SUSTAINABILITY
Sentinel believes that sustainability factors can have an impact on investment performance and must be considered when evaluating real estate investment opportunities and managing real estate assets.
Sentinel's Sustainability policy is designed to:
- ensure sustainability considerations are incorporated into our decision-making processes;
- provide our employees with guidelines for implementing sustainability initiatives at our investment properties;
- define Sentinel's position on sustainability for the benefit of clients, tenants, broader stakeholders and third parties with whom we work; and
- advance our stewardship by participating in industry organizations and actively engaging investors, tenants and Sentinel personnel to advance meaningful initiatives on our sustainability agenda.
This policy applies to all Sentinel entities, employees and affiliates.
Our sustainability objectives are integrated into all aspects of our real estate operations and the investment cycle as a whole. These factors are considered as soon as due diligence on a property begins and throughout the acquisition process, in our construction and development initiatives, in all leasing and property operating policies and in the disposition process.
Sentinel has three Sustainability Officers on its team within the Portfolio Management, Asset Management and Architectural & Design Groups, two of which are fully dedicated to sustainability efforts. These professionals, in cooperation with Sentinel's Sustainability Committee, are responsible for the oversight of the firm’s sustainability activities. Sentinel also works with a range of consultants in the sustainability arena.
The Sustainability Officers and the Asset Management and Capital Programs Groups regularly evaluate and report on property level performance to the Sustainability Committee, which is then charged with orienting the overall sustainability strategy to continue to meet the environmental objectives. The Portfolio Management teams, and ultimately the Executive Committee, ensure that this strategy aligns with our clients’ real estate investment objectives and their Sustainability goals.
Sentinel Real Estate Fund Achieved 5-Star GRESB Rating
As a means of tracking the effectiveness of our environmental sustainability policies and practices, Sentinel initiated its participation in the Global Real Estate Sustainability Benchmark (GRESB) survey in 2011. In 2023, our flagship fund, the Sentinel Real Estate Fund (SREF), demonstrated meaningful improvement this year in a wide variety of categories:
- SREF’s GRESB score increased by four points from 85 in 2022 to 89 in 2023.
- Ranked 1st out of six funds in its peer group and 3rd within Residential/Americas out of 135 GRESB designated peers;
- Improved from four stars to five stars.
Key initiatives that resulted in the improvement of the Fund's score this year included:
- energy, water and waste data coverage and reduced energy and GHG consumption through various measures such as installation of LED lights and transitioning to higher efficiency HVAC units;
- Obtained 9 additional IREM CSP certifications, increasing the percentage of certified properties in the Fund’s portfolio to 61%;
- Increased amount of renewable energy associated with the portfolio.
The Fund remains committed to identifying cost-effective opportunities to enhance the Fund’s overall sustainability. In 2024, we will continue to focus on (i) enhancing data coverage, (ii) reducing energy, water and waste consumption through tenant educational initiatives as well as implementation of more efficient materials and technologies and (iii) continuing to execute on our portfolio-wide sustainability certification program.
Set Long Term Reduction Targets
Sentinel's Executive Committee, in cooperation with the Sustainability Committee, has established a long-term reduction target of 5% over the next five years, or approximately 1.0% per year reduction in energy and water usage. Between 2022 and 2023 alone, same store energy consumption declined 3% and same store water consumption declined 4%.
In addition, Sentinel supports the goal of the Paris Climate Accords to achieve net-zero greenhouse gas emissions by 2050 or sooner. We recognize the responsibility of all real estate investment managers to positively impact the environments in which we invest. We believe that opportunities exist for thoughtful, targeted sustainable investment within the context of each of Sentinel’s existing investment strategies that both can enhance the economic returns of our properties and meaningfully reduce our carbon footprint. We have decided to focus our efforts on reducing Scope 1 and Scope 2 emissions from landlord-controlled common areas at our communities, with a provisional goal of reducing carbon emissions by 50% over the next ten years.
Analyzed and Benchmarked Performance
During the year, we utilized the Yardi dashboard, allowing asset management to analyze portfolio-wide consumption and costs, benchmark properties against one another and track progress towards our long-term targets.
