Facility Condition Index 2.0: A tool to (re)assess our portfolios in the light of the EU green deal?

Kai Drinda and Nils Detje
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Kai Drinda: MANN+HUMMEL, Germany
Nils Detje: Director, Global Corporate Social Responsibility, MANN+ HUMMEL, Germany

Corporate Real Estate Journal, 2024, vol. 13, issue 4, 348-357

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 (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2024
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