OPERATIONAL PERFORMANCE

Industrial sector

The industrial sector is traditionally a low management intensity sector, that is, tenants often manage their own property operations and there is limited ability for property owners to influence sustainability performance. The sector also comprises a diverse range of property types from multi-unit office parks to large distribution warehouses resulting in difficulties in comparability. Consequently sustainability improvements can be somewhat limited in the industrial sector, compared with the office and retail property sectors.

However, over the last 12 months we have progressed a number of site specific sustainability initiatives in the industrial sector. These include:

• Replacing toilets with water efficient models
• Installing flush sensors for urinals
• The installation of flow restrictors on taps
• Cooling tower metering
• Changes to fire sprinkler testing to a monthly regime in line with AS 1851
• Recycling deceased trees to create mulch for landscaping
• Working in partnership with tenants to identify where water re-use initiatives can be implemented

In addition to these initiatives, the industrial sector has benefited significantly from the development of our resource consumption database providing a comprehensive view of the consumption performance of the sector. Completing the resource consumption database for the industrial portfolio has highlighted some key differences in the way resources are managed from site to site. Water, in particular, is managed differently depending on tenants' operations.

A number of challenges were identified in 2008/09 particularly in relation to water use. A significant issue was identified when an adjoining construction site was consuming water attributed to one of our industrial sites. This required extensive negotiation with the water authority to resolve the problem.

This issue alone resulted in an increase of over 10% in our reported water consumption compared with the same period last year. A number of smaller, similar issues were also identified at other sites and have highlighted the benefit of undertaking a review of water use and efficiency at each site.

The consumption figures for the industrial portfolio are detailed below. Energy consumption and GHG Emissions increased across the portfolio by 3% and water consumption increased overall by 20% due to the issues highlighted above.

This year was our first year of improved resource consumption data and we will be using this to analyse individual site consumption patterns and identify areas for improvement.

In future, we expect the resource consumption database will provide greater opportunity to rapidly rectify these type of issues.

The focus for our industrial sector over the coming year will be on:

• Efficient resource management assisted by our resource consumption database, allowing for comparative analysis within the sector and seasonal trends to be reviewed in 2009/10
• Water efficient landscape management
• Protection of run-off water quality through maintenance of our bioswale systems
• Energy efficiency through lighting configuration and management
• Tenant partnerships to ensure resource efficiency is aligned with each operation
• Establishing an Industrial Sustainability Working Group with representation from all areas of the industrial team

Industrial developments

The industrial sector has undertaken limited development over the last 12 months consistent with our prudent development approach.

In 2009/10 a number of initiatives will be explored, for example the use of the Green Building Council of Australia’s Industrial Pilot Tool, as a means to further embed our commitment to sustainable development within our industrial operations.

US sustainability initiatives

During the year, our US portfolio managers – RREEF – continued to progress sustainability initiatives across our North American portfolio. Scope 1 and Scope 2 GHG emissions were reduced during the year to December 2008, down 26% for Scope 1 and down 15% for Scope 2 emissions (see diagram here).

In addition, a key focus in 2008/09 was the completion of a number of developments specified to include the latest sustainability features. For example, three of our Whirlpool properties have or are expected to receive LEED certification: Columbus Ohio received LEED certification during the year and two properties in Atlanta, Georgia and Seattle, Washington have been designed to achieve Gold LEED Certification (equivalent to the Australian 5 star Green Star Rating).

In 2009/10, we will be working with our property managers to continue to improve our resource consumption data capture to enhance the reporting capabilities of our North American properties, which will include waste management programs data.

About LEED

The Leadership in Energy and Environmental Design (LEED) Green Building Rating System is the accepted benchmark in the US for the design, construction and operation of high performance green buildings. LEED promotes a whole-building approach to sustainability and recognises performance in five key areas: sustainable site development; water savings; energy efficiency; materials selection; and indoor environmental quality.

Industrial Consumption Data

Case Study: Driving tenant demand - Summit Oaks

A good example that demonstrates the value of investing in sustainable buildings is at our Summit Oaks office development in Santa Clarita, CA which attained a Silver LEED rating and contributed to securing a major lease deal as a result. Advanced Bionics signed what was Los Angeles County’s largest office lease to date at Summit Oaks, an A-grade equivalent office property. The property was designed to incorporate best practice sustainability features and was awarded a LEED Silver rating (equivalent to the Australian 4 Star Green Rating) in June 2009 – one of Southern California’s few LEED Silver Certified office projects.

Advanced Bionics, the only US-based manufacturer of cochlear implants (bionic ears) consolidated four locations into the new space. "Employee retention and attraction is important to us. When you factor together the location aspects, the surrounding area amenities of the Valencia community and the high-quality design features and sustainable initiatives found within Summit Oaks, we’ve got a great location that will be an immense benefit to helping us recruit and retain the best and the brightest," said Jeff Greiner, President of Advanced Bionics.

The sustainable features contributing to the LEED Silver rating included certified cool roofing system, on-site storm water drainage filtration system to manage storm water runoff, water efficient, drought tolerant indigenous landscaping, eco-friendly HVAC and refrigerant equipment, locally processed and manufactured building materials along with recycled materials used in building structure, Forest Stewardship Council certified wood, indoor environmental quality strategies, such as the use of low emitting materials. Additionally, green housekeeping and site maintenance programs will be implemented with low impact environmental cleaning policies.