Responsible Investing

Threestones is fully aware of the major inefficiencies dominating the global real estate market and adopts a "Best in Progress" investment strategy focused on:

  • Aiming to improve the technical features of the properties in the portfolio via reduction of energy waste, greenhouse gas emissions, water usage and waste production
  • Improving the number and quality of available care beds in targeted undersupplied micro locations across Europe
  • Making sure the properties are in line with current safety, accessibility and fire protection regulations

The capital entrusted to us by our investors is the centre of what we do. We believe this should be allocated in a responsible manner with the goal of achieving environmental and social objectives, while delivering sustainable financial returns over time. As part of its investment strategy, Threestones aims to mitigate the negative externalities that buildings pose to the environment by improving the energy efficiency and resource consumption of its portfolio, whilst investing in existing real estate which generate immediate cash flow and ROI to investors.

Approach

Deal Sourcing

During deal sourcing, the Investment Team prepares a short investment memorandum ("IM") along with a thorough list of key risk indicators ("KRI"), covering financial and non-financial items, that will be presented to the Investment Committee.

Investment Decision

A complete IM will be produced whilst considering the KRIs from the deal sourcing phase. A proprietary ESG scorecard is filled which allows the investment team to assign an ESG score to the target property to be acquired. The IM includes financial and non-financial business case for investing in a specific asset, including remediation actions required to improve the sustainability features of the asset throughout the holding period. The IM, including the main findings from the ESG scorecard, is then presented to the IC which will (or will not) forward the investment to be approved by the board of the target AIF.

Management of the Asset

The implementation of a Capex plan during the holding period is the central part of the value creation strategy of Threestones. Improvements are undertaken based on the idiosyncratic features of each property in order to increase its value and reduce its environmental footprint. Examples of increasing value through responsible asset management could involve e.g., reducing operating costs through the installation of energy efficiency equipment, improving insulation, greening of fa├žades and/or roofs, developing the properties to increase the number of available care beds etc. Aside from the environmental impact, Threestones focuses also on engaging with operators of the facilities to discuss key social and governance issues such as energy and water consumption, recycling, elderly wellbeing, tenants' satisfaction, anti-money laundering, code of ethics etc.

Sale of the Asset

Proper management of the asset through time leads to better financial and non-financial returns for Threestones' stakeholders, via a reduction of downside risks to Threestones' investors and an improved quality of life for the elderly residents of our real estate assets. TSC will highlight to potential buyers the environmental, social and governance results achieved during the holding period and seek buyers which could continue and enhance such sustainability approach to the portfolio.

External Validation

Threestones has signed up to different sustainability institutions and/or labels. The list below being current but not exhaustive:

  • Threestones Capital Management (the AIFM) subscribed to UN Principles for Responsible Investing;
  • The latest launched sub-fund "TSC Fund - Eurocare IV" reports under GRESB;
  • "TSC Fund - Eurocare IV", "TSC Fund - Eurocare Real Estate" and "Threestones Capital Fund - Eurocare PE" are classified as SFDR article 8.

Team

Threestones has chosen to integrate ESG at the heart of its investment strategy with two sustainability resources.

The sustainability strategy is laid out within the "Sustainability Policy" and its implementation is overseen by the Sustainability Committee, which is composed by members of the Investment Team, the Head of Compliance, the Head of Risk and the Sustainability Manager.

The Sustainability Committee was created with members of different teams from the Threestones' organization, to structure Threestones' sustainability approach and style, covering topics such as evaluating the application for international labels (ISR Label...) and external validation groups (UN PRI, GRESB...), creating, implementing and updating the Sustainability Policy in compliance with the applicable European regulations, managing various workstreams with property managers, external consultants and operators, liaising with different entities providing ESG certifications etc.. The Sustainability Committee meets at least once a month. The role of this committee will evolve in the coming months, notably with the integration of additional participants such as employees from different subsidiaries, as well as architects and engineers who can provide technical knowledge during the establishment and review of the sustainability strategy.