Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Africa House refurbishment achieved a BREEAM excellent rating and included environmental features such as a biomass boiler, rainwater harvesting, bio-diverse planting, and facilities to encourage cycling to work.

Social Achievements

• Donations to educational charities amounted to £150,000; dividends on donated shares amounted to £919,000.

Governance Achievements

• Annual review of executive Directors’ salaries, with increases based on individual responsibilities, experience, performance, and overall business performance. The non-executive Directors receive fees of £20,000 per annum.

Climate Goals & Targets

Environmental Challenges

• Challenging market for office space in the UK with rent concessions sought by tenants.
• Regional concentration of UK properties in and around London.
• Potential for adverse impact from regulations aimed at controlling residential rental levels or shorthold tenancy arrangements.
• Risk of inappropriate acquisitions.
• Risk of tenant default.
• Risks associated with development projects (planning, construction timing, costs, and letting).
• Dependence on key directors.
• Adverse movements in the sterling/dollar exchange rate.

Mitigation Strategies

• Continuous monitoring of the economic outlook, maintenance of low gearing, rigorous tenant covenant checks.
• Monitoring funding trends and banking regulations, sustaining relationships with financing partners.
• Funding US assets by US dollar borrowings and local retained earnings.
• Careful monitoring of developments in legislation.
• Physical building security, fireproof storage of documents, dispersal of business-critical IT systems.
• Continued investment in the USA, regular monitoring of the property market, regular professional revaluations.
• Rigorous pre-acquisition screening.
• Seeking tenants with strong covenants, careful monitoring of tenants.
• Rigorous screening of development opportunities, focusing on a limited number of developments, close monitoring of active developments.
• Recent appointment of two new directors from the next generation of the Freshwater family.

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: IFRS

Third-party Assurance: KPMG LLP

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Africa House achieved a BREEAM excellent rating and included environmental features such as a bio-mass boiler, rainwater harvesting, bio-diverse planting and facilities to encourage cycling to work.
• Gold Award from the British Council of Shopping Centres for improvements at the retail centre in Newton Aycliffe, County Durham.

Social Achievements

• Donations to educational charities amounted to £150,000.
• Dividends on donated shares of £847,000 passed to charitable companies.

Governance Achievements

• Appointment of Mr Aaron “Mendy” Bude as a new non-executive director.

Climate Goals & Targets

Environmental Challenges

• Economic uncertainty due to the UK’s EU referendum and the Greek debt crisis.
• Potential reduction in availability of finance for property at acceptable cost.
• Adverse movements in the sterling/dollar exchange rate.
• Potential for increased regulation on residential rentals, shorthold tenancies, and environmental matters.
• Risk of catastrophic events (fire, cyber-attack, etc.).
• Risk of tenant default.
• Regional concentration of UK properties in London.
• Risk of inappropriate acquisitions.
• Risks associated with property development (planning, construction, costs, letting).
• Dependence on key directors.
• Weakness in values of some provincial offices and care homes.
• Weak demand and increased vacancy rates for commercial properties in smaller provincial towns and cities.

Mitigation Strategies

• Continuous monitoring of economic outlook, maintenance of low gearing, rigorous tenant covenant checks.
• Monitoring funding trends, sustaining relationships with financing partners, spreading loan maturities.
• Funding US assets with US dollar borrowings and local retained earnings.
• Careful monitoring of legislative developments.
• Building insurance, physical building security, fireproof storage of documents, dispersal of IT systems.
• Seeking tenants with strong covenants, credit checks, monitoring tenants showing financial stress.
• Continued investment in the USA, regular market monitoring for opportunities outside London, regular professional revaluations.
• Rigorous pre-acquisition screening and due diligence.
• Rigorous screening of development opportunities, focusing on a limited number of developments, close monitoring.
• Appointment of new directors from the next generation of the Freshwater family, appointment of Mr Bude as a non-executive director.
• Active consideration of redevelopment schemes (e.g., Cromlech Street hotel development).
• Seeking suitable acquisition opportunities in the USA and refinancing existing properties at more advantageous rates.

Supply Chain Management

Climate-Related Risks & Opportunities

Awards & Recognition

• Gold Award from the British Council of Shopping Centres

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Travelodge Hotel development designed to achieve a BREEAM excellent rating, including combined heat and power, surface water run-off management, energy-efficient lighting, and use of recycled aggregates and sustainably sourced materials.