Alignment with IREM
We aligned our Sentinel Green Program, our approach to day-to-day operations, unit interior renovation programs and community-wide value enhancement initiatives, with the basic principles of the Institute of Real Estate Management.
Integrating Efficiency Measures
Waste Management and Diversion
As of year-end 2023, 69 properties in the overall Sentinel portfolio were being tracked by Waste Management. The annual diversion rate portfolio wide is 20%.
Electric Vehicle (EV) Charging Stations
Sentinel has been evaluating the feasibility of introducing EV charging stations throughout its portfolio and exploring the various legal structures available for such an implementation. By the end of 2023, we had 110 EV charging stations throughout the portfolio, with a variety of vendors.
Sustainable Capital Programs
All capital programs at Sentinel now contemplate sustainability with regard to both the sourcing of materials and the ultimate impact the project will have on its environment. Specifically, we have ongoing programs for the following improvements:
- retrofitting common area and unit interior lighting with LED bulbs;
- installing recyclable carpet and wood-style vinyl plank flooring;
- converting HVAC systems from R-22 condensers to "cleaner" R-410A condensers;
- installing low flow shower heads, water efficient toilets and drip irrigation systems to reduce water usage;
- installing energy efficient appliances;
- utilizing sustainable procurement processes to source environmentally-friendly products; and
- implementing paperless operations throughout the portfolios.
Case Study
The on-site solar array at Foothills at Old Town Apartments in Temecula, CA was completed in 2022 and has been generating power throughout 2023. The system includes 108 solar panels, which are mounted on the clubhouse roof. During the year, the solar system generated 64.48 MWh of power, saving 129,707 lbs. of CO2, which is the equivalent of planting 980 trees.
Obtaining Recognition through Certifications
Sentinel's overall portfolio contains 42 properties with property-level building certifications, including 29 properties that we have certified under the IREM CSP program. In 2023, in SREF alone, two additional properties obtained IREM CSP certifications, and one property was recertified with IREM. Within the portfolio of 36 properties, 25 have received sustainability certifications, accounting for 69% of the total properties. This includes 24 properties with IREM certification, one with a Green Globes Certification and three properties with both IREM and National Green Building Standard certifications, bringing the total count of certifications to 28.
Sentinel recently enrolled in the IREM Certified Sustainable Property (CSP) Volume Program, which involves committing to sustainability across a property management portfolio. Sentinel is committed to enhancing its sustainability profile, improving the performance of its properties and taking a lead in sustainable property management.
Establishing Pathways to Carbon Neutrality
Sentinel's flagship development in Australia, The Elements by Kinleaf, has achieved carbon neutral re-certification by maintaining numerous sustainable operations, targeting enhanced water and energy conservation, reducing greenhouse gas emissions and utilizing Australian-based carbon credits. Key sustainability features include electric car charging stations, energy efficient appliances, a 30kW photovoltaic system for common area energy use and an 8-star NatHERS rating. Specialty waste streams, access to a centralized geothermal system, a rainwater and grey-water recycling system, occupancy sensors and an embedded metering network also support the building's high sustainability standards. Our goal is for our entire development portfolio in Australia to meet this carbon neutral standard. In the role of developer, the opportunities to manage sustainable outcomes are much more ingrained in the structure of the development itself, as environmental approaches can be applied in a progressive, holistic way – from building strategies aimed at water and energy conservation to reduction in greenhouse gas emissions and minimal maintenance and waste through the use of durable products.
In 2023, following the success of The Elements in Western Australia, Sentinel opened The Briscoe by Kinleaf, located in West Melbourne, Victoria. The Briscoe is notable for the adaptive re-use of sections of the building's original heritage façade and art deco signage. These were restored throughout the construction process, with original brickwork from the façade also featured inside the completed building.
As pioneered by Sentinel Australia's previous Build to Rent properties, The Briscoe is pursuing carbon neutral certification and is currently registered for a 5-Star Green Star As Built rating from the GBCA. It has achieved an average 8 Star NatHERS energy rating and 50% of the base building electricity supply is GreenPower, which is certified renewable energy. Additionally, the building has a 15 kW solar array that generates renewable energy on-site for common areas, further reducing the building's reliance on the grid for its energy supply.
See Sentinel’s article on ESG programs in NAREIM Dialogues
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