Climate Change Data

Environmental Metrics

ESG Focus Areas

• Homelessness alleviation
• Environmental responsibility
• Social impact
• Governance

Environmental Achievements

• Improved energy efficiency of properties (aiming for EPC rating of C or higher for new developments; improving EPC E-graded properties within six months of acquisition)
• Promoting water-saving measures
• Encouraging waste reduction and recycling

Social Achievements

• Provided 3,846 beds across 711 properties for homeless individuals
• Partnered with 21 registered charities, housing associations, and other organizations to provide accommodation and support services
• Achieved 100% rent collection rates

Governance Achievements

• Strong board with substantial real estate, financial, and sector experience
• Established Audit Committee and Management Engagement Committee
• Compliance with AIC Code of Corporate Governance

Climate Goals & Targets

Environmental Challenges

• Global pandemic (COVID-19) and its impact on tenants' businesses and the economy
• Potential for tenant defaults
• Subjectivity and uncertainty in property valuations
• Reliance on key service providers
• Risk of not complying with REIT rules and regulations
• Interest rate risk
• Inflation risk

Mitigation Strategies

• Monitoring business continuity of key service providers
• Close monitoring of tenants' ability to meet rent obligations
• Thorough due diligence before acquisitions
• Contingencies in place to strengthen tenant balance sheets
• Regular review of investment performance
• Long-term Investment Advisory Agreement
• Sliding scale investment advisory fee
• Monitoring of key service providers' performance
• Monitoring compliance with REIT regime
• Appointment of experienced tax advisors
• 12-year fixed-rate loan facility with Scottish Widows
• 100% of rental income linked to CPI annual rent reviews with caps and collars

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• Flooding

Reporting Standards

Frameworks Used: EPRA best practice recommendations

Third-party Assurance: BDO LLP

UN Sustainable Development Goals

• Goal 1: No Poverty
• Goal 3: Good Health and Well-being
• Goal 8: Decent Work and Economic Growth
• Goal 10: Reduced Inequalities
• Goal 11: Sustainable Cities and Communities

Investments in homeless accommodation contribute to poverty reduction, improved health and well-being, economic growth, reduced inequality, and sustainable urban development.

Environmental Metrics

ESG Focus Areas

• Homelessness alleviation

Environmental Achievements

• 100% of assets let on "green leases", aiming to improve environmental performance through cooperation with tenants.

Social Achievements

• Provided 8,103 beds across 1,585 properties for homeless people, delivering a 60% estimated saving to local authorities compared to B&B costs.
• Portfolio diversified geographically across 111 local authorities and across different sub-sectors within homeless accommodation.

Governance Achievements

• Strong board with substantial real estate, financial, commercial and sector experience.
• Established appropriate committees (including Audit Committee and Management Engagement Committee).

Climate Goals & Targets

Environmental Challenges

• Risk of tenants defaulting on rental obligations.
• Potential downturn in UK property market impacting shareholder returns.
• Illiquidity of investments making them difficult to realize quickly.
• Impact of global pandemic on tenants' businesses and ability to meet rent obligations.

Mitigation Strategies

• Thorough due diligence before acquisition and acquiring assets let to strong tenants with track records.
• Regular monitoring of investment performance, purchase yields, debt finance costs, dividends, and total shareholder return.
• Maintaining a cash buffer on the balance sheet for short-term requirements.
• Long-term nature of asset class cash flows underpinned by central government support.
• Conservative level of aggregate borrowings (LTV of 29% against a maximum target of 35%).
• Monitoring business continuity position of key service providers and regular communication with stakeholders.

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: PRI (Principles for Responsible Investment)

Third-party Assurance: BDO LLP

UN Sustainable Development Goals

• Goal 1: No Poverty
• Goal 3: Good Health and Well-being
• Goal 8: Decent Work and Economic Growth
• Goal 10: Reduced Inequalities
• Goal 11: Sustainable Cities and Communities

The company's investment in homeless accommodation contributes to these goals.

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Aim to improve building's Energy Performance Certificate rating to a C or higher
• Require developer counterparties to contractually commit to improving building’s rating to at least a C within 12 months of acquisition (where applicable)

Social Achievements

• Investing exclusively in the UK, focusing on the delivery of high-quality homeless accommodation
• Each asset let to a specialist housing association/registered charity

Governance Achievements

• Seeks to comply with the AIC Code of Corporate Governance
• Investment Advisor is a signatory to the UN-supported Principles of Responsible Investment (PRI)

Climate Goals & Targets

Environmental Challenges

• Tenants' energy consumption is outside of direct company control
• Risk that future value of some properties may be adversely affected by sustainability issues
• Risk of losing income from existing tenants due to migration to properties with better environmental qualities

Mitigation Strategies

• Engage with tenants to encourage more efficient energy use and promote energy efficiency improvements
• Systems in place to monitor and manage emerging sustainability-related risks
• Assess likely implications of climate change-related government policies on each asset and overall Group performance

Supply Chain Management

Responsible Procurement

• Encourage counterparties to minimize negative environmental impact

Climate-Related Risks & Opportunities

Physical Risks

• Flooding

Transition Risks

• Government policies

Opportunities

• Creating more sustainable assets

Reporting Standards

Frameworks Used: UN PRI

UN Sustainable Development Goals

• Goal 1
• Goal 3
• Goal 8
• Goal 10
• Goal 11
• Goal 13

Company's commitment to contributing to the implementation of these goals as part of its investment objective