• LHN eyes Green Mark, $1 m investment for EV charging
LHN Group has unveiled several sustainability commitments that will be gradually rolled out across its local industrial and commercial properties over the next three years. In an interview with EdgeProp Singapore, Kelvin Lim, executive chairman and group managing director of LHN, shares that the group’s sustainability commitments include a target of achieving Green Mark certification for half of the industrial and commercial buildings under its management.
LHN is also investing approximately $1 million to install 200 electric vehicle (EV) charging stations across its properties over the next three years.
LHN is a local real estate management services group that was listed on the Catalist board of the Singapore Exchange in 2014. The company’s businesses include commercial and industrial development, residential spaces, facilities management and logistics management. The group has 40 industrial and commercial properties under its portfolio.
In March, LHN unveiled five key sustainability principles it is implementing across its business operations and property developments. According to Lim, these are: reducing carbon emissions, conserving resources, recycling, selecting environmentally friendly construction materials and increasing green coverage across its properties.
“The decision to adopt a sustainability plan is in line with an increased global awareness of the impact of climate change and we see it as a good practice to adopt these principles in our operations. Such strategic considerations also help maintain our running costs over the long term,” says Lim.
Green Mark certification
The group’s commitment towards incorporating more sustainable technologies and green features across its properties is a step towards achieving Green Mark certification for at least half of the industrial and commercial developments it manages in Singapore.
The Green Mark certification scheme was launched by the Building and Construction Authority in January 2005. The rating system was designed to evaluate a building’s environmental impact and performance.
Some of the key criteria for a Green Mark certification are climatic responsive design, building energy performance, smart and wellness measures, and green features.
The only building with a Green Mark certification in LHN’s portfolio is 202 Kallang Bahru, a JTC industrial property that was jointly acquired with W&S Flexi from Ascendas REIT for $17 million in January 2020. The group says it plans to utilise the eight-storey light industrial factory building as a self-storage facility with automated retrieval and logistics.
“Our company typically leases our properties so in terms of cost factors the elements needed to achieve Green Mark certification was not sustainable for our business model in the past. But moving forward with our sustainability initiative, we are more likely to achieve Green Mark for half of the buildings under our management,” says Lim.
Existing green features
LHN says it has already made notable progress in incorporating green features throughout its properties. The group says that in 2020, 90% of the properties it manages are equipped with energy-saving LED lights while water-saving taps have been installed at 75% of its properties.
Solar panels have been installed in at least three of its developments at 38 Ang Mo Kio Industrial Park 2, 72 Eunos Ave 7, and 100 Eunos Ave 7. The panels have been in operation since 2019. The group says it aims to complete its solar panel installation at 202 Kallang Bahru and
1557 Keppel Road by this September.
“We target to gradually cover most of our rooftop spaces at our properties with solar panels by rolling out the installation works in up to three sites per year whenever possible,” says the company.
According to Lim, most players in the private real estate sector have started to incorporate solar panels on rooftops to generate their own electricity. “Usually, these properties are warehouses, factories or office buildings which have a relatively large space footprint,” he says.
He adds that sustainable practices in the real estate sector tend to be focused on energy conservation to reduce the overall carbon footprint of buildings. However, new green features that have become more common include energy storage systems and utilising untapped solar energy to power EV charging stations, says Lim.
Million-dollar bet in EV charging stations
Over the next three years, LHN also plans to roll out about 200 EV charging stations across its industrial properties. “This is in line with the government’s push to encourage more electric vehicle adoption,” says Lim.
“We are trying to position our properties as sustainably driven assets as well as provide the facilities we think will best serve our tenants in the future. By doing so, we hope to either maintain our rental rates or even push up the rental premium for some of our properties,” says Lim.
The company plans to install at least five EV charging stations in each of the car park facilities in the properties they manage. LHN says it will initially roll out so-called entry-level charging stations that are expected to cost about $5,000 but will eventually upgrade them to more sophisticated and efficient charging stations that are priced at about $10,000 each.
“At the moment, the government grants for EV vans are higher than the grants for EV cars. So we expect to see more usage of these charging stations within our industrial properties compared to commercial developments, especially to support last-mile logistics operators,” says Lim.
LHN is also exploring energy storage solutions to utilise untapped electricity generated by its solar panels to supply power to its EV charging stations.
Impact on valuations
“At the end of this sustainability plan, we feel that it will contribute positively to the overall appeal and valuation of our property portfolio. As awareness of the importance of these technologies increases and sustainable practices become more widespread, this will help push up the value of our properties,” says Lim.
Achieving Green Mark certification would already be a big step towards boosting rents, as buildings with Green Mark certification generally enjoy rent premiums of 10%–20% compared to non-Green Mark certified developments, he says.
The group also says that some of its tenants have indicated that being part of the sustainable movement is an important factor and a reflection of their corporate goals. “Consumers and businesses are more willing to invest in eco-friendly features,” the company says.
According to Lim, tenants are more receptive to higher rents if they see tangible benefits and facilities such as EV charging stations and increased green coverage. “Sometimes it can be a challenge raising rents if the sustainable features don’t have a visible benefit such as solar panels. Tenants may even ask for lower rents because they perceive that the building’s overall utility cost has gone down,” says Lim.
The initial phase of the group’s sustainability roadmap will span about three years and then the group will explore new green technologies in the market that it could incorporate in the future.
“This is not a plan that will run its course after three years or so. It is our continuous commitment to sustainability that will carry on for many more years,” says Lim.