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KKR ESG & Citizenship Report

Eco-Efficiency: KKR Retail Portfolio

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Malls Move Toward Energy Efficiency

Key Environmental Performance Area:

  • Greenhouse Gas Emissions (Facilities)

Three shopping malls in KKR’s real estate portfolio have launched lighting, control, and variable frequency drive upgrades to save energy and reduce costs.

Future operating improvements include conversion of exterior lighting to LED and additional upgrades to HVAC systems.

All data an information in this case study are as of Dec 31, 2015 unless otherwise noted..

Challenge

Of all commercial buildings in the United States, retail buildings have the highest energy costs – approximately $20 billion annually – and account for the second largest percentage of greenhouse gas (GHG) emissions.i Retail buildings can decrease their energy costs and associated GHG emissions through various energy efficiency initiatives. Given their large footprint, need for shopper comfort, and long operating hours, shopping malls in particular can consume a significant amount of energy.

KKR’s real estate portfolio includes three malls which have identified the opportunity to reduce energy use and associated costs and environmental impacts: Broadway Mall in Long Island, New York; Colonie Center in Albany, New York; and Yorktown Center in Lombard, Illinois.

Response

These three malls, which are managed by Pacific Retail Capital Partners, began partnering with KKR’s Green Solutions Platform team during 2015 to improve the energy efficiency of their operations.

Resultsii

In 2015, the properties implemented a number of energy efficiency projects that will lower costs and reduce GHG emissions. For example:

  • Broadway Mall is expected save approximately $86,000 and avoid 250 metric tons of GHG emissions annually due to interior and exterior lighting projects implemented in late 2015.
  • Colonie Center is expected to save $127,000 and avoid more than 630 metric tons of GHG emissions due to energy efficiency projects, including interior and exterior lighting upgrades that were implemented in early 2015.
  • Yorktown Center is expected to save approximately $74,000 and avoid almost 330 metric tons of GHG emissions due to interior lighting, daylighting control, and cooling tower VFD projects that were implemented in mid-2015.

KKR’s retail portfolio, managed by Pacific Retail Capital Partners, began participating in KKR’s green program in 2015 and is communicating results for the second time.

i Energy Star. "Retail: An Overview of Energy Use and Energy Efficiency Opportunities." n.d. Web. 21 April 2016.

ii Self-reported portfolio company data is not calculated, reviewed or independently verified by KKR or KKR Capstone. For more information regarding the results methodology for companies evaluating their own data, please see the methodology section. There is no guarantee that any GSP-related avoided costs or added efficiencies will positively impact the portfolio company’s valuation or performance.

Unless otherwise noted, portfolio company data represents 2015 results, published in August 2016. These case studies may contain forward looking statements including descriptions of planned projects and projected results and savings. These statements are subject to the risk that the projects will not develop as planned or at all or that projected results and savings are not realized.