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Facility Condition Index 2.0 : A tool to (re)assess our portfolios in the light of the EU green deal?
Corporate Real Estate Journal,
13
(4),
348-357
(2024)
Abstract
Investments in capital expenditures (CapEx) for corporate real estate (CRE) assets, especially in a manufacturing environment, are always highly competing against investments in production and core business-related equipment and projects. The maximum amount of acceptable CapEx to the organisation seems to be only determined by the previous year’s amount of depreciation, completely independent from the actual need — and health — of the portfolio. This paper recaps the well-established concept of the Facility Condition Index (FCI)1 — a tool that shows the amount of needed building repairs in relation to the costs of replacing the building, to give a snapshot of deferred maintenance and general condition. It explains the concept through a multi-year case study of (light) industrial assets in freehold and triple net (NNN) lease environments. It also touches on new (reporting) requirements resulting from the European Union (EU) Green Deal2 with relevance to real estate and a potential revision of this indexing methodology.
Keywords: Facility Condition Index; FCI; TDD; due diligence; facilities; decarbonisation; EU Green Deal; EU taxonomy; CSRD
The full article is available to subscribers to the journal.
Author's Biography
Kai Drinda is the Vice President of Corporate Real Estate (CRE) at MANN+HUMMEL Group, one of the world’s largest filter manufacturers. With 15+ years’ experience in the CRE industry, he delivers leadership and direction for the global real estate and facilities (GREF) function. As direct C-Level report, he manages a mixed portfolio of light industrial, logistics, office, shared services and research and development (R&D) assets, leading cross-functional teams in a matrix reporting environment. The primary mission is to align real estate decisions with the core business strategy of the enterprise, aiming at enhancing bottom-line results and supporting environmental, social and governance (ESG) goals. Kai holds a degree in business administration and engineering and Masters in technical building management (civil engineering) and corporate real estate (MCR). He is an Extended Board Member and Director of the Central Europe Chapter, Region South-West of CoreNet Global, the largest network of CREM professionals, embracing the exchange of best practices, new technologies and cultural diversity.
Nils Detje is Director, Global Corporate Social Responsibility, responsible for MANN+HUMMEL’s corporate social responsibility (CSR) activities. In this newly created role, he reports directly to Kurk Wilks, chief executive officer (CEO) of the internationally active filtration specialist. The family-owned company has been committed to cleaner mobility, cleaner air, cleaner water and cleaner industry for over 80 years. With Nils’ appointment, MANN+HUMMEL is not only strengthening its efforts for a cleaner world, but also anchoring them deeply in its corporate culture. Nils studied production technology and management in Hamburg. He then worked for over ten years in the field of strategy and consulting in various positions, including at Deutsche Bahn. Since 2012, he has been responsible for the implementation of Corporate Development and sustainability management and non-financial reporting at Berlin-based IAV GmbH, among other things.
