Environmental, Social, and Governance (ESG) Policy
Ladera Capital Partners (“Ladera”) is a privately held real estate investment management company. Ladera invests in multifamily real estate in the United States and is an experienced investor and real estate operator. Ladera responsibly invests with a strategy and practice to incorporate ESG (Environmental, Social, and Governance) factors in investment decisions and active ownership. Ladera’s policy is a framework that is aspirational, measurable, and aligned with globally recognized ESG standards of impact like the United Nations Sustainable Development Goals.
Ladera is committed to implementing environmental and social initiatives as part of its business practices and investment activities that enhance investment performance, operational efficiency, quality of life for employees, and resident satisfaction. New initiatives are evaluated based on their investment return, materiality, and alignment with core company values. New initiatives are assessed based upon their return on investment, applicability, alignment with core company values. In addition, they are based on the United Nations Sustainable Development Goals (SDGs), for which Ladera believes it can make the most significant impact.
Peter Giles oversees the ESG platform at Ladera. Before joining Ladera, Mr. Giles launched the Green Advantage® program at Freddie Mac, which funded $62B in green financing loans during his tenure. In addition, he was a member of the company’s Diversity Equity and Inclusion (DEI) executive steering committee addressing issues in equity and sustainability. His extensive background in formulating ESG initiatives and frameworks and working with third-party resources will stretch the ESG perspective across the platform in all company areas and investments.
Ladera’s approach to sustainability is comprehensive. Ladera seeks to integrate ESG into investment decisions and operations across all assets to enhance risk-adjusted returns through thoughtful capital and investment management deployment. Retrofitting, monitoring and reporting, accountability, and stakeholder engagement are essential to Ladera’s environmental programs overall success and efficacy.
Ladera’s responsibility is to reduce its carbon footprint with an economically efficient conservation program as a multifamily real estate company. Ladera can demonstrate an understanding and responsiveness to climate concerns with recycling programs, water conservation, energy-saving measures, and clean energy utilization to reduce greenhouse gas emissions. These measures are implemented at the corporate office and throughout the investment portfolio of multifamily investments to impact the environment positively.
Ladera will seek to pursue green financing initiatives when appropriate, which often provide preferential pricing and flexible credit terms and are achievable when implementing energy and water efficiency retrofits or purchasing an asset with an industry-standard green building certification.
Green improvements can play an essential role in preserving housing affordability, as energy and water utility costs have increased across the country each year for the previous decade. Almost one-third (31 percent) of multifamily households report some energy insecurity, such as forgoing or reducing necessities to pay an energy bill or keeping their home at an unhealthy or unsafe temperature. By reducing energy and water consumption, green improvements can lessen energy insecurity by helping to reduce tenants’ utility costs.
Ladera will consider procuring a Green Assessment® (energy analysis) on newly acquired assets to determine which positive benefit-to-cost ratio actions the company can implement at that asset. For example, low-flow plumbing fixtures, LED lighting, insulation, and smart thermostats can impact bills and resources.
Ladera may engage a third-party Green Consultant data collection firm. Green Consultants input the historical utility consumption data into ENERGY STAR® Portfolio Manager® (Portfolio Manager), a free online tool maintained by the Environmental Protection Agency (EPA) and provide Ladera with access to this data. The data inputted into Portfolio Manager establishes baseline periods for energy and water consumption for the property and can be used for future utility consumption benchmarking. Unfortunately, the industry has dealt chiefly with greenwashing without understanding the real impact. Reporting is critical to ESG to understand the value and impact of the initiatives and investment.
Ladera believes efficient and sustainable operations can lead to reduced consumption and, as a result, reduced costs, which results in an overall benefit to investors. Ladera gains value from green, including lower utility costs, attractive energy costs to market for tenancy, diversified investor base attracting ESG specialist investors looking for more impact, and premium pricing at the sale to buyers focused on “green” investments.
