Investor Centre

Corporate responsibility and ESG

The Board is mindful of its responsibilities to all of its stakeholders, including the wider community, when it makes decisions in setting and implementing the Company’s strategy.  Alongside its fiduciary, regulatory and legal responsibilities, these responsibilities include those which can be broadly classified under the headings environmental responsibility, social responsibility and governance, widely referred to as “ESG”.

While we do not run any trading operations on site at any of the assets owned by the Group, we take into account the impact of our assets on people and the environment so we monitor our tenants’ compliance with the terms of their leases and with good estate management practice, including in the areas of health and safety and sustainability, recognising that the assets that the Group owns are places where buildings connect with peoples’ lives.

During the current financial year, we have commissioned a review of our ESG policies from independent experts.  We therefore expect to further develop our reporting on this area with effect from the 2021 financial reports. 

We comment below on the Company’s own ESG policies and follow this with a brief summary of the key ESG policies and strategies of our major tenants’ businesses in the specific areas of ESG where they intersect most closely with our portfolio.

Environmental responsibility

In considering environmental responsibility, the Board has regard to climate, nature and sustainability.  In our reporting, the Board makes reference to the Real Estate Sustainability Accounting Standard, published in October 2019 by the Sustainability Accounting Standards Board (“SASB”).  That standard sets out certain metrics that are considered relevant for REITs, and has categorised certain ‘activity metrics’ against which the Group reports as follows:

 LeisureHospitalsBudget HotelsTotal
Number of assets2612123161
Lettable floor areaThe nature of the great majority of the Group’s assets is such that lettable area measured in square feet is not a relevant measure.  As the assets are operational assets, lettable floor area is not monitored by the Board and so is not provided.
Percentage by ERV of indirectly managed assets (where tenants have operational control)98.9%100%100%99.5%
Average occupancy rate by ERV99.9%100%100%100%

For the overwhelming majority of the Group’s assets, operational control of the asset rests with the tenant.  Consequently, the energy management and water management data outlined in the standard is not provided in this report, nor is it currently monitored by the Board as in most cases the information is not at this stage able to be obtained from the tenants under the terms of the leases. We comment further on the policies of our major tenants and our engagement with them under the heading “ESG policies and strategies of our major tenants”.  We are, however, working closely with our tenants to obtain relevant information to better support their and our own objectives.

The SASB standard suggests disclosure of the approach to “management of tenant sustainability impacts”, described as the manner in which agreements, contracts and relationships with tenants are structured to be instrumental in effectively managing the sustainability impacts of those tenants.  This can include aligning sustainability outcomes, creating systems for measuring and communicating resource consumption information, and/or mandating minimum sustainability performance criteria.  All investment property assets owned during the year with the exception of the small income stream from the Manchester car park operating agreement entered into during 2020 had their leases already in place at the time of acquisition and the Group has no ability to unilaterally change their terms, including insofar as sustainability is concerned.  Aside from the requirement for tenants to abide by all laws and regulations, including environmental law, none of the Group’s leases have provisions which are relevant to management of tenant sustainability in a specific way.  This is in large part because the majority were granted at least five years ago and in most cases over 13 years ago, when it was very uncommon for sustainability criteria or reporting to be included in leases.  The Group has only negligible amounts of vacant space and therefore has extremely limited opportunity to make a meaningful difference by introducing tenant sustainability management measures on new lettings.  Where space becomes available for letting or lease renewal, compliance with environmental standards and promotion of good environmental practices form part of the assessment of appropriate lease terms. A recent example is the requirement for Citipark, the new operator of the 1,000 space car park at Manchester Arena, to offer a discounted tariff to all Euro 6 compliant vehicles, which was negotiated when the operating agreement was entered into during the year.  However, 98% of the Group’s leases by rental value have terms to expiry (with no breaks) of greater than 16 years therefore it is not anticipated that the pace of change in lease terms will accelerate materially in the near term.

Finally, the SASB standard suggests reporting on “climate change adaptation” which is an assessment of the approach to managing climate change risk.  The Board considers that the structures of the Group’s leases, where the risks of continuing to operate each asset rest with the tenants and guarantors (where relevant), together with the insurance of assets in accordance with the principles of good estate management, mean that this risk is managed to the extent that is proportionate for a company with the vast majority of its assets being subject to very long leases on full repairing and insuring terms where the tenants bear the majority of these risks.

The Board has also considered the recommendations of the Task Force on Climate-related Financial Disclosures (“TCFD”) and, while not yet in a position to fully comply, has specifically aimed to address all four ‘pillars’ of TCFD’s recommendations:

  • Governance, where the Board retains responsibility for assessing environmental risks, opportunities and responsibilities, as set out in the Board Leadership and Company Purpose section of the Corporate Governance Report;
  • Risk management, where climate risk is included in the report of Principal Risks and Uncertainties;
  • Strategy, where the impacts of climate change and environmental issues are addressed in the summary of the business model, strategy and future strategy; and
  • Metrics and targets, where we explain in this section of the report our approach to working closely with our tenants and the continuing development of our own policies in this area.

Social responsibility

Social responsibility encompasses a wide range of issues, including in particular:

  • Equality, diversity and inclusion

The Board is committed to fairness and to encouraging diversity on the Board and in its operations, including prevention of any forms of discrimination including under the terms of the Equality Act 2010.  The terms of reference of the Nominations Committee include a requirement for it to regularly review the structure, size and composition of the Board including the skills, knowledge, experience and diversity of the Directors.  The Committee’s report includes commentary on its work in this respect.  The Corporate Governance Report includes details of the composition of the Board, including a description of the balance of skills, experience and gender on the Board.  The gender balance of the Board is two female and five male directors.