Social Achievements

• Donations to educational charities of £150,000; dividends on donated shares of £909,010 passed to charitable companies.

Governance Achievements

• Annual review of executive Directors’ salaries, with increases agreed at a meeting of the full Board where executive Directors did not participate; periodic reviews of non-executive Directors’ fees.

Climate Goals & Targets

Environmental Challenges

• Political and economic uncertainty generated by the UK's decision to leave the European Union, potentially impacting rental income, capital values, vacancy rates, and bad debts in the UK; risk of downward pressure on commercial property values; potential reduction in availability of finance for property at acceptable cost and for appropriate period; significant strengthening in the sterling/dollar exchange rate could adversely impact reported results; regulations aimed at the control of residential rental levels or shorthold tenancy arrangements could have an adverse impact; increased regulation on environmental, health and safety or planning matters could impose additional costs; catastrophic events could adversely affect operations; tenant default constitutes a risk to income and capital value; regional concentration in UK portfolio; risk of inappropriate or ill-judged acquisitions; development carries risks as to planning, construction timing, costs and letting; loss of key directors’ involvement would be disruptive.

Mitigation Strategies

• Continuous monitoring of the economic outlook; continued maintenance of low gearing; rigorous tenant covenant checks; enhanced rent collection effort; monitoring funding trends and development of banking regulations; sustaining relationships with principal financing partners; securing term finance facilities; ensuring that maturities of major loan arrangements are spread over a period of years; funding US assets by US dollar borrowings and local retained earnings; careful monitoring of developments in legislation; insuring buildings; physical building security; fireproof storage of leases; dispersal of business critical IT systems; enhanced data security measures; seeking tenants with strong covenants; credit checks on new tenants; careful monitoring of tenants showing signs of financial stress; continuing to invest in the USA; regular monitoring of the property market for opportunities throughout the UK; regular professional revaluations; rigorous pre-acquisition screening; rigorous screening of all development opportunities; focusing on a limited number of developments at any one time; close monitoring of active developments; appointment of new directors from the next generation of the Freshwater family.

Supply Chain Management

Responsible Procurement

• Use of recycled aggregates and sustainably sourced construction materials in Travelodge Hotel development.

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: FRS 102

Third-party Assurance: KPMG LLP

Environmental Metrics

ESG Focus Areas

• Community Investment
• Environment
• Health and Safety

Environmental Achievements

• Travelodge hotel development designed to achieve a BREEAM excellent rating (incorporating combined heat and power, surface water run-off management, energy-efficient lighting, recycled aggregates, and sustainably sourced materials).

Social Achievements

• Donations to educational charities totaling £151,000.
• Dividend payments of £960,659 to charitable companies from donated shares.

Governance Achievements

• Annual review of executive Directors’ salaries, with increases agreed by the full Board (excluding executive Directors).

Climate Goals & Targets

Environmental Challenges

• Slowing economic growth, increasing inflation, and political uncertainty in the UK due to Brexit negotiations.
• Potential reduction in the availability of finance for property at acceptable cost and for an appropriate period.
• Significant movements in currency exchange rates (sterling/dollar).
• Increased regulation on building standards, environmental, health, and safety or planning matters.
• Catastrophic events (extreme weather, fire, cyber-attack, civil disturbance, or terrorism).
• Tenant default.
• Regional concentration of UK properties in and around London.

Mitigation Strategies

• Continuous monitoring of the economic outlook, maintenance of low gearing, rigorous tenant covenant checks, enhanced rent collection efforts.
• Monitoring funding trends, sustaining relationships with financing partners, securing term finance facilities, spreading loan maturities.
• Funding US assets by US dollar borrowings and local retained earnings.
• Careful monitoring of legislative developments.
• Building insurance, physical building security, fireproof storage of documents, dispersal of IT systems, enhanced data security.
• Seeking tenants with strong covenants, credit checks, monitoring tenants showing financial stress, active use of debt recovery mechanisms.
• Continuing to invest in the USA, regular market monitoring for opportunities throughout the UK, regular professional revaluations.

Supply Chain Management

Responsible Procurement

• Use of recycled aggregates and sustainably sourced construction materials in Travelodge hotel development.

