Sustainability-related Disclosures section

Introduction:

The Sustainable Finance Disclosure Regulation (SFDR) is part of the European action plan for Sustainable finance. It increases transparency with ESG related investments, setting disclosure requirements for Financial Market Participants (FMPs) in the European Union. With this in mind the Fund’s General Partner in consultation with its Investment Advisor have made the following disclosures in accordance with articles 3(1), 4(1)(a) and 5(1) of the Disclosure Regulation.

ESG Integration within the investment process

We believe that a well-governed business run in a sustainable way delivers stronger, more resilient investment returns in the long term for customers, clients and shareholders, and better outcomes for society and the environment.

With the best talent and network around the world, the General Partner under the supervision of its AIFM uses a thematic investment strategy and distinctive value creation approach to future-proof investments, “creating superior returns to our investors and making a positive impact with everything we do”.

The Responsible investments policy intends to present to the readers the process of how the Investment Advisor under the supervision of the AIFM imbeds sustainability risks within its investment process. Please refer below to download the policy.

Further details on the AIFM’s PAI statement can be found in https://www.tmf-group.com/

Responsible Investment Policy

Remuneration Policy

Our remuneration policy aims to ensure the payment of equitable, competitive remuneration to Key Managerial Personnel (“KMP”) and certain other employees having a material impact on the risk profile of the Investment Adviser which is based on individual performance, performance of the Investment Adviser and industry practices. Please refer below to download the policy.

Further details on the AIFM’s PAI statement can be found in https://www.tmf-group.com/

Remuneration Policy

Adverse sustainability impact statement

This financial product does not consider principal adverse impacts on sustainability

Further details on the AIFM’s PAI statement can be found in https://www.tmf-group.com/

Sustainability-related Disclosures section

In accordance with Article 10 of the Disclosure Regulation, and Chapter IV, Section 1 of the RTS, this section provides information on the environmental and social characteristics promoted by the European Student Accommodation Core Fund SCA SICAV-RAIF and the methodologies that are used to assess, measure and monitor these characteristics.

 

Defined terms used in this section (unless defined herein) are as set out in the offering documents. Terms used in the summary have the same meaning as in the rest of this website disclosure.

Summary

The Fund is categorised as an article 8 financial product for the purposes of the Disclosure Regulation.

The Fund promotes a variety of environmental and social characteristics, as detailed below through some of the direct and indirect investments it makes. For the avoidance of doubt, all leaseholds and assets operated by certain hotel chains are excluded.

No sustainable investment objective

The Fund promotes environmental or social characteristics, but does not have as its objective sustainable investment.

Environmental or social characteristics of the financial product

The Fund promotes the below environmental and social characteristics:

  • a.Long-term carbon reduction;
  • b.Lower energy use and/or reduce exposure to energy inefficient assets; and
  • c.Social and community infrastructure.

Investment strategy

The Fund is a limited liquidity, perpetual life, European core+ real estate fund. The Fund is designed to purchase, manage and sell institutional quality student accommodation properties, reasonably similar in all material aspects to those contained within the Seed Portfolio, to be inclusive of properties catering for young professionals generally seeking accommodation soon after their higher or further education studies, primarily in Spain and Portugal, with investments complementary to the Fund’s portfolio also sought in Italy or other European countries.

Assessment of Good Governance

The AIFM in conjunction with the Investment Advisor diligences the lessor of the real estate assets and other external counterparties and/or service providers engaged in the acquisition, holding and disposal of the real estate asset in question for good governance practices and more generally from a corporate governance perspective (to the extent such data can be obtained or reasonable assumptions can be made).

Proportion of investments

The planned minimum proportion of investments used to meet the environmental and/or social characteristics promoted by the Fund is 70% of the Fund’s assets (excluding all leaseholds and assets operated by certain hotel chains). The remainder of the Fund’s assets may be invested in investments that do not contribute to the environmental and/or social characteristics promoted by the Fund.