As an externally managed business, no Group company has any employees, therefore the Group is not required to report in this annual report on gender balance or the gender pay gap, nor on recruitment policies or procedures for employees.  The Board has, however, satisfied itself with the appropriateness of the Investment Adviser’s approach to fairness and equality in its operations.  The Investment Adviser has confirmed that it complies with all relevant laws and regulations in that respect.  The gender split of the wider external management team and staff is 50/50 with eight males and eight females.

Human rights and supply chain integrity

Both the Company and the Investment Adviser have complied with their responsibilities under the Modern Slavery Act 2015 and the relevant confirmations are regularly updated and included on their respective websites.

  • Data protection and protection of privacy

The Company and the Investment Adviser seek to comply at all times with relevant data protection legislation and to protect the privacy of counterparties where appropriate.  There have been no breaches of policy or regulation in this regard in the reporting period.

  • Health, safety and wellbeing

While the Company does not have any employees, the health, safety and wellbeing of the Board, the Investment Adviser’s employees and those of its affiliated service provider, and the Group’s suppliers and other counterparties is taken into account in the Board’s decision making.  This has been particularly relevant since the onset of the Covid-19 pandemic, where remote working practices were implemented at an early stage, ahead of the UK’s national lockdown in March 2020.  The Board and the board of the Investment Adviser have sought to support the physical and mental health of the workforce, including remaining in regular contact with all team members wherever they are based.  The members of the Prestbury workforce have access to private health cover and also an externally run confidential helpline to support their physical and mental wellbeing.


Aspects of governance cover a broad range of matters including:

  • the overall purpose and strategy of the Company;
  • the structure and constitution of the Board and management of the business;
  • engagement with the Company’s stakeholders;
  • the management of risks and opportunities;
  • the creation of appropriate incentive and remuneration arrangements; and
  • regulatory aspects such as the prevention of money laundering and corporate crime, anti-bribery and corruption policies and the establishment and monitoring of an appropriate, transparent tax policy for the Company.

These and other aspects of governance are set out in the report on Corporate Governance.

ESG policies and strategies of our major tenants

One of the important features of the leases underpinning the value of the Group’s real estate assets is that they are granted on Full Repairing and Insuring (“FRI”) terms, where the tenant is responsible for the upkeep of the properties and compliance with laws and regulations relevant to them.  In terms both of the enduring value of the Group’s assets and of the Company’s responsibilities to stakeholders in a wide sense, understanding how our tenants fulfil these responsibilities is important to us.

While we do not in every case have reporting from our tenants on an asset by asset basis, we have engaged with their own Heads of Sustainability or other senior individuals responsible for ESG and we have summarised below key points from their publicly available corporate statements. We note that these are current as at the date of this report.

Contractual rent per annum £m
Merlin Entertainments Limited35.6Merlin Entertainments Limited has a “Responsible Business” section on its website, www.MerlinEntertainments.Biz.  That includes reports on a range of ESG issues covering health, safety & security, people & communities, animal care & conservation, the environment and corporate governance. The most directly relevant of these to the Company’s business is the Environmental Policy which includes among other things a commitment to comply with and, where appropriate and practicable, to exceed all relevant environmental legislation, and a commitment to measure, monitor and make public their annual carbon emissions with a carbon reduction target of at least 2% year on year.
Ramsay Health Care Limited34.4Ramsay Health Care Limited has published a Corporate Governance Statement on the “Investors” section of its website,  This covers in some detail their various governance policies and includes, on page 14 of that statement, their sustainability policy.  That report includes details of their Global Sustainability Committee and refers to the appointment during the financial year ended 30 June 2020 of a Group Sustainability Officer, responsible, among other things, for driving their sustainability programme. Ramsay has been included in the FTSE4Good Global Index every year since 2011.  That index identifies companies demonstrating strong ESG practices, measured against globally recognised standards.  Every year since 2017, Ramsay received an MSCI* ESG rating of AA.  Ramsay also publishes a Sustainability Impact Report, available on its website, covering the various aspects of ESG including, in their 2020 report, specific commentary on their actions during the Covid-19 pandemic.
Travelodge Hotels Limited28.3Travelodge Hotels Limited’s latest public statements on ESG matters are made in its annual report for the year ended 31 December 2019, which is available on the Investors section of its website  This includes, on pages 23 to 27, their sustainability reporting and social impact statement.  It also discloses that their gross greenhouse gas emissions in 2019 represented a 7.9% reduction on those in 2018 and a 12.2% reduction was achieved in that period for the measure of emissions intensity relative to turnover.  Travelodge reports that its ‘Energy Governance Group’ is continuing to drive positive change in this area.
ASM Global (parent entity of SMG)4.0ASM Group’s Corporate Responsibility Statement is available on the “Our Story” section of its website,  This includes an overview of their environmental policy, stating their intention to be industry leaders in this area and confirming that they undertake the measurement of greenhouse gas emissions, water consumption and waste reduction.
The Brewery on Chiswell Street Limited3.4The Brewery’s Corporate Social Responsibility statement is available within a dedicated section of its website  The tenant and venue have achieved ISO20121 certification for sustainability in event management, incorporating socially and environmentally responsible decision making.
Major tenants105.793% of Group contractual rent
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