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: IFRS

Third-party Assurance: KPMG LLP

Environmental Metrics

ESG Focus Areas

• Community
• Environment

Environmental Achievements

• Travelodge hotel development designed to achieve a BREEAM excellent rating (combined heat and power, surface water run-off management, energy-efficient lighting, recycled aggregates, sustainably sourced materials)

Social Achievements

• Donations to educational charities (£196,000), dividends on donated shares to charities (£1,001,386)

Governance Achievements

• Established formal audit, nominations, and remuneration committees

Climate Goals & Targets

Environmental Challenges

• Slowing economic growth and political uncertainty in the UK (Brexit), potential downward pressure on rental and capital values, increased vacancy rates, bad debts; reduction in the availability of finance for property at an acceptable cost; significant movement in the US dollar/sterling rate of exchange; increased regulation; catastrophic events; tenant default; regional concentration in UK portfolio; risk of inappropriate acquisitions; risks associated with development projects; reliance on key executive directors.

Mitigation Strategies

• Continuous monitoring of economic outlook, maintenance of low gearing, rigorous tenant covenant checks, enhanced rent collection effort, monitoring funding trends, sustaining relationships with financing partners, securing term finance facilities, funding US assets with US dollar borrowings, careful monitoring of legislation, insuring buildings, physical building security, fireproof storage of documents, dispersal of IT systems, enhanced data security, seeking tenants with strong covenants, credit checks on new tenants, monitoring tenants showing financial stress, actively using recovery mechanisms for overdue debts, continuing to invest in the USA, regular monitoring of property market opportunities, rigorous pre-acquisition screening, due diligence, fixed-price contracts with building contractors, focusing on a limited number of developments, close monitoring of active developments, appointment of new directors, appointment of independent non-executive directors, establishment of a strong Group management team.

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: IFRS

Third-party Assurance: KPMG LLP

Environmental Metrics

ESG Focus Areas

• Health and Safety
• Community Investment
• Environment

Environmental Achievements

• Conversion of Prestamex House into a residential building with measures to minimize water consumption, low energy lighting, and secure cycle parking.

Social Achievements

• Donations to educational charities amounting to £158,000.
• Dividends on donated shares to charities totaling £1,052,477.

Governance Achievements

• Appointment of new directors from the next generation of the Freshwater family.
• Appointment of independent non-executive directors.
• Establishment of a strong Group management team.

Climate Goals & Targets

Environmental Challenges

• Slowdown in the general rate of increase in property values in the UK and USA.
• Political and economic uncertainty in the UK surrounding Brexit.
• Headwinds in the UK retail market.
• Tariff war between the USA and China affecting global trade.
• Risk of recession in the UK.
• Potential for adverse regulations affecting residential property letting in the UK.
• Reduction in foreign investment interest in central London.
• New rent regulation laws in New York state.

Mitigation Strategies

• Pursuit of a strategy of prudence and risk minimization.
• Conservation of cash and bank resources.
• Continuous monitoring of the economic outlook.
• Maintenance of low gearing.
• Rigorous tenant covenant checks.
• Enhanced rent collection effort.
• Monitoring funding trends and banking regulations.
• Sustaining relationships with financing partners.
• Securing term finance facilities.
• Funding US assets by US dollar borrowings and local retained earnings.
• Careful monitoring of developments in legislation.
• Insuring buildings, physical building security, fireproof storage of documents, and dispersal of IT systems.
• Seeking tenants with strong covenants.
• Credit checks on new tenants.
• Monitoring tenants showing signs of financial stress.
• Active use of recovery mechanisms for overdue debts.
• Close monitoring of developments in the retail sector.
• Continuing to invest in the USA.
• Regular monitoring of the property market for opportunities.
• Rigorous pre-acquisition screening.
• Rigorous screening of development opportunities.
• Seeking fixed-price contracts with building contractors.
• Focusing on a limited number of developments at any one time.
• Close monitoring of active developments.
• Appointment of new directors from the next generation of the Freshwater family.
• Appointment of independent non-executive directors.
• Establishment of a strong Group management team.

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather

Reporting Standards

Frameworks Used: IFRS

Third-party Assurance: KPMG LLP

Environmental Metrics

ESG Focus Areas

• Community Investment
• Environment
• Health and Safety
• Employee Wellbeing

Environmental Achievements

• Started a program of installing solar panels on suitable buildings.
• Improved energy efficiency of buildings during repair and refurbishment.

