Introduction

Custodian Property Income REIT (“the Company”) recognises the significance of disclosing our environmental, social, and governance (ESG) information, and we chose to align our reporting with the considered industry-leading, European Public Real Estate Association’s (EPRA) Sustainability Best Practices Recommendations (sBPR). This enables us to provide potential investors with transparent insights into our ESG performance while also facilitating benchmarking against our peers, setting clear objectives to achieve continued progress. We are pleased to have received a EPRA sBPR Gold Award for the third consecutive year in 2023 and we aim to retain this recognition.

In alignment with our SECR statement, EPRA sBPR data relates to the calendar years 2023 and 2022 but has been disclosed as 2024 and 2023 respectively due to the Company’s March accounting reference date.

Our EPRA sBPR disclosure includes:

  1. Overarching Recommendations
  2. Sustainability Performance Measures (please see our accompanying data tables)

Materiality

The scope of our EPRA sBPR data disclosure was influenced by our application of materiality. Custodian Property Income REIT undertook a materiality assessment to review the applicability of the full set of EPRA sBPR indicators. Based on professional judgment, each indicator was assessed in terms of its impact on the Company and its importance to stakeholders.

This calculation resulted in an overall score that determined if an issue was material.

As part of our EPRA sBPR disclosures and associated materiality assessment, we have defined Custodian Property Income REIT’s organisational boundary in line with the Greenhouse Gas (GHG) Protocol. We have taken the operational control approach, and this has played a fundamental role in the materiality assessment. The Company is an externally managed real estate investment trust that has no direct employees. The Investment Manager is Custodian Capital Limited, which has 17 employees, and Custodian Property Income REIT has operational control over neither Custodian Capital nor its employees. The Social Performance Measures determined immaterial are in relation to employees, thus they are not relevant for reporting at the Custodian Property Income REIT level.

In addition, the Company does not have district heating and cooling and it is therefore not an applicable reporting metric.

Using this organisational boundary, the following Sustainability Performance Measures are determined to be immaterial for Custodian Property Income REIT:

  • Total district heating and cooling consumption (DH&C-Abs)
  • Life-for-like total district heating and cooling consumption (DH&C-LfL)
  • Employee gender and diversity (Diversity-Emp)
  • Employee gender pay ratio (Diversity-Pay)
  • Employee training and development (Emp-Training)
  • Employee performance appraisals (Emp-Dev)
  • New hires and turnover (Emp-Turnover)
  • Employee health and safety (H&S-Emp)

However, as Custodian Property Income REIT does have its own Board of Directors, which consists of six non-executive directors, we have chosen to report on gender, diversity and the gender pay ratio of the Company’s Board members to enhance our transparent reporting with our stakeholders.

Overarching Recommendations

Organisational boundaries

The Company takes an operational control approach. Our UK-based portfolio consists of 162 assets across five sectors: industrial, retail warehouse, high street retail, office, and other. We manage 35 of these directly with a mixture of landlord-controlled utilities.

Coverage

Due to the nature of our business and operational control, we have varying amounts of data coverage across the different utilities. Despite ongoing efforts, obtaining tenant data continues to remain a challenge. However, we have managed to improve our data coverage by enabling data automation where possible and undertaking further tenant engagement.

Coverage for each Performance Measure is disclosed in our accompanying data tables.

Estimation of landlord-obtained utility consumption

In instances where data is missing or unavailable, estimations have been applied. Different estimation methodologies are used depending on whether the data is missing (e.g., one month of the year) or unavailable (e.g., data we were not able to obtain). For missing data, we estimate based on historical data and figures from other months throughout the year. For data that was unavailable, we use benchmarking factors recommended by the Carbon Risk Real Estate Monitor (CRREM) tool and floor area. We have maintained detailed records of all instances of estimation, which are stored within our internal records.

We have disclosed the proportion of total data estimated for each Performance Measure in the accompanying data tables.