Monitoring of environmental or social characteristic

A variety of sustainability indicators are considered in order to measure the environmental and/or social characteristics promoted by the Fund, including:

  1. Attainment of Net Zero Carbon Emissions by 2040;
  2. Energy performance certificates;
  3. Energy consumption / intensity; and
  4. ‘WELL Health-Safety’ rating for Facility Operations and Management.

Methodologies for environmental or social characteristics

The performance of the above sustainability indicators will be tracked and reported on. These sustainability indicators will be used to measure the attainment of each of the environmental and social characteristics promoted by the Fund and will be included in the Fund’s mandatory periodic report.

Data sources and processing

Data are derived from multiple external sources such as energy provider, Lessor, and technical audit. Data are controlled by the Lessor’s ESG team for each asset and input in a licensed IT tool and exported and monitored in internal monitoring tools. No external data service providers are used.

Limitations to methodologies and data

Limitations in both methodology and data are listed under this heading in main body of the website disclosure below. We are satisfied that such limitations do not affect the promotion of environmental or social characteristics as explained further under this heading in the main body of the website disclosure below.

 

Due diligence

Before making investments, we will conduct reasonable and appropriate due diligence based on the facts and circumstances applicable to each investment.

Engagement policies

Engagement is an important component of the Fund’s investment process.

Designated reference benchmark

A reference benchmark has not been designated for the purpose of attaining the environmental or social characteristics promoted by the Fund. However, noting the Fund’s investment focus, namely, investment in real estate, the Fund has aligned with GRESB to set the performance measurement framework for the Fund.

b. No sustainable investment objective;

This product promotes environmental or social characteristics, but does not have as its objective sustainable investment.

c. Environmental or social characteristics of the financial product;

The Fund promotes the below environmental and social characteristics through some of the direct and indirect investments it makes (excluding all leaseholds and assets operated by certain hotel chains):

a. Long-term carbon reduction;
b. Lower energy use and/or reduce exposure to energy inefficient assets; and
c. Social and community infrastructure.

d. Investment strategy;

The Fund is a limited liquidity, perpetual life, European core+ real estate fund. The Fund is designed to purchase, manage and sell institutional quality student accommodation properties, reasonably similar in all material aspects to those contained within the Seed Portfolio, to be inclusive of properties catering for young professionals generally seeking accommodation soon after their higher or further education studies, primarily in Spain and Portugal, with investments complementary to the Fund’s portfolio also sought in Italy or other European countries.

The strategic positioning of the Fund to achieve the target return is based on:

  1. Themed approach: the Fund has a very clear strategy which is to invest in institutional quality student accommodation (“IQSA”) in Europe with a distinct focus in Iberia.
  2. Sustainable cash flows: the ability for an asset to always attract occupiers and to sustain cash flow is central to the Fund´s strategy (countercyclical nature of income).
  3. Top-down research lead portfolio construction: in our approach to core+ investing, we focus on income, ensuring capital preservation and long term growth.
  4. Prime and dominant position within each region: supportive IQSA market fundamentals driven by large supply-demand imbalance.
  5. Income Enhancement: the Fund looks for hidden unrecognised and unrealised value in all acquisitions. The Fund will look to unlock value through the acquisition of turnkey assets (with a 2Y income guarantee) or stabilized assets with occupancies over 90% and active asset management.

Policy to assess good governance practices

The AIFM in conjunction with the Investment Advisor diligences the lessor of the real estate assets and other external counterparties and/or service providers engaged in the acquisition, holding and disposal of the real estate asset in question for good governance practices and more generally from a corporate governance perspective (to the extent such data can be obtained or reasonable assumptions can be made). As part of this process, robust ESG due diligence questionnaire responses will be requested pre-appointment and monthly post-appointment update calls will be organised. In addition, each lease agreement with the lessor of the real estate assets will include ‘green clauses’. These clauses are intended to ensure that each leased property is used and managed in a manner which fosters sustainability.