As a member of ULI, Ladera has committed to measuring, benchmarking, knowledge sharing, and implementing best practices to shape industry standards and reduce energy consumption, carbon emissions, water use, and waste generation. Project management is critical. Ladera develops an estimated timeline to completion, ROI, and phases and milestones to mark its progress and monitors the progress and results over time to measure overall effectiveness. Lastly, Ladera will produce reports that assess the financial impact of sustainable improvements and ventures. Ladera pays attention to factors beyond its control, such as economic downturns, watches for any less-than-optimal results, and decides whether a modification in approach is necessary to correct course. Ladera reduces energy, water consumption, and greenhouse gas emissions through efficiency retrofitting. It is an environmental management system aligned with the ISO 14001 standard, smart building technology, onsite solar projects were viable, and electric vehicle charging stations.
Ladera is committed to the health and safety of its employees and the residents at its portfolio properties. Therefore, Ladera encourages all staff members to volunteer time and resources to responsible charitable organizations and engage in meaningful outreach to improve the community by organizing employee volunteer events. Ladera also supports and encourages its personnel to assume leadership roles in charitable and community organizations.
Consistent and stable housing is a vital part of the renter’s financial security. Ladera is engaged in facilitating credit-building for tenants based on on-time rent payments that can advance housing stability. Credit agencies report less than 10% of on-time rent payments, and most renting households see no positive impact on their credit score from their most significant monthly expense. There is a large delta in credit scores from renters (who average low- to mid-600 scores) compared with homeowners (who average low- to mid-700 scores) as the renters’ on-time housing payments are mainly invisible, while homeowners benefit from theirs. Ladera is implementing optional credit reporting software as a standard at its assets. The program also allows Ladera to track the benefit to residents in a reportable format.
Incorporating supportive services into a platform can create economic opportunities for moderate-income households. In addition, programs that provide wealth and credit building guidance will set households up for long-term economic mobility.
Ladera will offer Credit Smart to its residents. CreditSmart is a suite of educational resources designed to empower consumers with the skills and knowledge to assist them through various stages of their financial journey.
Ladera adheres to transparent and measurable policies and seeks to make a deliberate effort to improve diversity, equity, and inclusion within the workplace and its operations. Ladera has adopted a Code of Conduct and an employee handbook that requires employees to uphold a high level of professionalism and integrity when conducting business. In addition, Ladera monitors the performance of its third-party vendor-partners, brokers, and other service providers to determine those firms’ quality of performance and ensure compliance with operating standards and contractual obligations.
Ladera is committed to operating its business responsibly, ethically, and transparently. Ladera seeks to accomplish and even surpass the goals detailed in its investment guidelines and documentation. In addition, Ladera aims to provide transparency to investors as it works to maximize property and portfolio performance.
Ladera respects all state and federal laws of the United States where it operates and its policies and procedures. Employees are bound by company policies and the code of ethics to make a committed effort to do the right thing and to be honest and fair in all business dealings. Its internal policies address issues that include kickbacks, gratuities, gifts and entertainment, conflicts of interest, anti-money laundering, OFAC compliance, insider trading, the Foreign Corrupt Practices Act, political contributions, frontrunning, and scalping. These policies provide definitions and examples of potential issues and guidelines for employees, managers, and supervisors to ensure the policy is abided by. In addition, a whistle-blower mechanism and a process to deal with incidents lacking compliance are provided.
Integration and Engagement
Ladera has an investment committee that votes on potential acquisitions. Through this process, the investment committee evaluates and mitigates investment risk and identifies areas and opportunities of long-term value creation for its investors and all stakeholders. Furthermore, the investment committee assumes responsibility and oversight of a long-term sustainability strategy and ESG performance.
Reporting and Disclosure
An integral aspect of the performance and realization of value creation opportunities is the monitoring and improvement of ESG matters, as technology and research provide new means and methods to support ESG innovations. Ladera professionals and third-party property managers are tasked with providing performance measurements of each property, including information about operating costs and the implementation of any sustainability or other cost-saving programs. The company is committed to the ongoing reporting of its ESG initiatives and continually monitors progress towards targets.