Boundaries – reporting on landlord and tenant consumption

We have 35 assets directly managed by the Company, with a combination of landlord and tenant control across all utilities. In the accompanying data tables, we report electricity figures by landlord-controlled, “shared services,” and tenant-controlled areas, “tenant areas”. The data for other energy sources, such as fuels and water, is reported as “whole building” figures as it is difficult to separate these services from the common area usage.

Normalisation

As the Company is a REIT, primarily investing in real estate, floor area is an appropriate denominator to normalise energy and water consumption and GHG emissions as an intensity metric and is consistent with the SECR guidelines recommendations for the property sector.
Disclosure on own offices

Custodian Property Income REIT does not have any direct employees and, therefore, does not occupy an office.

Segmental analysis

We have chosen to report our data by sector type (i.e., industrial, retail warehouse, high street retail, office and other), consistent with our financial reporting. As all our assets are within the UK, an analysis by geography is not applicable.

Third Party Assurance

The Company does not conduct third party assurance.

Sustainability Performance Measures

Through the Board, Custodian Property Income REIT encourages investment managers to act responsibly in the areas we can influence as a landlord, working with tenants to improve their assets’ environmental performance to minimise their impact on climate change. The Company monitors and reports on environmental key performance indicator (KPI) targets quarterly (internally) and annually (externally). This helps Custodian Property Income REIT assess and improve our performance and implement various initiatives such as energy efficiency, green energy procurement, tenant engagement and ESG due diligence.

For more information on the Company KPIs, please see our 2024 ESG Report.

2024 Data trends

In 2024, the Company saw overall downward trends in our environmental data. We attribute some of these trends to significant improvements in our data quality as less data relies on estimations which are more conservative.

Nevertheless, as we continue our ESG journey, we are implementing a multitude of actions across our portfolio to reduce our utility usage and GHG emissions.


Energy

Custodian Property Income REIT has an ongoing commitment to reduce energy consumption across our portfolio with various initiatives implemented in 2024. We are prioritising the installation of photovoltaic (PV) systems with 2,914 kWp of total capacity across our assets with further installations planned at Arthur House. These installations are popular amongst our tenants as we have agreed on nine power purchasing agreements, creating synergies between ourselves and our occupiers allowing us to better track data across our portfolio while encouraging renewable energy use. We are also identifying other opportunities including the installation of LED lighting, as displayed at Ashby and Fountain Street, and energy-efficient heating, ventilation, and air conditioning (HVAC) systems across our retail warehouses and office spaces. The Company has also increased our electric vehicle charging capacity to 2,862 kWh (44 chargers) across our retail warehouses and another 442.4 kWh (34 chargers) across our other sector assets, moving closer to our KPI targets. These actions helped reduce total electricity consumption by 5.8% (Elec-Abs), decreasing from 44,934 MWh in 2023 to 42,235 MWh in 2024. Although our absolute electricity saw a reduction, when calculating our like-for-like data, there was an increase of nearly 2% (Elec-LfL). The fluctuating external weather temperatures are the probable cause of this trend.

Where possible, the Company looks for upgrades across the portfolio to reduce natural gas consumption. For example, at Winsford, we decarbonised the site by removing the gas boiler and replacing it with an air-source heat pump system and at Arthur House, we removed gas and installed HVAC systems fully powered by electricity. Actions such as these supported our total fuel consumption to decrease by 11.5% with 26,814 MWh recorded in 2024 and 30,284 recorded in 2023 (Fuels-Abs). This helped impact a like-for-like reduction of 13.6% in 2024 (Fuels-LfL).

The combination of reductions in our electricity and fuel consumption led to energy intensity figures decreasing by 7%, with 146 kWh/m2 recorded in 2024 and 157 kWh/m2 recorded in 2023 (Energy-Int).

Greenhouse gas (GHG) emissions

Despite seeing a 13% increase in absolute location-based scope 1 emissions (GHG-Dir-Abs), a 27% reduction in our scope 2 (GHG-Indir-Abs) helped us achieve an overall GHG intensity reduction of 12% (GHG-Int). This reduction is the result of our ongoing energy efficiency actions. Our absolute emissions for scope 3 have also decreased by 14% (GHG-Indir-Abs), due to reduced tenant energy consumption.