e. Propotion of investments

The planned minimum proportion of investments used to meet the environmental and/or social characteristics promoted by the Fund is 70% of the Fund’s assets (excluding all leaseholds and assets operated by certain hotel chains). The remainder of the Fund’s assets may be invested in investments such as cash or other holdings retained for example for liquidity, hedging or cash management purposes may fall under ‘#2 Other’ since such investments do not contribute to the environmental and/or social characteristics promoted by the Fund. The ‘#2 Other’ section may also include investments (i) for which the AIFM does not have sufficient data to confirm that they are aligned with the environmental and/or social characteristics promoted by the Fund and/or (ii) which are at the time of acquisition not aligned with the environmental and/or social characteristics promoted by the Fund but which will be subject to an enhancement plan to align them with the environmental and/or social characteristics promoted by the Fund. No minimum environmental or social safeguards are applied to these ‘#2 Other’ investments.

The Fund does not commit to investing in sustainable investments or investments aligned with the Taxonomy Regulation.

While the Fund may make use of derivatives for hedging, liquidity, efficient portfolio management and/or investment purposes, derivatives are not used for direct real estate investments. As such, they are not used to attain the environmental or social characteristics promoted by the Fund.

f. Monitoring of environmental or social characteristic:

 

A range of sustainability indicators will be used to measure the environmental and/or social characteristics promoted by the Fund, as disclosed below:

E/S Characteristic Promoted

Sustainability Indicator

Long-term carbon reduction

Net Zero by 2040: The Fund targets Net Zero Carbon (“NZC”) Emissions by 2040.

 

For these purposes:

  1. “Net Zero” means a Carbon Emissions target aligned to recognized initiatives such as the Science Based Targets initiative (“SBTi”) Criteria. The Fund’s Net Zero program will be aligned with SBTi from the date on which the Fund was launched, i.e. 31 March 2023, but it won´t be submitted to SBTi until 2025 considering the expected growth of the Fund’s portfolio.

 

  1. “Carbon Emissions” means:
  1. Scope 1 Emissions (i.e. direct emissions of a company from owned and controlled sources);
  2. Scope 2 Emissions (i.e. indirect emissions of a company from the generation of purchased energy); and
  3. Scope 3 emissions (i.e. all indirect emissions not included in Scope 2).

 

For property investments that are not yet Net Zero, the Fund aims to achieve NZC Emissions by 2040 by achieving the below-listed milestones:

 

  • Between 2023 and 2027, the Fund will apply a carbon reduction target of 20% with respect to Scope 1 and 2 Emissions.
  • Between 2027 and 2032, the Fund will apply a carbon reduction target of: (i) 50% of Scope 1 and 2 Emissions; and (ii) 30% of Scope 3 Emissions. The Fund aims to reduce at least 42% of its Scope 1 and 2 emissions by 2030, following which a compensation plan for residual emissions shall be put in place.
  • Between 2032 and 2037, the Fund will apply a carbon reduction target of 70% with respect to Scope 1, 2 and 3 Emissions.

 

For property investments that achieve Net Zero, the Fund will seek to maintain NZC Emissions for the duration of the lifecycle of the relevant real estate asset.

 

Disclosures in this document may develop and be subject to change due to ongoing improvements in the data provided to, obtained by and analyzed in respect of the Fund

Lower energy use / Reduce exposure to energy inefficient assets

The Fund will use the following sustainability indicators to measure the attainment of this environmental characteristic promoted by the Fund:

 

  1. Energy performance certificates; and
  2. Energy consumption / intensity.

Social and community infrastructure

The Fund will promote good practices in well-being issues for the occupants of the real estate assets by earning internationally recognized ratings. Over a 4-year period commencing in 2023 and ending in 2026, the Fund will seek to achieve the ‘WELL Health-Safety’ rating for Facility Operations and Management across the entirety of the Fund’s portfolio. From 2026, the Fund will seek to maintain this internationally recognized rating across the entirety of the Fund’s portfolio. 

