Any new office building should be targeting good sustainability ratings. Take that as the baseline.

However about three quarters of Australia’s building stock are older, and quite a bit worse when it comes to carbon and water footprints.

Buildings consume about 40% of Australia’s electricity, so improving older building’s environmental performance is a powerful lever of climate action.

So, we were thrilled that 401 Collins St, a 70+ year old building that our community invested in, has achieved a 5 star NABERS Energy (whole building) rating.

For context, that’s a pretty good number for new buildings, let alone one that was built in the 1930s.

The business case supporting the environmental upgrades:

• Our community of investors bought the building in 2014 at a cost of around $32m.
• In 2017 we raised new equity and debt of just under $20m to fund a rejuvenation and upgrade project, equating to total capital cost of ~$52m
• The environmental works cost substantially less than the $20m we raised, which also included funds for aesthetic works and re-leasing.
• After the upgrade project, at EoFY 2018, the building was valued at $66m, equating to an equity uplift of ~$14m; far in excess of the cost of the upgrades. The building has continued to appreciate since then.
• 401 Collins St currently performs more energy efficiently than 86% of ‘Whole Building’ rated assets in Victoria.
• This means is emits 45% less CO2-e than an otherwise comparable building in Melbourne with average performance (ie NABERS Energy ~3 Stars). That’s an emissions saving of 683 tonnes CO2-e/year.
• We believe that buildings’ environmental performance is attractive to tenants and owners, especially as more people place more value on sustainability.

The Age ran a story on 401 Collins. They led with money side, to be expected in the business pages, but managed to cover the environmental story as well.