Social Achievements

• Donations to educational charities amounting to £115,500.
• Dividends on donated shares passed to charitable companies, amounting to £1,083,131.
• Covid-19 secure workplaces and practices established for all employees, including enabling working from home where appropriate.

Governance Achievements

• The Board has undertaken a robust assessment of the principal risks facing the Group.

Climate Goals & Targets

Environmental Challenges

• Continuing uncertainty throughout from Brexit and the impact of the Covid-19 pandemic.
• Material adverse changes to rent regulation in New York.
• Deepening UK recession predicted.
• Covid-19 pandemic in the USA still spreading.
• Trade war with China and political uncertainty ahead of the US Presidential election.
• Contraction or collapse of several high-profile retail chains.
• Downward pressure on UK high street rental and capital values.
• Slowdown in the London market.
• Significant falls in the value of regulated properties in New York.

Mitigation Strategies

• Continuous monitoring of the economic outlook.
• Continued maintenance of low gearing and the conservation of cash and bank facilities.
• Rigorous tenant covenant checks.
• Enhanced rent collection effort.
• Careful monitoring of developments in legislation.
• Developing a system of home working.
• Insuring buildings.
• Physical building security.
• Fireproof storage of leases and other documents of title.
• Dispersal of business-critical IT systems and enhanced data security measures.
• Close monitoring of developments in the retail sector.
• Careful monitoring of tenants showing signs of financial stress.
• Avoiding concentration on any one tenant or retail sector.
• Continuing to invest in the USA, principally in Florida and other locations outside New York.
• Regular monitoring of the property market for opportunities.
• Rigorous pre-acquisition screening of all buying opportunities and appropriate due diligence.
• Rigorous screening of all development opportunities.
• Seeking fixed-price contracts with building contractors.
• Focusing on a limited number of developments at any one time.
• Close monitoring of active developments.
• Establishment of a strong Group management team.
• All their employees receive appropriate training in the identification and management of health and safety risks.

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: IFRS

Third-party Assurance: KPMG LLP

Environmental Metrics

ESG Focus Areas

• Health and Safety
• Community Investment
• Environment

Environmental Achievements

• Improved energy efficiency of buildings during repairs and refurbishments
• Striving to achieve the highest environmental and sustainability standards in new developments and major refurbishments

Social Achievements

• Donations to educational charities amounting to £173,487
• Dividends on donated shares to charities amounting to £1,198,242

Governance Achievements

• Regular review of the Group’s approach to corporate governance
• Board reviewed the Wates Corporate Governance Principles for Large Private Companies

Climate Goals & Targets

Environmental Challenges

• Sluggish economic growth, record levels of inflation and rapidly rising interest rates
• Working from home reducing demand for office space
• Political uncertainty
• Brexit's negative impact
• Rent controls in New York City
• Potential for tenant default
• Contraction of retail chains
• Regional concentration of properties in the UK and US portfolios
• Risks associated with acquisitions and developments
• Dependence on key executive directors
• Catastrophic events (e.g., extreme weather, fire, cyber-attack)

Mitigation Strategies

• Continuous monitoring of economic outlook and asset allocation
• Maintenance of low gearing and conservation of cash
• Rigorous tenant covenant checks
• Enhanced rent collection effort
• Monitoring funding trends and banking regulations
• Sustaining relationships with financing partners
• Securing term finance facilities
• Spreading maturities of loan arrangements
• Using financial instruments to fix or cap interest rates
• Funding US assets by US dollar borrowings
• Careful monitoring of legislative developments
• Concentrating new acquisitions in areas not subject to adverse regulation
• Maintaining a system of home working
• Insuring buildings
• Physical building security
• Fireproof storage of documents
• Dispersal of business-critical IT systems
• Seeking tenants with strong covenants
• Credit checks on new tenants
• Monitoring tenants showing signs of financial stress
• Actively using recovery mechanisms for overdue debts
• Close monitoring of developments in the retail sector
• Continuing to invest in the USA, principally in Florida
• Regular monitoring of the property market
• Rigorous pre-acquisition screening
• Rigorous screening of development opportunities
• Seeking fixed-price contracts with building contractors
• Focusing on a limited number of developments
• Establishment of a strong Group management team
• Appointment of directors from the next generation of the Freshwater family
• All employees receive appropriate health and safety training
• Regular cyclical risk assessments on all properties

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather

Transition Risks

• Regulatory changes
• Market shifts