In addition and over the same 4-year period commencing in 2023 and ending in 2026, the Fund will implement the ‘Value to Society’ methodology to measure the social value impact of the assets and the Fund itself. From 2026, the Fund will measure and seek to at least maintain but ultimately to improve this ‘Value to Society’ methodology.

The WELL Health-Safety Rating for Facility Operations and Management is a roadmap for driving resilience into the center of business policies and operational plans, focused on operational policies, maintenance protocols and emergency plans (spaces clean and sanitized, health benefits and services, communication of health and safety efforts, emergency plans and assess air and water quality).

Through the “Value to Society” methodology, the Fund will measure and establish key performance indicators (“KPIs”) (i) for social issues, (ii) for assigning monetary values, (iii) to identify and evaluate the impact generated by the activity, and (iv) for the assets and the Fund to make better decisions among different stakeholders, communities and the environment.

g. Methodologies;

Following investment, the AIFM in conjunction with the Investment Advisor monitors the assets into which the Fund has invested on an ongoing basis in order to track the performance with respect to environmental and social characteristics. In particular, the AIFM in conjunction with the Investment Advisor will track and report on the performance of the various KPIs of quantitative nature:

Environmental KPIs

Measure Unit Definition
Scope 1[1] Tonnes CO2 Scope 1 GHG emissions from natural gas, fluorinated gases (f-Gas), fleet and diesel
Scope 2 Tonnes CO2 Scope 2 GHG emissions from purchased electricity
Scope 3[2] Tonnes CO2 Scope 3 indirect GHG emissions from business air travel, electricity transmission and distribution losses, and electricity consumption by a third party data centre
Total GHG emissions Tonnes CO2 Total GHG emissions
Total GHG emissions per revenue Tonnes
CO2 / €M
Total GHG emissions per FTE for the continuing business
Total GHG emissions per student Tonnes
CO2 / student
Total GHG emissions per FTE for the continuing business
Total GHG emissions per m2 Tonnes
CO2 / m2
Total GHG emissions per FTE for the continuing business
NZC Chart Tonnes CO2 NZC Chart providing overall evolution of GHG emissions vs NZC path
EPC Blended certification Blended class Portfolio blended EPC Certification level
Total Energy consumption MWh Total energy consumption
Electricity used from conventional tariff MWh Total electricity consumption
Natural gas used MWh Total natural gas consumption
Electricity used under a green/renewable tariff MWh Total renewable electricity
Water M3 Total water consumption

Building certifications

Measure Unit Definition
BREEAM in use – Part 1 Number Number BREEAM in use Part 1 certifications obtained
BREEAM in use – Part 1 % Percentage of GAV of BREEAM in use Part 1 certifications obtained
BREEAM in use– Part 2 Number Number BREEAM in use Part 2 certifications obtained
BREEAM in use – Part 2 % Percentage of GAV of BREEAM in use Part 2 certifications obtained
Well Health and safety Number Number Well Health and Safety certifications obtained
Well Health and safety Number Percentage of GAV of Well HS certifications obtained
Compliance with code of conduct % Percentage of employees who have agreed to comply with code of conduct

Value to society

Measure Unit Definition
Value to Society Value to Society methodology to measure the impact of the Social Value related to the assets and the Fund itself[3].

GRESB Reporting

Measure Unit Definition
GRESB Starts / Result Portfolio GRESB Benchmarking results presentation.

Stakeholder Management KPIs

Measure Unit Definition
Number of suppliers signed up to the code of conduct Number Number of suppliers signed up to our supplier code of conduct through our procurement system
Policies and Due Diligence Number Number of policies and Due Diligence
Bribery and corruption breaches Number Number of bribery and corruption breaches
Whistleblowing calls Number Whistleblowing notifications which resulted in investigation
Compliance with code of conduct % Percentage of employees who have agreed to comply with code of conduct

Other policies applicable to European Student Accommodation Core Fund SCA SICAV RAIF

Other policies