We also anticipate that the improved data coverage that has been achieved this year is a key driving factor in the emissions reductions observed, as less data relies on estimations which are more conservative. This is particularly prominent with our tenant consumption, where coverage is lower.

Water

Water is a utility that we continue to struggle to data collect data for. To calculate our water consumption, the Company relied on benchmarking factors to estimate our annual usage. Based on this, we estimated to see small decreases of 1.5% in absolute consumption (Water-Abs) and 0.3% in overall intensity (Water-Int) and an increase of 5.5% in like-for-like consumption between 2023 and 2024 (Water-LfL).

We aim to obtain more data as we strengthen our relationships with tenants with more transparent communications and create a streamlined plan with property managers for collecting data quarterly.

Waste

As we only have operational control over four assets, the Company’s data only accounts for 2% of our total portfolio. We do not estimate waste data therefore, the data we disclose is based on actual waste management reports. At these four sites we saw a total non-hazardous waste reduction of 50%, a 57 tonne difference from 2023 (Waste-Abs). 54% our waste was recycled, or 30 tonnes, and the remaining was sent to landfills or incineration with or without energy recovery. 21 tonnes, or 27% of our total waste was deemed hazardous and diverted from the landfill, seeing an overall hazardous waste diversion rate of 100%. As our portfolio did not see any changes over the reporting year, our like-for-like figures are the same as absolute figures (Waste-LfL).

We aim to promote more diversion efforts across our portfolio and encourage our tenants to practice responsible waste management.

Building certifications

We track our Energy Performance Certificates (EPC) certification across our portfolio as an indicator to demonstrate how efficient our assets are. The Company’s Investment Manager, Custodian Capital Limited, is continuously reviewing and undertaking new assessments of any EPCs that are older than five years and below C rating, bearing in mind a C rating is expected to become the minimum standard for new leases under the Minimum Energy Standard (MEES) in 2027.

Prime examples of Custodian Property Income REIT’s dedication towards improving energy ratings across our portfolio are illustrated in several of our recent developments including Redditch, which was upgraded from an F to an A rating and achieved an “Excellent” BREEAM New Construction certification. Overall, EPCs across 42 properties in our portfolio have been updated in our continuing efforts to improve the environmental performance of our assets. The weighted average EPC across the portfolio follows a positive trajectory towards an average B rating (equivalent to a score of between 25 and 50).

To continue improvements in our building certifications, we have underpinned these actions with targets to increase the total weighting of our EPC average.

Social

The Company is responsible for conducting health and safety assessments on 37 of our assets, all of which underwent annual fire risk assessments and health and safety inspections in 2024 (H&S-Asset). There were no reported incidents of non-compliance (H&S-Comp).

We do not report on the assessments conducted on properties controlled by our tenants.

Community engagement

Custodian Property Income REIT is committed to supporting local committees through our ESG strategy. Although we do not have asset-level community engagement programmes defined by the EPRA sBPR (Comty-Eng), we are dedicated to engaging constructively with tenants and local government to ensure we support the wider community through local economic and environmental plans and strategies; and play our part in giving employers safe places of business that promote tenant well-being. See more on the Board’s commitment to community engagement in the Custodian Property Income REIT Annual Report 2024.

Governance

Custodian Property Income REIT’s Board reviews the investment objectives at least annually to ensure they remain appropriate to the market in which the Company operates and are in the best interests of shareholders.

The Board (Gov-Board) is comprised of six non-executive directors, 33% of whom are female, on par with last year (Diversity-Emp). The Board has a positive approach to diversity and where possible, each time a director is recruited, at least one of the shortlisted candidates is female and at least one of the shortlisted candidates is from a minority ethnic background. Our members are paid according to their role on the Board. This explains the gender pay difference as there is an uneven number of men to women in their respective roles (Diversity-Pay).

For additional information on our Board selection (Gov-Select) and how we mitigate conflict of interest (Gov-CoI), please see our accompanying data tables:

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